Iran Banking Regulations Aim to Detect Suspicious Transactions

Introduction

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 exposure to US sanctions and address Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) risks posed by Iranian activity in the international financial system.

Threats Posed by the Iranian Regime

The advisory provides information on the threats posed by the Iranian regime, including:

• Deceptive financial strategies used to evade sanctions
• Malign activities and typologies, such as:
  • Front companies
  • Fraudulent documents
  • Exchange houses
  • Seemingly legitimate businesses

Red Flag Indicators

The advisory includes red flag indicators related to specific malign activities and typologies. These include:

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

Advisory Recommendations

FinCEN recommends that financial institutions exercise due diligence when dealing with transactions involving exchange houses that may have exposure to the Iranian regime or designated Iranian persons. Additionally, institutions should be aware of possible evasive practices involving:

• Iranian shipping companies
• Virtual currency and precious metals

Next Steps

Following the re-imposition of sanctions lifted under the Joint Comprehensive Plan of Action (JCPOA), FinCEN expects the Iranian regime to increase efforts to evade US sanctions. The Treasury Department is interested in information related to these efforts and requests financial institutions include a reference to the advisory when filing a Suspicious Activity Report (SAR).

Conclusion

The advisory aims to help financial institutions detect and report potentially illicit transactions related to Iran, preventing exposure to US sanctions and addressing AML/CFT risks. Financial institutions should be on high alert for deceptive practices used by the Iranian regime to generate illicit revenues and finance their malign activities.

Sources:

• Financial Crimes Enforcement Network (FinCEN)
• Treasury Department