RED FLAGS- Fundraising and Money Laundering of Iran-Backed Terrorist Organizations

Red Flag Indicators Related to the Fundraising and Money Laundering Activities of Iran-Backed Terrorist Organizations:

These crucial red flags, identified by FinCEN, are instrumental in assisting financial institutions in detecting, preventing, and reporting suspicious activity connected to financing Iran-backed terrorist organizations.

These RED FLAGS, in addition to those identified in FinCEN’s advisory notes, remain relevant.

• 2018 Iran advisory and
• 2023 Hamas alert,

Given the complexity of the task, it's important to note that no single red flag is determinative of illicit or suspicious activity. Before judging suspicion, financial institutions should comprehensively analyse the surrounding facts and circumstances, such as a customer’s historical financial activity, transaction alignment with prevailing business practices, and multiple red flags.

RED FLAGS:-

1. A CUSTOMER or a customer’s counterparty conducts transactions with Office of Foreign Assets Control (OFAC)-designated entities and individuals, or transactions that contain a nexus to identifiers listed for OFAC-designated entities and individuals, including email addresses, physical addresses, phone numbers, passport numbers, or CVC addresses.
2. CUSTOMER Information included in a transaction between customers or in a note accompanying a peer-to-peer transfer includes key terms associated with terrorism or terrorist organisations.
3. A CUSTOMER conducts transactions with a money services business (MSB) or other financial institution, including a VASP, that operates in jurisdictions known for, or at high risk for, terrorist activity and is reasonably believed to have lax customer identification and verification processes, opaque ownership, or otherwise fails to comply with AML/CFT best practices.
4. A CUSTOMER conducts transactions that originate with, are directed to, or otherwise involve entities that are front companies, general “trading companies” with unclear business purposes, or other companies whose beneficial ownership information indicates that they may have a nexus with Iran or other Iran-supported terrorist groups. Indicators of possible front companies include opaque ownership structures, individuals and/or entities with obscure names that direct the company, or business addresses that are residential or co-located with other companies.
5. A CUSTOMER that is or purports to be a charitable organisation or NPO solicits donations but does not appear to provide any charitable services or openly supports terrorist activity or operations. Sometimes, these organisations may post on social media platforms or encrypted messaging apps to solicit donations, including in CVC.
6. A CUSTOMER receives numerous small CVC payments from many wallets and then transfers the funds to another wallet, particularly if the customer logs in using an Internet Protocol (IP) based in a jurisdiction known for, or at high risk for, terrorist activity. In such cases, financial institutions can also provide associated technical details such as IP addresses with time stamps and device identifiers that can provide helpful information to authorities.
7. A CUSTOMER makes money transfers to a jurisdiction known for, or at high risk for, a terrorist activity that is inconsistent with their stated occupation or business purpose with vaguely stated purposes such as “travel expenses,” “charity,” “aid,” or “gifts.
8. A CUSTOMER account receives large payouts from social media fundraisers or crowdfunding platforms. It is then accessed from an IP address in a jurisdiction known for, or at high risk for, terrorist activity, particularly if the social media accounts that contribute to the fundraisers contain content supportive of terrorist campaigns.
9. A CUSTOMER company is incorporated in the United States or a third-country jurisdiction. However, its activities occur solely in jurisdictions known for, or at high risk for, terrorist activity and show no relationship to the company’s stated business purpose.

SOURCE

https://www.fincen.gov/sites/default/files/advisory/2024-05-07/FinCEN-Advisory-Iran-Backed-TF-508C.pdf