US Treasury Issues Advisory to Help Financial Institutions Detect Illicit Transactions Linked to Iran-backed Terror Groups

Combating Terrorism Funding: FinCEN Issues Advisory to Assist Financial Institutions

In a bid to curb the flow of funds to terrorist organizations, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory aimed at assisting financial institutions in detecting and reporting suspicious transactions linked to Iran-backed terror groups. The move comes as the Middle East continues to witness intensified terrorist activity.

Typologies Used by Terrorist Organizations

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

• Shell companies
• Cash-intensive businesses
• Cryptocurrencies

These methods are often used to disguise or conceal illegal activities, making it difficult for financial institutions to detect and report suspicious transactions.

Red Flags Indicating Suspicious Activity

The advisory provides a list of red flags that may indicate related suspicious activity, such as:

• Unusual transactions involving individuals with suspected ties to Iran or its proxies
• Transactions involving shell companies or cash-intensive businesses
• Use of cryptocurrencies for illegal activities

Financial institutions are advised to monitor these red flags and report any suspicious transactions to the relevant authorities.

Director’s Statement

According to FinCEN Director Andrea Gacki, “Terrorist organizations and activity supported by and aligned with Iran should not benefit from access to the US or international financial systems.”

Under Secretary’s Statement

Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson noted that “Iran continues to explore new ways to fund its dangerous and destabilizing activities, including the proliferation of dangerous weapons, malicious cyber activities, and financing of terrorist proxies in the region.” The advisory is part of a concerted effort by the US government to constrain Iran’s ability to exploit the international financial system.

Recent Events Underscore Iran’s Involvement in Terrorism

Recent events have underscored Iran’s involvement in and financing of terrorist activity in the region. Tehran seeks to project power by exporting terrorism throughout the Middle East and beyond, financing a range of regional armed groups including:

• Lebanese Hizballah
• Hamas
• Palestinian Islamic Jihad
• Houthis
• Iran-aligned militia groups in Iraq and Syria

Full Advisory Available Online

The full advisory is available online at FIN-2024-A001.