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FinCEN Advisory on the Iranian Regime’s Attempts to Exploit the Financial System

By: Jessica Caballero, CERP, CRCM

Advisory Warns Financial Institutions of Potentially Illicit Transactions 

On October 11, 2018, FinCEN issued an advisory to help financial institutions identify potentially illicit transactions related to the Islamic Republic of Iran (Iran). The advisory details known key players and their tactics in exploiting the US financial system. FinCEN is warning financial institutions in an effort to prevent financing related to nefarious activities, including the funding of terrorist organizations such as the Islamic Revolutionary Guard Corps and Hamas.

Specifically, FinCEN is warning against the use of personal accounts by Central Bank of Iran senior officials and the illicit use of virtual currency, shipping companies, and precious metals, to name a few. In addition to maintaining strong controls over ensuring compliance with sanctions around the regime, the agency warns against transactions originating from, or otherwise involving, jurisdictions with strong geographical or ethical ties to Iran. Robust, multi-tiered levels of screening should be used to review transactions originating in, or involving, any jurisdiction in close proximity to Iran.

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The advisory contains 21 red flags to help financial institutions identify suspicious activity around these warnings.  Those include illicit activity by CBI/CBI officials, illicit activity through exchange houses, use of procurement networks, illicit procurement of aircraft parts, Iran-related shipping companies access to U.S. financial system, virtual currencies, and suspicious funds transfers. 

Additionally, the advisory highlights the need for beneficial ownership compliance and strong customer due diligence practices to ensure you are not indirectly or unknowingly involving your financial institution with the regime.  Read the detailed advisory in its entirety here to ensure you are properly monitoring for the outlined activity and appropriately mitigating risk for your institution.

If you are filing a SAR you believe is related to the activities documented in this advisory, reference the advisory by including the key term “Iran FIN-2018-A006".

About the Author

Jessica Caballero, CERP, CRCM

Jessica Caballero began her career as an examiner for the Office of the Comptroller of the Currency and worked as a BSA officer at a community financial institution as well as a compliance consultant with Compliance Alliance before joining Abrigo. She has examined banks for asset quality, consumer compliance, capital markets and information technology, has helped banks implement Dodd-Frank and has assisted banks and credit unions as they created risk assessment processes, policies, and comprehensive compliance management programs. As Abrigo’s Senior Manager of Strategy and Engagement, Jessica helps financial institutions accurately interpret risk management topics by providing industry training and thought-leadership whitepapers and articles. Jessica earned her bachelor’s degree in business economics from Texas State University.

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