UPDATE IRAN and AML CFT enhanced due diligence

Advisory Notice on Money Laundering and Terrorist Financing controls in Overseas Jurisdictions

On 23 June 2017 the Financial Action Task Force (FATF) published two statements (included as annex A and B respectively) identifying jurisdictions with strategic deficiencies in their anti-money laundering and counter terrorist financing regimes. (download the notice

The Money Laundering Regulations require regulated entities to put in place policies and procedures in order to prevent activities related to money laundering and terrorist financing.

In response to the statements published by FATF on 23 June 2017

 EIFEC advise all Organizations to:

Consider the following jurisdictions as high risk for the purposes of the Money Laundering Regulations (AML), and so advises Organizations to apply enhanced due diligence measures in accordance with the risks: DPRK*, Iran*†

Take appropriate actions in relation to the following jurisdictions to minimise the associated risks, which may include enhanced due diligence measures in high risk situations: Bosnia and Herzegovina, Ethiopia, Iraq*, Syria*, Uganda, Vanuatu, Yemen*,

 * These jurisdictions are subject to sanctions measures at the time of publication of this notice which require firms to take additional measures.

† On 24 June 2016, the FATF suspended its call for countermeasures against Iran for twelve months. This suspension has been continued and remains in effect.

Restrictions on Iranian Parties (march 2017)

Certain persons, entities and bodies have been delisted and consequently no longer subject to the asset freeze, prohibition to make funds available and visa ban. This covers UN listings and EU autonomous listings.

However, some persons/ organisations are still listed and remain subject to sanctions.

Therefore is mandatory that EU operators verify all possible available information of Iranian counterparts including but not limited to Ultimate Beneciary Owners ( UBO) that directly or indirectly control the Iranian counterpart, Decision Makers (DM) (enhanced due diligence).

All parties must be screened against EU and UN listings.

AML/CTF EU regulation ( Anti-Money Laundering and financing of terrorism) and Enhanced Due Diligence.

The lifting of sanction changed the process of handling payments and financial transactions with IRAN.

Before JCPOA almost every payment had to be authorised or notifed to the National authorities.

Now everything is in principle can be done without any prior authorization.  This condition poses a threat to EU organization of breaching AML/CTF EU regulation.

EU rules in this area are largely based on international standards adopted by the Financial Action Task Force (FATF). They are tailored to the EU’s needs and complemented by national rules.

In June 2016, the FATF welcomed Iran’s adoption of, and high-level political commitment to, an Action Plan to address its strategic AML/CFT deficiencies. In an effort to acknowledge both Iran’s engagement with the FATF and the continued risk posed by Iran to the international financial system,  FATF agreed to suspend the call for countermeasures for twelve months in order to monitor Iran’s progress in implementing the Action Plan.

The two specific Action Plan items that Iran will have to fully address in the next twelve months with corresponding deadlines. While these two Action Plan items are not representative of the most significant risk of terrorism financing emanating from Iran, it allows the International Co-operation Review Group (ICRG) to determine Iran’s level of commitment to the FATF process.

If the FATF determines that Iran has not fully addressed these Action Plan items at the end of that period, the ICRG agreed that the call for counter-measures should be re-imposed.

According to ICRG procedures, Iran will remain on the FATF Public Statement until it has fully completed its Action Plan. Therefore during this transition period, all operators must adopt the highest level of compliance to monitor the risk of money laundering and terrorism financing in accordance with the general rules set EU and national level.

For all EU Member States breaches of certain prohibitions from Council Regulation (EC) No 428/2009 of 5 May 2009 (Dual Use), Council Regulation (EU) No 267/2012, AML and other Regulations are criminal offences, in particular those relating to export of prohibited or unlicenced goods and services, the asset freezing measures, transfer of funds, dealing any person (Company, Organization or natural Person) listed in related Annexes and the additional restrictive measures again Iran set out in those Regulations.

Against this background, EU exporters or NON EU organization dealing with EU who fail to comply with enhanced due diligence requirements appear to be ill-equipped to deal with the steadily increasing number of EU Government- sponsored compliance initiatives.

Therefore in order to help all parties involved in transactions with Iran to have a full compliance with EU Regulations ( both post-JCPOA and AML  enhance due diligence) a specific EU Export Compliant Certification Program (EU-C/ECO/IRAN) has been activated.

QUICK FACTS on Due Diligence Certification

Guidelines for ECO/IRAN Due diligence certification 

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