On October 11, 2018, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an advisory to assist financial institutions in identifying “potentially illicit transactions related to the Islamic Republic of Iran.” The guidance is provided in conjunction with the withdrawal by the US from the Joint Comprehensive Plan of Action (JCPOA) and the ongoing re-imposition of previous sanctions, as FinCEN anticipates heightened efforts by the Iranian regime to evade US measures.
The advisory outlines methods that the Iranian regime has exploited in the international financial system and provides “red flags” that should be considered together with other indicators to determine whether transactions and other activities may be malign.
Some of the categories of suspicious activity covered by these red flags include: deceptive procurement schemes by Iranian airlines; sanctions evasion tactics by Iranian shipping companies; illicit funds transfers by the Central Bank of Iran; the concealment of transactions intended to benefit the Iranian regime or its proxy groups through currency exchange networks; and the procurement of technology and services using shell and front companies.
These schemes often involve affiliated parties that have not previously been identified by sanctions or law enforcement actions and maintain other commercial interests outside Iran.
The advisory also recommends that financial institutions implement compliance practices that reflect increased awareness of Iranian sanctions evasion tactics. Specifically, FinCEN stresses that banks “should continue to develop controls designed to curtail indirect involvement of Iranian persons in transactions that transit through or otherwise involve the U.S. financial system.” Global financial institutions are advised “to implement robust and multi-tiered levels of screening and review for transactions originating from or otherwise involving jurisdictions in close proximity to Iran.”