Addressing senior bankers in Tehran on Thursday, Hemmati said “the CBI is committed to preventing the unbridled circulation of money in the banking system, which is the function of (and leads to) money laundering and speculative operations”, the CBI website reported.
The CBI has tightened restrictions on circulation of money in recent months to meet verifiable anti-money laundering requirements. Last October the CBI made it mandatory for banks and credit institutions to create specialized units to deal only with suspected money laundering and relevant issues, Financial Tribune reported.
The bylaw was issued after the government ratified an amendment to the AML and Countering the Financing of Terrorism Law in the same month.
In a similar measure in December, the regulator set limits on daily bank transactions, limiting transactions via all inter-bank systems to 1 billion rials ($7,500) per person per day.
In a recent case in January, the CBI obliged all Iranian bank clients to provide authentic and verifiable documents related to large transactions.
Accordingly, banks can handle transactions above 10 billion rials ($75,000) if and when the purpose of the transaction is clearly mentioned and all relevant documents are presented.
Need to Reduce Credit Risks
Hemmati urged head of bank branches to be more scrupulous in rating their customers’ creditworthiness and make sure that the loans are used only for purpose mentioned in the loan application.
“Credit risks account for 75% of risks banks take,” Hemmati said, underscoring the need to identify and reduce this category of lending risks.
Head of bank branches have been mandated to name their customers in terms of identity, their economic status and people designated as beneficiaries of their bank accounts.
“Head of bank branches can and should do their fair share in reducing credit risks and improving transparency in the banking sector,” Hemmati told the meeting.
Credit risk is the possibility of a loss resulting from a borrower's failure to repay a loan or meet contractual obligations. It refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flow and increases the cost of collection.
The issue of credit rating has gained a lot more traction as an increasing number of big defaulters has led to the emergence of a teetering banking sector and sick banks that have choked off credit to deserving companies.
A report by the Majlis Research Center, an influential parliamentary think tank, in May 2018 said about 60% of the total volume of NPLs would "unlikely be cleared", which is the worst kind of bad loans.