FinCEN Issues Advisory on Filing Transaction Reports Related to Iran-Backed Terrorist Financing

May 9, 2024

The Financial Crimes Bureau (FinCEN) released an advisory on Wednesday to help financial institutions identify unlawful transactions linked to Iranian and Syrian-backed terrorist organizations.

Financial institutions are urged to exercise caution and report any unusual transactions that can point to terrorism financing. The advisory code “IRANTF-2024-A001” must be included by banks in the Notes section of a Suspicious Activity Report (SAR) submitted to FinCEN. They will also mark field 33(a) for terrorist financing.

The content of the advisory document includes a FinCEN analysis of Bank Secrecy Act (BSA) data, open-source reporting, and information from law enforcement partners.

FinCEN Director Andrea Gacki stated,

“As we witness continuing instability and violence in the Middle East, we are issuing this Advisory to help financial institutions protect the financial system from abuse by terrorists and to encourage financial institutions to stay vigilant in identifying and reporting related suspicious activity.”

As per FinCen Press Release, recent events indicate that Iran supports terrorism in the Middle East. In Iraq and Syria, organized groups such as Hezbollah, Hamas, Islamic Jihad, the Houthis, and Iranian-allied forces provide this support.

Despite sanctions on its oil industry, Iran supports terrorist groups through sales revenues and arms acquisitions. They rely on financial intermediaries such as the IRGC-QF and Hezbollah to channel money to agents. Estimates show that Iran has historically given Hezbollah about $700 million out of a $1 billion budget. Iran uses extensive smuggling schemes to help funnel money to terrorist groups like the Houthis in Yemen.

Typologies include shell companies, complex exchange networks, and fake charities such as Sham charities used to gain access to the international financial system. Countries with free trade zones and weak legal systems are used to set up import and export companies for trade-based money laundering.

The advisory made note of the fact that terrorists received financial support through the usage of Bitcoin and other cryptocurrencies. It also explained how pro-Iranian organizations, including the military forces in Iraq and Syria and the Houthis in Yemen, depend on illicit revenue to fund their operations.

It further pointed out the recent case involving a Turkish energy group and an IRGC-QF official which highlights efforts to evade sanctions and support terrorist activities through illegal means. Last month, OFAC issued a new set of sanctions against Iran. The company fined Thailand’s SCG Chemicals $20 million for citing Iranian ties to chemicals sold in the U.S.

Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence stated

“Iran keeps looking for new ways to finance its dangerous and unstable operations, such as the spread of lethal weapons, malicious online activities, and the funding of terrorist front organizations in the area.”

Red flags raised by FinCEN include transactions with designated entities, use of unreasonable money transfer purposes, and activities inconsistent with stated business objectives.

The full advisory is available online at FIN-2024-A001.