FinCEN Releases Advisory On Iran


October 12, 2018 10:04 PM

A US Treasury division has released an advisory to financial institutions on avoiding (again illicit) financial interactions with Iran.

The Financial Crimes Enforcement Network (FinCEN), a division of the US Treasury department, has released a document subtly titled “Advisory on the Iranian Regime’s Illicit and Malign Activities and Attempts to Exploit the Financial System.” This advisory is intended to help financial institutions “better detect potentially illicit transactions related to the Islamic Republic of Iran.” The issuance follows the recent completion of the reimplementation of sanctions on Iran, after the US withdrew from the international nuclear deal. It states:

“This advisory highlights the Iranian regime’s exploitation of financial institutions worldwide, and describes a number of typologies used by the regime to illicitly access the international financial system and obscure and further its malign activity.”

Some of that “malign activity” may involve cryptocurrency, though there’s not a lot of evidence cryptocurrencies are used much by either Iranian citizens or the government.

The Central Bank of Iran (CBI) has banned financial institutions from dealing in cryptocurrency. Though individuals may still use, and even mine, cryptocurrencies in the country, their use has remained relatively limited – only about $3.8 million worth in transactions annually.

And while the Iranian government has considered creating a national cryptocurrency, the FinCEN advisory indicates that as yet there has been no evidence of the Iranian government using cryptocurrencies to circumvent US sanctions. Instead, the document states, when sanctions were in place in earlier years, the usual method of money laundering was for the CBI to send out couriers to physically deliver currency to exchange houses. But, according to the advisory, “Iran also has a history of using precious metals to evade sanctions and gain access to the financial system and may seek to use virtual currencies in the future.”

Since such use may occur “in the future,” FinCEN is advising cryptocurrency institutions to “consider reviewing blockchain ledgers for activity that may originate or terminate in Iran.” The advisory has a list of “red flags” for possible illicit activity by the CBI, only three of which pertain directly to cryptocurrencies: exchange activities using logins from Iranian emails or IP addresses, payments to or from Iranian virtual currency entities, and unusual peer-to-peer activity.

The advisory also states it is intended to help foreign financial institutions “avoid exposure to U.S. sanctions,” indicating US agencies may seek to punish international businesses that interact with Iran, a possibility the EU has foreseen and moved to prevent. 

Since the International Atomic Energy Agency confirmed that Iran was never out of compliance with the terms of the agreement, US withdrawal seemingly violated the terms of the deal. According to an EU statement on the matter, the US did not have the authority to void the deal, and in October an international court ordered the US to ease some sanctions on Iran.

Tim Prentiss has a master’s degree in journalism from the University of Nevada, Reno. He lives in Reno with his daughter. In his spare time he writes songs and disassembles perfectly good electronic devices.

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