FinCEN Issues Advisory On Iran’s “Illicit” Use of Crypto to Bypass Sanctions

to evade economic sanctions put in place by the U.S., prompting FinCEN to issue an advisory on the topic. FinCEN on Iran’s Exploitation of Financial Markets The Financial Crimes Enforcement Network (FinCEN) has issued an alert, warning U.S.-based financial institutions, such as cryptocurrency exchanges, about Iran’s “illicit and malign” exploitation of various financial markets. FinCEN alleges that Iran has been abusing financial markets to evade U.S.-led economic sanctions and finance terrorist organizations and activities. The advisory claims that Iran utilizes “front and shell companies to exploit financial systems around the world to generate revenues” that support “terrorist groups, ballistic missile development, human rights abuses, support to the Syrian regime, and other destabilizing actions targeted by U.S. sanctions.” Among the financial markets Iran “exploits” is the cryptocurrency market. It was first reported as far back as February that Iran had been considering using cryptocurrencies to evade economic sanctions. However, FinCEN reports that Iran’s usage of cryptocurrency dates back to 2013. Since then, Iran’s use of crypto “includes at least $3.8 million worth of Bitcoin-denominated transactions per year.” FinCEN says the number is “comparatively small” to other countries, but still plenty cause for concern due to the “potential avenues” cryptocurrency provides for money-laundering and other illegal activities. FinCEN urges cryptocurrency exchanges to review blockchain transactions for any activity that could be tied to Iran. Iran Launching National Crypto, Uses Other Unorthodox Evasion Methods Iran is steadfast in its approach to using cryptocurrency as a means of evading Trump administration-led sanctions. This is to the point that Iranian President Hassan Rouhani ordered the National Cyberspace Center (NCC) to draft a plan for the nation’s own cryptocurrency backed by the rial – Iran’s failing fiat currency. Iran is said to be planning to use their national cryptocurrency to more easily evade sanctions, by using a private blockchain-based on Hyperledger Fabric technology. The Central Bank of Iran, which earlier in the year banned institutions from selling, exchanging, or even promoting cryptocurrencies, will be able to issue new tokens at will. Alireza Daliri, deputy for management and investment at the directorate for scientific and technological affairs explained that the “currency would facilitate the transfer of money (to and from) anywhere in the world,” and assist Iran “at the time of sanctions.” Iran’s efforts to bypass sanctions and fund terrorist operations doesn’t stop with cryptocurrencies. The rogue nation also uses some other interesting methods, including procuring aviation-related materials using front companies, and trading precious metals such as gold, silver, or platinum.