Banker's Academy AML Training by Country

Anti Money Laundering (AML) By Country: Iran

Anti Money Laundering (AML) in Iran

Money laundering in Iran is not a serious issue, however, terrorist financing and activities are a major concern for the government and people of Iran.

On January 22, 2008, the Islamic Parliament passed the Islamic Republic of Iran Money Laundering Law. This law creates a High Council on Anti-Money Laundering, chaired by the Minister of Economic Affairs and Finance. Membership in the High Council includes the Ministers of Commerce, Intelligence, Interior, and the Governor of the Central Bank of Iran (CBI). The High Council will serve to coordinate and collect information and evidence concerning money laundering. However, an operational Financial Intelligence Unit (FIU) or High Council has yet to be established in Iran. The new law also falls significantly short of meeting international standards, particularly with respect to addressing terrorist financing emanating from Iran.

Any individual or business engaging in transfers or transactions of foreign currency into or out of Iran must abide by regulations imposed by the CBI. These regulations include registration and licensing restrictions aimed at protecting against the use of hawala and other informal money transferring methods.

Iran has also signed, but not yet ratified, the United Nations (UN) Convention against Transnational organized Crime and the UN Convention against Corruption. Iran has not signed the UN Convention for the Suppression of the Financing of Terrorism.

The Economy of Iran

Iran�s economy is marked by three main factors: an inefficient state sector; reliance on the oil sector, which provides the majority of government revenues; and statist policies, which create major distortions throughout the system. The majority of economic activity is controlled by the state. Private sector activity is generally limited to farming, services and small-scale workshops. Growth in the private sector is generally hindered by subsidies, price controls and other rigidities. There is also a great deal of informal market activity and corruption.

In recent years, Iran has greatly increased export earnings due to high oil prices. However, oil prices have begun to drop again, causing the Iran government to once again face monetary difficulties. The country also continues to experience double-digit unemployment and inflation. The unemployment rate has caused many Iranian youth to seek jobs overseas.

Banking in Iran

Bank Markazi Islami Iran is the Central Bank of the Islamic Republic of Iran, also known as the Central Bank of Iran (CBI). The CBI was first established in 1960. The responsibilities of the CBI are introduced in the Monetary and Banking Act of Iran (MBAI).

The four major objectives of the CBI, as introduced in the MBAI, are to maintain the value of national currency, maintain equilibrium in the balance payments, facilitate trade-related transactions, and improve the growth potential of the country.

To achieve these objectives, the CBI is granted the responsibility of fulfilling five main tasks: issuing notes and coins; supervising banks and credit institutions; formulating and regulating foreign exchange policies and transactions; regulating gold transactions; and formulating and regulating the inflow and outflow of domestic currency.

The CBI also acts as banker to the government. In this role, the CBI is obligated to keep government accounts and grant loans and credits to state enterprises and agencies. The CBI is also responsible for numerous other facilities, including lending to banks, purchasing and selling government participation papers, and a host of other legal banking operations.

Iran's Currency

The currency of Iran is the rial, which can be subdivided into 100 dinar. Currently there is no official symbol for this currency, however, the international code for the rial is IRR. The rial was originally introduced in 1798, and was worth one eighth of a toman, Iran�s former currency. In 1825, the rial ceased to be issued and did not return until 1932, when it was brought back as Iran�s primary currency.

The rial comes in both banknotes and coins. Banknotes are available in 100, 200, 500, 1,000, 2,000, 5,000, 10,000, 20,000 and 50,000 denominations. Coins are available in 50, 100, 250 and 500 rial pieces.

Along with banknotes, there also exist Iran Cheques, which are treated as cash. These cheques come in 500,000 and 1,000,000 denominations and are also issued by the CBI.