Financial Institutions Urged to Identify and Report Suspicious Activities Linked to Iran

The Financial Crimes Enforcement Network (FinCEN) has issued an advisory to help financial institutions detect and report potentially illicit transactions related to the Islamic Republic of Iran. This move aims to prevent the exploitation of the US financial system by the Iranian regime, which has been accused of using deceptive practices to evade sanctions.

Tactics Used by the Iranian Regime

According to FinCEN, the Iranian regime has used various tactics to generate illicit revenues and finance its malign activities, including:

• Front companies
• Fraudulent documents
• Exchange houses
• Seemingly legitimate businesses

The advisory provides red flag indicators related to specific malign activities and typologies, as well as information on the threats posed by the Iranian regime to the US financial system.

Red Flags and Due Diligence

The advisory warns financial institutions to exercise appropriate due diligence when dealing with transactions involving exchange houses that may have exposure to the Iranian regime or designated Iranian persons. It also advises institutions to be on the lookout for possible evasive practices involving:

• Iranian shipping companies
• Virtual currency and precious metals

To help identify deceptive activity potentially linked to the Iranian regime, FinCEN has included red flags in its advisory, such as:

• CBI officials routing transactions to personal accounts rather than central bank or government-owned accounts
• Wire transfers or deposits that do not contain any information on the source of funds

Reporting Suspicious Activities

Financial institutions are urged to provide all pertinent available information when filing a Suspicious Activity Report (SAR), including reference to this advisory by including the key term “Iran FIN-2018-A006” in the SAR narrative and in appropriate SAR fields.

Timing and Importance of the Advisory

The advisory comes ahead of the November 5 deadline for the re-imposition of US sanctions lifted under the Joint Comprehensive Plan of Action (JCPOA). FinCEN expects that Iranian financial institutions, the Iranian regime, and its officials will increase their efforts to evade US sanctions to fund malign activities and secure hard currency for the Government of Iran.

Quote from Sigal Mandelker

“This advisory lays out in great detail the extent to which the Iranian regime uses deceptive practices…to generate illicit revenues and finance their malign activities,” said Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence. “Governments, financial institutions of all types around the world, and other companies need to be on high alert to the types of schemes described in this advisory.”