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3/19/2020

FinCEN Issues Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System | U.S. Departm…

FinCEN Issues Advisory on the Iranian Regime’s Illicit and
Malign Activities and Attempts to Exploit the Financial System
October 11, 2018

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) issued an advisory today
to help financial institutions better detect and report potentially illicit transactions related to
the Islamic Republic of Iran. The advisory is also intended to help foreign financial institutions
better understand the obligations of their U.S. correspondents, to avoid exposure to U.S.
sanctions, and to address the Anti-Money Laundering/Combating the Financing of Terrorism
(AML/CFT) risks that Iranian activity poses to the international financial system. The advisory
provides information on the threats the Iranian regime poses to the U.S. financial system as well
as to institutions that have correspondent banking relationships with U.S. financial institutions,
describes deceptive financial strategies that the Iranian regime uses to evade sanctions, and
provides red flag indicators related to specific malign activities and typologies.
“This advisory lays out in great detail the extent to which the Iranian regime uses deceptive
practices, including front companies, fraudulent documents, exchange houses, seemingly
legitimate businesses and government o icials, to generate illicit revenues and finance their
malign activities. Iran’s deceptive practices have been orchestrated not only by elements of
their government such as the IRGC-Qods Force, but also by Central Bank of Iran o icials who
were at the highest levels. Any country that allows its Central Bank to be involved in deception
in support of terrorism requires the highest levels of scrutiny, particularly when the country
itself is the world’s largest state sponsor of terrorism,” said Sigal Mandelker, Under Secretary of
the Treasury for Terrorism and Financial Intelligence. “Governments, financial institutions of all
types around the world, and other companies need to be on high alert to the types of schemes
described in this advisory. More than that, as we expect Iran to continue to attempt to engage in
wide scale sanctions evasion while simultaneously using its resources to fund a broad array of
malign activity, financial institutions should continue to sophisticate their compliance programs
to keep these actors from exploiting them.”
On June 5, 2018, Under Secretary Mandelker delivered extensive remarks on the surreptitious
means by which the Iranian regime finances itself.
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FinCEN Issues Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System | U.S. Departm…

“Crucial insight provided through Suspicious Activity Reports (SARs) and other valuable
information conveyed by the financial sector have been instrumental in identifying money
laundering and other financial schemes associated with the Iranian regime,” added FinCEN
Director Kenneth A. Blanco. “This advisory focuses financial institutions’ attention on the
current risks associated with transactions involving the Iranian regime. It also provides
concrete red flags and typologies to help them identify potentially illicit Iran-linked activity. In
so doing, this advisory not only increases industry awareness; it also enhances the future value
of related SAR reporting and ultimately strengthens the safety and security of the U.S. financial
system.”
The advisory details how the Iranian regime has abused the international financial system
through illicit means. For example, the Iranian regime has masked illicit transactions using
senior o icials of the CBI, who used their o icial capacity to procure hard currency and conduct
transactions for the benefit of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and
its terrorist proxy group, Lebanese Hizballah. Accordingly, financial institutions are advised to
exercise appropriate due diligence when dealing with transactions involving exchange houses
that may have exposure to the Iranian regime and/or designated Iranian persons, and the
advisory details examples of exchange house-related schemes. Iran-related actors use front and
shell companies around the world in procurement networks through which the Iranian regime
has gained goods and services related to currency counterfeiting, dual-use equipment, and the
commercial aviation industry.
The advisory further warns financial institutions to be on the lookout for possible evasive
practices involving Iranian shipping companies. Financial institutions should also be aware of
possible Iranian abuses of virtual currency and precious metals to evade sanctions and gain
access to the international financial system and to conceal their nefarious actions.
In order to help financial institutions identify deceptive activity potentially linked to the Iranian
regime, FinCEN has included red flags in its advisory. For example, CBI o icials’ routing
transactions to personal accounts rather than central bank or government-owned accounts, and
individuals or entities with no central bank or government a iliation withdrawing funds from
such accounts, may be a red flag for financial institutions to investigate. Similarly, wire transfers
or deposits that do not contain any information on the source of funds, contain incomplete
information about the source of funds, do not match the customer’s line of business, or that
involve jurisdictions where there is a higher risk of dealing with entities linked to the Iranian

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FinCEN Issues Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System | U.S. Departm…

regime may be red flag indicators of illicit Iranian attempts to gain access to the U.S. financial
system or evade sanctions.
Following the full re-imposition on November 5, 2018 of sanctions li ed under the Joint
Comprehensive Plan of Action (JCPOA), FinCEN expects that Iranian financial institutions, the
Iranian regime, and its o icials will increase their e orts to evade U.S. sanctions to fund malign
activities and secure hard currency for the Government of Iran. Treasury and the U.S.
Government are interested in information related to the Iranian regime’s e orts outlined in this
advisory, as well as information pertaining to how the Iranian regime or Iranian entities subject
to sanctions, including the CBI, otherwise evade the sanctions and access the U.S. financial
system.
When filing a SAR, financial institutions should provide all pertinent available information in the
SAR form and narrative. FinCEN requests that financial institutions reference this advisory by
including the key term “Iran FIN-2018-A006” in the SAR narrative and in appropriate SAR fields
to indicate a connection between the suspicious activity being reported and the persons and
activities highlighted in the advisory.
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FinCEN’s mission is to safeguard the financial system from illicit use, combat money laundering,
and promote national security through the strategic use of financial authorities and the
collection, analysis, and dissemination of financial intelligence.

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