FINTRAC Mandates Reporting of Transactions Linked to Iran

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued a Ministerial Directive requiring reporting entities to submit Suspicious Transaction Reports for transactions associated with Iran, aimed at combating money laundering and terrorist financing.

Mandatory Reporting Requirements

Reporting entities must treat all transactions linked to Iran as high-risk and monitor them to determine whether a report is required. The reports are mandatory for completed transactions that involve Iranian rials or have an Iranian address, regardless of the transaction value.

• Transactions with Iranian Rials: All transactions involving Iranian rials must be reported.
• Iranian Addresses: Transactions with an Iranian address, regardless of the transaction value, must also be reported.

Key Requirements

To comply with the directive, reporting entities must:

• Insert the prefix “IR2020” before the report reference number for transactions that do not meet the reasonable grounds threshold.
• Include the prefix “IR2020” in the G section of the suspicious transaction report.
• Monitor all transactions associated with Iran as high-risk and submit reports if necessary.
• Submit Terrorist Property Reports if property is owned or controlled by listed persons or terrorist groups.
• Take mitigation measures to reduce the risk of transactions involving jurisdictions identified in Ministerial Directives.

Reporting Timeframes

Reporting entities must adhere to the following timeframes:

• Electronic Funds Transfers: Report within 5 working days after becoming aware that the transfer must be reported.
• Large Cash Transactions: Report within 15 days after the transaction.

Compliance Program

To ensure compliance with the directive, reporting entities are required to have policies and procedures in place to identify and respond to Ministerial Directives. The compliance program should include:

• Information on how the organization becomes aware of Ministerial Directives
• How it will respond to them
• Failure to comply can result in serious consequences, including administrative monetary penalties

Risk Assessment

Reporting entities must conduct a risk assessment to determine the likelihood of transactions involving jurisdictions identified in Ministerial Directives. The risk assessment should:

• Be documented
• Include measures to mitigate the risk of such transactions
• FINTRAC may review the compliance program during an examination to verify that reporting entities have taken appropriate mitigating measures and documented their risk assessments.

By following these requirements, reporting entities can ensure compliance with the directive and help combat money laundering and terrorist financing.