Financial Crimes Enforcement Network: Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies

September 7, 2016



The FATF’s conditional 12-month suspension of its call for countermeasures does not remove or alter any obligations U.S. financial institutions may have with respect to Iran under U.S. law and regulation. U.S. financial institutions are still subject to a broad range of restrictions and prohibitions on engaging in transactions with or involving Iran due to a number of illicit financing risks, including money laundering, terrorist financing, and the financing of Iran’s ballistic missile program. U.S. financial institutions must continue to comply with existing U.S. sanctions on Iran. These sanctions include a general prohibition on dealing with Iran and the Government of Iran, as well as designated Iranian banks and other entities appearing on the OFAC List of Specially Designated Nationals and Blocked Persons, which include Iranian entities with links to terrorist activity and Iran’s ballistic missile program. Information about these sanctions is publicly available on OFAC's .

Furthermore, on November 21, 2011, Treasury issued an NPRM to impose a special measure against Iran based on its finding that Iran is a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act.9 In addition, financial institutions should be familiar with the financial provisions and prohibitions contained in United Nations Security Council Resolutions (UNSCRs) related to Iran.10


In concurrence with FATF’s actions on DPRK and Iran and pursuant to Section 312 of the USA PATRIOT Act, 31 USC § 5318(i), as described in implementing regulations 31 C.F.R. § 1010.610(b) and (c), FinCEN advises U.S. financial institutions to apply enhanced due diligence when maintaining correspondent accounts for foreign banks operating under a banking license issued by a designated country. However, as noted above, the United States already has extensive restrictions and prohibitions on the holding of any correspondent accounts with foreign banks licensed by DPRK or Iran.

As required by the regulations implementing the Bank Secrecy Act (BSA), covered financial institutions should ensure that their enhanced due diligence programs include, at a minimum, steps to:

  • Conduct enhanced scrutiny of correspondent accounts to guard against money laundering and to identify and report any suspicious transactions, in accordance with applicable law and regulation;
  • Determine whether the foreign bank for which the correspondent account is established or maintained in turn maintains correspondent accounts for other foreign banks that use the foreign correspondent account established or maintained by the covered financial institution and, if so, take reasonable steps to obtain information relevant to assess and mitigate money laundering risks associated with the foreign bank's correspondent accounts for other foreign banks, including, as appropriate, the identity of those foreign banks; and
  • Determine, for any correspondent account established or maintained for a foreign bank whose shares are not publicly traded, the identity of each owner of the foreign bank and the nature and extent of each owner's ownership interest.