Financial Crime World

Iran’s Financial Transactions Face Heightened Scrutiny: Due Diligence Crucial in High-Risk Environment

On July 25, 2020, the Minister of Finance issued a directive aimed at strengthening Canada’s financial system against money laundering and terrorist financing. The directive requires financial institutions and money services businesses to treat transactions originating from or bound for Iran as high-risk, regardless of their value.

Key Requirements Under the Directive

  • Verify the identity of clients requesting or benefiting from transactions with Iran
  • Exercise customer due diligence
  • Record certain information about the transaction
  • Determine whether there are reasonable grounds to suspect money laundering or terrorist financing and report suspicious transactions to FINTRAC

Indicators of Transactions Associated with Iran

According to FINTRAC, financial institutions and money services businesses should look out for the following indicators:

  • Client identification information suggesting a connection to Iran
  • Transaction details that do not suggest it is bound for Iran but the institution cannot obtain further information about the destination

These indicators should be communicated immediately to anyone interacting with customers and their transactions. The information should also be included in procedure manuals and annual anti-money laundering compliance training topics.

Importance of Documenting Processes and Adhering to MDs

Financial institutions and money services businesses are advised to document processes for Ministerial Directives (MDs) to demonstrate adherence during examinations by FINTRAC. Failure to comply with MDs can result in serious penalties.

Additional Resources and Support

For assistance with integrating this content into an anti-money laundering program, financial institutions and money services businesses are encouraged to contact [insert contact information]. A Word document summarizing the directive’s requirements is available for download.