Monday, October 26, 2020

FinCEN Designates Iran as ‘Primary Money Laundering Concern’

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The Financial Crimes Enforcement Network (FinCEN) issued a final rule imposing a fifth special measure against Iran as a jurisdiction of primary money laundering concern under Section 311 of the USA Patriot Act.

The rule prohibits U.S. financial institutions from opening or maintaining a correspondent account on behalf of an Iranian financial institution and prohibits U.S. FIs from processing transactions involving Iranian FIs.

The designation was first proposed in 2011 and is based on Iran’s abuse of the international financial system, including support for terrorist groups like Hezbollah and Hamas; “endemic corruption” in Iran’s government; and AML/CFT deficiencies identified by the Financial Action Task Form. Iran joins North Korea and Myanmar as the only countries subject to Section 311 designation, although Myanmar banks have received exceptive relief.

Concurrent with the imposition of the fifth special measure, the Treasury and State Departments announced a mechanism to increase the transparency of humanitarian trade with Iran.

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“This humanitarian mechanism offers a process for enhanced due diligence to help mitigate the high risk of doing business in a country whose repressive leaders remain intent on diverting resources to fund terrorism,” said Sigal Mandelker, Treasury under secretary for terrorism and financial intelligence.

“Through this new mechanism, no revenue or payment may flow to the Iranian regime.”

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