Central Bank of Iran: Proof of Purpose a Must for Big Transactions

EghtesadOnline: Bank clients in Iran henceforth are obliged to provide authentic and verifiable documents regarding the purpose of large transactions, the Central Bank of Iran of Iran said in a notice.

News ID: ۷۴۹۵۶۴

28 January 2020

As per the notice published on the CBI website Monday, banks can handle transactions above 10 billion rials ($74,000) if and when the purpose of the transaction is stated and all relevant documents are presented.

Banks also must keep a copy of the documents. Officers from the CBI Office for Supervision and the Anti-money Laundering Department will control the lenders' obedience to the law, Financial Tribune reported.

The measure is in line with the CBI policy to  implement AML regulations in the banking sector.

Last month the central bank banned all large transactions without the client’s presence in the branch.

Back in October, a CBI bylaw made it mandatory for banks and credit institutions to create special units to deal with possible money laundering cases.

To manage potential risks emanating from possible money-laundering and terrorism funding, lenders are obliged to critically asses and identify the risks before giving financial services.

The Paris-based Financial Action Task Force has long urged Iran to strengthen its legal framework to guard against money laundering and terror funding.

On Oct. 18 it said that it had given Tehran a final deadline of February 2020 to comply with international norms after which it would urge all its members to apply countermeasures.

In-Depth Research

The amended AML Law was signed by President Hassan Rouhani in early 2018, after it was studied in depth, namely by special committees in the government, parliament, the constitutional watchdog Guardians Council and the top arbiter, the Expediency Council.

The law was ratified in February 2008, and in the decade since it was obvious that it needed amendments.

In August 2018, amendments to the CFT (Combating Financing of Terrorism) Law of the Islamic Republic of Iran were approved by the Guardians Council and notified to the relevant bodies and ministries. In January 2019, Iran amended its Anti-Money Laundering Act.

The amendments were among the pillars of Iran’s Action Plan, followed by amendments to the AML law and accession to Palermo and CFT conventions.

The so-called Palermo bill (International Convention Against Transnational Organized Crime) approved by the UN General Assembly in 2000 and the CFT (Convention Against Funding Terrorism) have been ratified by the Majlis, but did not come into force as the constitutional watchdog Guardians Council has not ratified it.

Parliament sent the bills to the Expediency Council for arbitration, but the council has not yet issued a final verdict on the subject.