FinCEN adopted a final rule imposing strict prohibitions on the access of Iranian financial institutions to the U.S. financial system due to money laundering concerns. Given the extent of the sanctions imposed against the regime, the U.S. Departments of the Treasury and State (the "Departments") implemented a new mechanism to ensure that humanitarian trade can reach the people of Iran.
In accordance with Section 311 of the USA PATRIOT Act, FinCEN designated Iran as a "jurisdiction of primary money laundering concern." According to FinCEN, Iran uses covert methods to pursue "malign activities," including using the Central Bank of Iran to fund various terrorist groups (e.g., the Islamic Revolutionary Guard Corps (or "IRGC"), the Islamic Revolutionary Guard Corps Qods Force (or "IRGC-QF"), the Lebanese Hizballah, Hamas and the Taliban). Generally, the final rule prohibits anyone from (i) opening or maintaining accounts in the United States on behalf of Iranian financial institutions and (ii) processing transactions involving Iran's financial institutions.
The new humanitarian mechanism is designed to support the commercial export of certain resources (e.g., agricultural commodities, food and medicine) to Iran. The Departments explained that the mechanism, which involves "stringent enhanced due diligence steps," was designed (i) to aid foreign governments in creating a payment method to provide legitimate humanitarian exports to Iran while (ii) ensuring that no revenue or payment is transferred to Iran.
The final FinCEN rule will become effective 10 days after publication in the Federal Register.
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