On October 11, 2018, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) released an advisory (the Advisory) intended to help money services businesses (MSBs) and foreign financial institutions better understand how U.S. sanctions on Iran affect their compliance obligations under the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) rules and under the U.S.-Iran sanctions enforced by the U.S. Department of the Treasury’s Office of Foreign Asset Controls (OFAC).
While Iran has historically relied upon, among other things, precious metals, such as gold, to evade sanctions and to market Iranian goods abroad, FinCEN views virtual currency as another commodity that Iranians may rely on to avoid sanctions. Since 2013, Iranians have participated in more than $3.8 million in bitcoin-denominated transactions annually. As a result, companies subject to U.S. regulation that participate in the virtual currency markets should pay careful attention to the Advisory.
To confirm the importance of the Advisory, OFAC separately issued the Advisory to all persons who subscribe to OFAC updates and listed the Advisory on its website. This, together with the discussion of OFAC obligations within the Advisory, demonstrates that FinCEN and OFAC may cooperate on enforcement of these obligations. As a reminder, U.S. sanctions prohibit U.S. persons and U.S.-owned or -controlled foreign entities from entering into transactions involving Iran, the Government of Iran, or Iranian financial institutions.