Financial Crime Data Analytics Advisory Issued for 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 advisory aims to enhance awareness of the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) risks posed by Iranian activity to the international financial system.
Deceptive Financial Strategies
The advisory highlights the deceptive financial strategies employed by the Iranian regime to evade sanctions, including:
- Use of front companies
- Fraudulent documents
- Exchange houses
- Seemingly legitimate businesses
These tactics are designed to exploit vulnerabilities in the financial system and undermine international efforts to combat money laundering and terrorist financing.
Red Flag Indicators
The advisory provides red flag indicators for specific malign activities and typologies, including:
- Suspicious transactions involving Iranian shipping companies
- Abuses of virtual currency and precious metals to evade sanctions
- CBI officials routing transactions to personal accounts rather than central bank or government-owned accounts
- Individuals or entities with no central bank or government affiliation withdrawing funds from such accounts
Suspicious Activity Reports
The advisory notes that Suspicious Activity Reports (SARs) have been instrumental in identifying money laundering and other financial schemes associated with the Iranian regime. Financial institutions are advised to be vigilant in reporting suspicious transactions and activity.
Due Diligence Requirements
Financial institutions are also reminded of the importance of exercising appropriate due diligence when dealing with transactions involving exchange houses that may have exposure to the Iranian regime.
Enhanced Vigilance Required
“We expect Iran to continue attempting to engage in wide-scale sanctions evasion while simultaneously using its resources to fund a broad array of malign activity,” said Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence. “Financial institutions must be on high alert to the schemes described in this advisory and continue to sophisticate their compliance programs to keep these actors from exploiting them.”
Conclusion
The FinCEN advisory emphasizes the need for financial institutions to remain vigilant in detecting and reporting suspicious activity linked to the Iranian regime. By exercising enhanced due diligence and staying informed about the latest tactics and red flag indicators, financial institutions can help prevent Iran from exploiting vulnerabilities in the international financial system.