Financial Sanctions Enforcement in Iran: US Warns of Deceptive Practices
The Financial Crimes Enforcement Network (FinCEN) has issued an advisory to help financial institutions detect and report potentially illicit transactions linked to the Islamic Republic of Iran. The advisory warns of deceptive practices used by the Iranian regime to evade sanctions, highlighting the threats posed by the Iranian regime to the US financial system.
Threats to the US Financial System
The advisory highlights the following threats:
- Correspondent banking relationships with US financial institutions
- Malign activities and typologies, such as:
- Front companies
- Fraudulent documents
- Exchange houses
- Seemingly legitimate businesses
Deceptive Practices Used by Iran
According to Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence, “Iran’s deceptive practices have been orchestrated not only by elements of their government but also by Central Bank of Iran officials who were at the highest levels.”
The advisory notes that Iranian financial institutions and officials will increase efforts to evade US sanctions to fund malign activities and secure hard currency for the Government of Iran.
Red Flags and Typologies
FinCEN Director Kenneth A. Blanco stated that suspicious activity reports (SARs) have been instrumental in identifying money laundering and other financial schemes associated with the Iranian regime. The advisory provides concrete red flags and typologies to help institutions identify potentially illicit Iran-linked activity, including:
- Suspicious transactions involving exchange houses, shipping companies, and virtual currency and precious metals
- Withdrawals from accounts without proper affiliation
- Routing transactions to personal accounts rather than central bank or government-owned accounts
Examples of Deceptive Practices
The advisory includes examples of deceptive practices, such as:
- CBI officials routing transactions to personal accounts rather than central bank or government-owned accounts
- Individuals or entities withdrawing funds from such accounts without proper affiliation
- Iranian abuses of virtual currency and precious metals to evade sanctions and gain access to the international financial system
What You Can Do
FinCEN requests that financial institutions:
- Exercise appropriate due diligence when dealing with transactions involving exchange houses, shipping companies, and virtual currency and precious metals
- Reference this advisory when filing a SAR, providing all pertinent available information in the form and narrative
- Include the key term “Iran FIN-2018-A006” to indicate a connection between the suspicious activity being reported and the persons and activities highlighted in the advisory