Iran’s Financial Institutions Face New Challenges in Preventing Fraud as Treasury Issues Advisory on Terrorist Financing
US Department of the Treasury Issues Advisory to Assist Financial Institutions in Detecting Illicit Transactions
In light of intensified terrorist activity in the Middle East, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory to assist financial institutions in detecting potentially illicit transactions related to Islamic Republic of Iran-backed terrorist organizations.
Typologies Used by Terrorist Organizations
The advisory highlights the means by which certain terrorist organizations receive support from Iran and describes several typologies these terrorist organizations use to access or circumvent the international financial system to raise, move, and spend funds. These typologies include:
- Cash-based transactions
- Use of shell companies and trusts
- Misuse of charitable donations
- Abuse of trade-based financing schemes
Red Flags for Financial Institutions
The advisory also provides red flags that may assist financial institutions in identifying suspicious activity, including:
- Large or unusual cash transactions
- Transactions involving entities with suspected ties to terrorist organizations
- Use of anonymous shell companies or trusts
- Unusual patterns of activity or transactions exceeding typical thresholds
Importance of Vigilance
According to FinCEN Director Andrea Gacki, “Terrorist organizations supported by and aligned with Iran should not benefit from access to the US or international financial systems.” Gacki emphasized that as we witness continuing instability and violence in the Middle East, it is crucial for financial institutions to stay vigilant in identifying and reporting suspicious activity.
Iran’s Involvement in Terrorist Financing
The advisory comes amid growing concerns over Iran’s involvement in and financing of terrorist activities in the region. Iran seeks to project power by exporting terrorism throughout the Middle East and beyond by financing a range of regional armed groups, some of which are US-designated Foreign Terrorist Organizations or Specially Designated Global Terrorist organizations.
Constrain Iran’s Ability to Exploit International Financial System
Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson underscored the need to constrain Iran’s ability to exploit the international financial system, stating 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.”
Accessing the Full Advisory
The full advisory is available online at FIN-2024-A001.