U.S. TREASURY ISSUES NEW ADVISORY REGARDING IRAN FINANCIAL TRANSACTIONS
November 12, 2018
On October 11, 2018, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued FIN-2018-A006, “Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System.” The alert reminds relevant institutions to be vigilant and maintain adequate risk-based compliance programs to ensure that they do not conduct funds or material transfers in contravention of various laws such as the International Emergency Economic Powers Act (IEEPA), the USA PATRIOT Act, and the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA).
The alert details a number of known methods by which Iranian individuals historically have sought to evade U.S. currency controls imposed by the Office of Foreign Assets Control (OFAC). These include the use of forged documents at exchange houses outside of Iran to convert Iranian currency into U.S. dollars, the use of shell companies to obtain advanced printing equipment for counterfeiting currency, and various forms of shipping and maritime document fraud to facilitate illegal cargo transfers. Red flags of possible illegal activity include commercially illogical funds transfers, use of multiple exchange houses, unusual structuring of transactions, or dealings in precious metals or jewels in that can serve as a substitute for currency. FinCEN also encourages vigilance with regard to rapidly-evolving blockchain-based virtual currencies, which are equally subject to anti-money-laundering compliance requirements as value denominated in other currencies.
With regard to civil aviation, FinCEN notes that many Iranian airlines are sanctioned entities due to their material support for other sanctioned organizations, such as the Iran Revolutionary Guards Corps. Front companies have been used to surreptitiously obtain export-controlled engines, parts, and whole aircraft for Iranian aviation, including through leases or purchases from other airlines. A red flag might be the ordering of aircraft parts for delivery to a destination that often serves as a transshipment point to Iran, when the beneficial ownership of the counterparty is unknown. FinCEN notes that companies maintaining commercial connections with sanctioned entities may be subject to sanction themselves by OFAC. If you have any questions regarding the advisory, please contact us.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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