Financial Crime World

Financial Institutions Urged to Monitor Transactions Linked to Iran Amid Sanctions

A New Advisory from FinCEN to Prevent Financial Crime

Washington D.C., USA - 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 financial crime by warning of deceptive practices used by the Iranian regime to evade sanctions and fund its malign activities.

Red Flags for Illicit Transactions

According to FinCEN, the Iranian regime uses various tactics to generate illicit revenues and finance its activities, including:

  • Front companies
  • Fraudulent documents
  • Exchange houses
  • Seemingly legitimate businesses

The advisory provides red flag indicators related to specific malign activities and typologies, urging financial institutions to exercise due diligence when dealing with transactions involving exchange houses that may have exposure to the Iranian regime.

Identification of Illicit Activity

FinCEN Director Kenneth A. Blanco emphasizes the importance of Suspicious Activity Reports (SARs) in identifying money laundering and other financial schemes associated with the Iranian regime. The advisory focuses on the current risks associated with transactions involving the Iranian regime, providing concrete red flags and typologies to help institutions identify potentially illicit Iran-linked activity.

Illicit Means Used by the Iranian Regime

The advisory details how the Iranian regime has abused the international financial system through illicit means, including:

  • Using senior officials of the Central Bank of Iran (CBI) 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.
  • 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

Financial institutions are advised to exercise appropriate due diligence when dealing with transactions involving exchange houses that may have exposure to the Iranian regime and/or designated Iranian persons. The advisory warns of possible evasive practices and provides red flags to help institutions identify deceptive activity potentially linked to the Iranian regime, including:

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

Expectations from FinCEN

Following the re-imposition of sanctions lifted under the Joint Comprehensive Plan of Action (JCPOA), FinCEN expects that Iranian financial institutions will increase their efforts to evade U.S. sanctions to fund malign activities and secure hard currency for the Government of Iran.

International Cooperation

The advisory is intended to help foreign financial institutions better understand the obligations of their U.S. correspondents, avoid exposure to U.S. sanctions, and address AML/CTF risks that Iranian activity poses to the international financial system. Financial institutions are urged to provide all pertinent available information in Suspicious Activity Reports (SARs) and reference this advisory by including the key term “Iran FIN-2018-A006” in the SAR narrative and in appropriate SAR fields.