Restrictions on Bank Activities of Minors

EghtesadOnline: In line with plans to enforce anti-money laundering principles, the Central Bank of Iran imposed new restrictions on banking transactions of minor clients.

News ID: ۷۸۵۶۳۸

30 September 2020

In a bylaw sent to banks and credit institutions, the CBI limited the banking transactions for clients of under 18 years of age up to 150 million rials daily.

The restrictions also prohibit minor clients from undertaking banking transactions worth no more than 500 million rials in one month. Restrictions also cover transactions conducted on online payment platforms.

For transactions done personally at bank branches, a “legal representative” is required to accompany the under-18-year-old clients.

State-owned Bank Melli Iran and several other banks have started enforcing the restrictions, according to IRNA.

The regulator’s move is apparently in line with other anti-money laundering measures to improve “control over the money flow” in the country.

“The bylaw is in line with the CBI guidelines to improve transparency of the banking system, reduce money-laundering risks and curb tax evasion” the news agency said.

The CBI says the monetary regulator is committed also to preventing the unbridled circulation of money in the banking system.

Earlier the central bank announced a daily cap for banking transactions of the adult clients. As per the rules, which came into effect in early 2020, 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.

Need for Documentary Evidence

Accordingly, individual bank customers should state the reason for transactions over the threshold when filling out bank forms. In addition, they must “provide documents to prove that the transaction is the result of a valid business deal, concluding a contract or other purposes”.

Legal entities having business accounts were also obliged to present documentary evidence regarding the need and purpose of transactions above 10 billion rials.

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 potential risks emanating from possible money laundering and terrorism funding, lenders are obliged to critically review and identify risks before offering financial services.

Anti-money laundering departments were mandated to oversee all transactions conducted in banks and report dodgy deals and violations of AML rules to the CBI and other supervisory bodies.

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

The international watchdog in February put Iran on its blacklist after Tehran failed to fully comply with its anti-money laundering norms.