Iranian Banks Told to Enforce AML Rules Diligently

In a meeting with senior bankers Hemmati stressed the need and significance of robust AML rules to avoid potential abuse, mainly by dealers and speculators in the chaotic foreign exchange market. 

"Combating money-laundering must be pursued with rigor along with full transparency in the banking system," he was quoted as saying by the CBI's public relation office. 

He blamed the ongoing forex market volatility partly to illegal forward currency deals and mandated banks to take necessary measures to prevent speculators from misusing banks for money-laundering. 

Through currency forward deals, the buyer and seller agree to buy or sell currency at a spot rate for a specified date, usually the next day of trade. In such deals, the rates are determined based on the dealers' prediction of forex rates in the next days. The CBI has banned currency forward deals.

A combination of the forex crunch, rising inflation expectations and steep decline in export revenue due to financial sanctions and Covid-19 pandemic have emerged as major challenges for the government since early this year.  

Officials blame dealers and speculators for gouging currency rates by abusing the chaotic situation, stressing that the banking transactions of such people must be controlled. However, academia, experts and prominent economists say  that the worsening economic conditions, mismanagement and lack of transparency in major industries and trading centers plus the Covid-19 plague have contributed to the present state of affairs.

AML Departments

Recalling that AML departments are already at work in the banks, Hemmati reiterated that their oversight must be further enhanced. 

The CBI says it is committed to preventing the unbridled circulation of money in the banking system. In recent months it has announced a set of anti-money laundering measures to “control the money flow”.

Last October, the CBI in an executive bylaw made it mandatory for banks and credit institutions to create special units to monitor potential money laundering. 

To manage risks emanating from suspected money laundering and terrorism funding, lenders are obliged to critically review and identify risks before giving financial services. 

Anti-money laundering departments are obliged to oversee all transactions conducted by banks and report dodgy deals and violations of AML rules to the CBI and other relevant bodies. 

Earlier the central bank announced a daily cap for banking transactions of adult clients. As per the rule, which came into effect early this year, transactions via all inter-bank systems was limited to one billion rials per person per day.

The regulator had earlier compartmentalized individual and business accounts. In February, it required individual customers to present documents showing the reason for transactions above two billion rials at one bank per day. 

The Paris-based Financial Action Task Force, the global money-laundering watchdog, has long urged Iran to strengthen its legal framework to guard against money laundering. 

The watchdog last February put Iran on its blacklist after Tehran failed to fully comply with its anti-money laundering norms. During its plenary meeting in October, the FATF announced that Iran would stay on its blacklist.