Financial Institutions Warned of Deceptive Practices by Iran’s Regime
The US 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, amid concerns over the country’s abuse of the international financial system.
The Iranian Regime’s Deceptive Practices
According to FinCEN, Iran’s regime uses deceptive practices, including:
- Front companies
- Fraudulent documents
- Exchange houses
- Government officials
These tactics are used to generate illicit revenues and finance its malign activities. The advisory provides red flag indicators related to specific malign activities and typologies, as well as examples of schemes used by Iranian actors to evade sanctions.
Red Flags for Financial Institutions
FinCEN has included the following red flags in its advisory to help financial institutions identify deceptive activity potentially linked to the Iranian regime:
- CBI officials routing transactions to personal accounts rather than central bank or government-own accounts
- Individuals or entities with no central bank or government affiliation withdrawing funds from such accounts
- Transactions involving senior officials of the Central Bank of Iran using their official capacity 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
Other Evasive Practices
The advisory also warns financial institutions to be on the lookout for possible evasive practices involving:
- Iranian shipping companies
- Abuses of virtual currency and precious metals to evade sanctions and gain access to the international financial system
Due Diligence Required
FinCEN is urging 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. The advisory requests that financial institutions reference it by including the key term “Iran FIN-2018-A006” in SAR forms and narratives to indicate a connection between suspicious activity being reported and the persons and activities highlighted in the advisory.
US Government Seeking Information
The US Government is seeking information related to the Iranian regime’s efforts outlined in this advisory, as well as information pertaining to how the regime or its entities subject to sanctions, including the Central Bank of Iran, otherwise evade sanctions and access the US financial system.