On June 6, 2025, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued an advisory (the Advisory) to assist U.S. financial institutions in identifying and reporting potential sanctions evasion and other suspicious activity related to Iran. As we discussed in a recent Blog post, the Trump administration has renewed its "Maximum Pressure Campaign" against Iran, as detailed in President Trump's National Security Presidential Memorandum-2 (NSPM-2). In April 2025, FinCEN kicked off a public-private partnership information exchange series aimed at thwarting Iran's ability to lead and sponsor terrorism. The information exchange series focuses in part on Iran's "shadow banking" system — a network of multi-jurisdictional illicit financial systems that facilitates revenue streams of sanctioned Iranian entities.
The Advisory replaces a 2018 FinCEN advisory on Iran's illicit activities by updating red flags and information on trends and typologies for Iranian sanctions evasion and other illicit activity. Specific to Iran's shadow banking system, the Advisory identifies the following red flags to assist in detecting, preventing, and reporting suspicious activity connected to Iranian illicit financial activity:
- A customer enters into transactions that move through multiple exchange houses and/or trading companies, adding additional fees and costs as the transactions progress, where the fees, number of transactions, and pattern of transactions do not reflect standard and customary commercial practices.
- An exchange house or trading company in a jurisdiction in close geographical proximity to Iran uses forged or falsified documents to conceal the identity of parties involved in transactions and uses regional banks' correspondent banking relationships with U.S. financial institutions to access U.S. dollars.
- A customer receives wire transfers or deposits that do not contain any information about the source of funds, contain incomplete information about the source of funds, or do not match the customer's line of business, especially if they involve entities in a high-risk jurisdiction for Iranian illicit finance-related activity.
- A transaction involves a general trading company registered in a commercial free trade zone in the United Arab Emirates (UAE) with opaque ownership and whose trading counterparties are companies mostly located in Singapore and Hong Kong and has bank accounts at multiple UAE financial institutions.
- A company based in Hong Kong that banks using a Chinese non-resident account, has little to no web presence, is co-located with numerous other similar companies, and/or is recently incorporated yet transmitting large payments with no adequate explanation for the source of funds, makes numerous payments in large figures to UAE general trading companies with no clear business purpose.
As detailed in the Advisory, no single red flag is necessarily indicative of suspicious activity. Instead, U.S. financial institutions must consider the surrounding circumstances of any particular transaction, including the "customer's historical financial activity, whether the transactions are in line with prevailing business practices, and whether the customer exhibits multiple red flags."
For activity similar to the activities highlighted in the Advisory, FinCEN requests that U.S. financial institutions include the key term "IRAN-2025-A002" in SAR field 2, as well as in the SAR narrative.
In tandem with the Advisory, FinCEN also designated over 40 individuals and entities connected to three Iranian brothers, who collectively laundered billions of dollars through Iran's shadow banking system by leveraging front companies in the UAE and Hong Kong. These front companies operated accounts in multiple currencies at various banks, facilitating payments for blocked Iranian entities engaged in the sale of Iranian oil and petrochemicals. The designation serves as a case study to and is incorporated by reference within the Advisory, highlighting that illicit actors may use Hong Kong and/or the UAE to establish front companies due to a lack of government scrutiny and oversight.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
