Iran’s Terrorist Finances Under Scrutiny: US Treasury Issues Advisory to Detect Suspicious Transactions

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In a bid to combat terrorist funding, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory to help financial institutions in the United States and abroad detect potentially illicit transactions linked to Islamic Republic of Iran-backed terrorist organizations.

Typologies Used by Terrorist Organizations

The advisory highlights several typologies used by these groups to access or circumvent the international financial system, including:

• Cash-intensive businesses: Establishing cash-intensive businesses, such as jewelry stores or currency exchange services, to launder money.
• Shell companies and nominee directors: Creating shell companies with nominee directors to hide ownership and control of assets.
• Money laundering through trade-based transactions: Using trade-based transactions to launder money by misrepresenting the value of goods or services.
• Cryptocurrencies and online payment systems: Utilizing cryptocurrencies and online payment systems to evade detection.

Red Flags for Suspicious Activity

The advisory also identifies several red flags that may indicate suspicious activity, including:

• Large cash transactions: Transactions involving large amounts of cash, particularly if the purpose is unclear.
• Unusual or complex transactions: Transactions with unusual or complex structures, such as multiple layers of intermediaries or multiple transfers of funds.
• Inconsistent or incomplete information: Inconsistent or incomplete information provided by customers, including identification documents or financial statements.

Response from FinCEN and Treasury

“We will not allow terrorist organizations and activity supported by and aligned with Iran to benefit from access to our financial systems,” said FinCEN Director Andrea Gacki. “Financial institutions must remain vigilant in identifying and reporting suspicious transactions that may be linked to these nefarious activities.”

Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson added, “Iran’s involvement in and financing of terrorist activity is a major concern, and we will continue to work with our international partners to constrain its ability to exploit the global financial system.”

Availability of the Advisory

The advisory, available online at FIN-2024-A001, provides guidance on identifying suspicious transactions related to Iran-backed terrorist organizations and encourages financial institutions to report any suspected illicit activity.

By staying vigilant and reporting suspicious transactions, we can help prevent terrorist financing and disrupt the activities of these dangerous groups.