Financial Crime World

Iran’s Efforts to Bypass Financial Sanctions: What You Need to Know

As the United States re-imposes sanctions on Iran, financial institutions must be vigilant against Iranian efforts to evade restrictions through deceptive shipping practices, use of precious metals, and virtual currencies.

Deceptive Shipping Practices

In the past, Treasury has identified Iranian or Iran-related companies using fake documents, reflagging vessels, and involving third parties to mask their activities. With sanctions lifted under the JCPOA set to expire, Iranian shipping companies may resume these tactics. Financial institutions should be aware of:

  • Falsified documents, including bills of lading and shipping invoices
  • Verify trade-related information through maritime databases and reports

Precious Metals

Iran has previously used gold and other precious metals to evade sanctions and facilitate the sale of oil and goods abroad. As sanctions are re- imposed, financial institutions should be aware of:

  • Schemes used by entities with a nexus to Iran to evade sanctions using gold and other commodities

Virtual Currency

Since 2013, Iran’s use of virtual currency has been significant, with at least $3.8 million worth of bitcoin-denominated transactions per year. Despite the Central Bank of Iran banning domestic financial institutions from handling decentralized virtual currencies, individuals and businesses in Iran can still access virtual currency platforms through the Internet.

  • Review blockchain ledgers for activity that may originate or terminate in Iran
  • Be aware of new virtual currency businesses incorporating or operating in Iran with little notice or footprint
  • Monitor open blockchains and investigate transactions to or from peer–peer exchange platforms, which may involve wire transactions from multiple accounts or locations

Compliance Obligations

Financial institutions and virtual currency providers must comply with all relevant sanctions requirements and Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) obligations. This includes:

  • Screening against the Specially Designated Nationals (SDN) List, as well as other OFAC-administered sanctions programs

Conclusion

As the United States re- imposes sanctions on Iran, financial institutions must be vigilant against Iranian efforts to evade restrictions through deceptive shipping practices, use of precious metals, and virtual currencies. By staying informed about these tactics and complying with relevant regulations, financial institutions can help prevent illegal activities and maintain a safe and secure financial system.

Sources

  • Treasury Department
  • Federal Reserve System
  • International Currency Council