Tuesday, November 22, 2011


The decision, taken by the US Treasury, to designate Iran as a jurisdiction of "Primary Money Laundering Concern" is a wake-up call for any financial institution whose clients are trading with Iran, whether directly or indirectly. It doesn't matter where your bank is located, there is increased risk:

(1) If a US financial institution, you risk fines & penalties in the highest multi-million dollar range, plus possible indictment for providing material support to a terrorist organisation, for assisting that country's WMD and ballistic missile programmes.

(2) If a non-US entity, you risk not only Draconian fines, but the distinct possibility of being shut out of the US financial structure, a situation certain to result in eventual bank failure, due to your inability to service your international clients' needs.

(3) All your clients' trade transactions involving the Middle East, especially Dubai and the rest of the UAE, must now receive special attention, lest you fail to identify shipments of goods that end up being transshipped to Iran.

(4) All the newly-sanctioned Iranian companies*, government agencies and shell entities should be closely examined, to ascertain whether any of your bank clients had historical dealings with them. You do not want any surprises later regarding OFAC violations.

(5) Those countries that are known to trade with Iran have a greater chance of facilitating sanctions evasion; are they purchasing dual-purpose goods that Iran is especially interested in ?

Remember how the global banking community abandoned contact with North Korea when it was similarly designated, to minimise the risk of incurring the wrath of US regulators and law enforcement ? My considered opinion is to advise your bank client to exit all Iran business forthwith, and if that does not happen, terminate the client.

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