FinCEN Issues Advisory to Detect Illicit Transactions Linked to Iran
The Financial Crimes Enforcement Network (FinCEN) has issued an advisory to help financial institutions detect and report potentially illicit transactions linked to the Islamic Republic of Iran. The advisory warns that Iran’s regime uses deceptive practices to evade sanctions and finance its malign activities.
Iran’s Regime Uses Deceptive Practices
According to FinCEN, Iran’s government officials have been involved in orchestrating schemes to generate illicit revenues and finance terrorism, including:
- Using front companies
- Fraudulent documents
- Exchange houses
- Seemingly legitimate businesses
The regime has also used senior officials of the Central Bank of Iran (CBI) to procure hard currency and conduct transactions for the benefit of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxy group, Lebanese Hizballah.
Suspicious Activity Reports Instrumental in Identifying Money Laundering
FinCEN Director Kenneth A. Blanco highlighted the importance of Suspicious Activity Reports (SARs) in identifying money laundering and other financial schemes associated with the Iranian regime.
The advisory provides concrete red flags and typologies to help financial institutions identify potentially illicit Iran-linked activity, including:
- Examples of exchange house-related schemes
- Procurement networks involving front and shell companies
Red Flags and Evasive Practices
Financial institutions are advised to be on the lookout for possible evasive practices involving Iranian shipping companies, as well as abuses of virtual currency and precious metals to evade sanctions.
The advisory includes red flags such as:
- Routing transactions to personal accounts rather than central bank or government-owned accounts
Increased Efforts to Evade Sanctions Expected
Following the re-imposition of sanctions lifted under the Joint Comprehensive Plan of Action (JCPOA), FinCEN expects that Iranian financial institutions and officials will increase their efforts to evade US sanctions to fund malign activities.
The Treasury Department is seeking information related to the Iranian regime’s efforts outlined in the advisory, as well as information on how the regime or its entities subject to sanctions otherwise evade the sanctions and access the US financial system.
Due Diligence and SAR Filing
Financial institutions are advised to exercise appropriate due diligence when dealing with transactions involving exchange houses that may have exposure to the Iranian regime and/or designated Iranian persons. When filing a SAR, financial institutions should provide all pertinent available information in the SAR form and narrative, and reference this advisory by including the key term “Iran FIN-2018-A006” in the SAR narrative and in appropriate SAR fields.
By following these guidelines and being aware of the red flags outlined in the advisory, financial institutions can play a crucial role in detecting and reporting potentially illicit transactions linked to Iran.