FinCEN Blasts Iran's 'Malign' Use of Crypto to Bypass Economic Sanctions

U.S. regulator FinCEN is urging domestic exchanges to prevent Iran from using cryptocurrency to bypass economic sanctions.

AccessTimeIconOct 12, 2018 at 10:00 a.m. UTC
Updated Sep 13, 2021 at 8:28 a.m. UTC

A U.S. regulator is urging domestic exchanges to help prevent the Iranian regime from using cryptocurrency to bypass economic sanctions.

The Financial Crimes Enforcement Network (FinCEN) published an advisory Friday, stating that Iran's "illicit and malign" use of cryptocurrency to "exploit" the financial system includes at least $3.8 million-worth of bitcoin-denominated transactions every year.

"While the use of virtual currency in Iran is comparatively small, virtual currency is an emerging payment system that may provide potential avenues for individuals and entities to evade sanctions," the advisory said.

As such, the regulator urges that "institutions should consider reviewing blockchain ledgers for activity that may originate or terminate in Iran." These activities, it added, have been highly dynamic and could thrive in Iran with "little notice or footprint."

The Trump administration announced in May this year it would withdraw from a 2015 nuclear agreement with Iran alongside the reimposing of economic sanctions that restrict Iran's access to U.S. dollars. The executive order went into effect on Aug. 6.

The FinCEN continued that despite recent reports that the Central Bank of Iran is seeking to ban domestic banks from supporting crypto trading, it found that individuals and businesses in Iran could still access trading platforms either in Iran or the U.S., as well as via peer-to-peer exchanges.

The agency reminded domestic crypto exchanges of their regulatory obligations as registered financial institutions under the Bank Secrecy Act, which requires them to deploy "appropriate systems to comply with all relevant sanctions requirements."

As CoinDesk reported in July, after the U.S. government had announced the reinstatement of the economic sanctions, government bodies in Iran indicated they were working on introducing a state cryptocurrency as a countermeasure – similar to efforts made by Venezuela, which launched its oil-backed petro cryptocurrency in February of this year.

Tehran image via Shutterstock

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
From One to Zero: BlockFi’s Fire Sale Shows the Uber Startup Model Is Disastrous for Finance

Peter Thiel’s monopolistic theories about building companies have clearly hit their limit: banking.

CoinDesk - Unknown
2
CoinDesk - Unknown
El Salvador compra 80 bitcoins adicionales a $19K cada uno, según el presidente Bukele

La última compra del país centroamericano había sido en mayo.

CoinDesk - Unknown
3
CoinDesk - Unknown
Brutal Month for Bitcoin as June Ends With Biggest Drop in 11 Years

Crypto markets saw heavy losses with investors increasingly worried about high inflation and Federal Reserve rate increases. Some analysts say the bitcoin price could go even lower.

CoinDesk - Unknown
4
CoinDesk - Unknown
Ignite CEO Peng Zhong Announces Departure Shortly After Re-Organization

Zhong’s exit comes weeks after the company’s former CEO, Jae Kwon, said he is re-joining the company as the CEO of spinoff New Tendermint.

CoinDesk - Unknown