Banking Regulations for Combating Financial Crime in Iran Issued by US Treasury Department
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The Financial Crimes Enforcement Network (FinCEN) of the US Treasury has issued an advisory to help financial institutions detect and report potentially illicit transactions related to the Islamic Republic of Iran. This advisory aims to enhance awareness among financial institutions about the risks posed by Iranian activity and provide concrete red flags and typologies to identify potentially illicit Iran-linked activity.
Deceptive Practices Used by the Iranian Regime
The advisory highlights the deceptive practices used by the Iranian regime, including:
- Front companies
- Fraudulent documents
- Exchange houses
- Legitimate businesses with illicit activities
These deceptive practices are orchestrated not only by government entities but also by high-level officials from the Iranian Central Bank.
Quote from Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence
“The Iranian regime’s use of deception is a threat not just to the US financial system but to institutions worldwide. Governments, financial institutions, and companies must be on high alert to these schemes.”
Red Flags and Typologies
To help financial institutions identify deceptive activity potentially linked to the Iranian regime, FinCEN has included red flags in its advisory. These include:
- Routing transactions through personal accounts rather than central bank or government-own accounts
- Wire transfers without information on the source of funds
- Deposits that do not match a customer’s line of business
US Sanctions Against Iran
The advisory comes as US sanctions against Iran have been fully reimposed since November 2018. FinCEN expects that Iranian financial institutions will increase their efforts to evade sanctions to fund malign activities and secure hard currency for the Government of Iran.
Reporting Suspicious Activity
When filing a Suspicious Activity Report (SAR), financial institutions are requested to provide all pertinent available information and reference this advisory by including the key term “Iran FIN-2018-A006” in the SAR narrative and fields.