IRAN, ISLAMIC REPUBLIC OF: Banks’ Obligations Under Bank Secrecy Act Come into Focus Amid Worsening AML Deficiencies
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Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) System Deficiencies in Iran
The Financial Crimes Enforcement Network (FinCEN) has issued guidance to supplement information previously provided to financial institutions on the serious deficiencies existing in the anti-money laundering systems of the Islamic Republic of Iran. This move follows a February 28 statement by the Financial Action Task Force (FATF) reiterating its concern about continuing deficiencies in Iran’s AML/CFT system.
UN Security Council Resolution 1803
On March 3, the United Nations’ Security Council passed Resolution 1803, calling on all states to exercise vigilance over activities of financial institutions in their territories with all banks domiciled in Iran and their branches and subsidiaries abroad. The FATF statement, combined with the UN’s specific call for vigilance, highlights the increasing risk to the international financial system posed by the Iranian financial sector, including the Central Bank of Iran.
FinCEN Guidance
FinCEN urges financial institutions to take into account the risk arising from the deficiencies in Iran’s AML/CFT regime, as well as all applicable United States and international sanctions programs, with regard to any possible transactions with the Iranian institutions listed in the advisory. The guidance is aimed at ensuring that banks operating in the United States are aware of their obligations under the Bank Secrecy Act (BSA) when dealing with Iranian financial institutions.
Prioritizing AML/CFT Compliance
As the situation continues to unfold, it remains essential for financial institutions to prioritize AML/CFT compliance and implement robust risk management systems to mitigate the risks posed by Iran’s financial sector. The FinCEN guidance serves as a timely reminder of the importance of vigilance in this regard.
Key Takeaways:
- Financial institutions must be aware of their obligations under the Bank Secrecy Act (BSA) when dealing with Iranian financial institutions.
- The risk arising from deficiencies in Iran’s AML/CFT regime must be taken into account, as well as all applicable United States and international sanctions programs.
- Robust risk management systems are essential to mitigate the risks posed by Iran’s financial sector.