Overview of AML/CFT Framework of

Overview of AML/CFT Framework of The ISLAMIC REPUBLIC OF IRAN Feb 2013 2

TITLES 1. Legal-institutional framework on AML/CFT 2. Executive measures, Statistics, facts and figures 3. International Co-operation 4. Future perspective of the IRFIU

1.Legal-institutional framework on AML/CFT 1.1 AML/CFT legislation in I.R of Iran 1.2. The High Council on Anti-Money Laundering 1.3. Task, structure and mission of the IRIFIU

2.Executive measures, Statistics, facts and figures 2.1. Executive Measures 2.2. Statistics, facts and figures 2.3 Hawala, ARS in I.R of Iran

3.International Co-operation 3.1. FIU to FIU Program for the I.R. of Iran 3.2.Data exchange and co-operation with other countries on AML and CFT 3.3. Participation in international events and organizations

4.Future perspective of the IRIFIU 4.1. Development AML/CFT legislation towards full compliance with international standards 4.2. IRIFIU outlook 2013-2015

1.1 AML/CFT legislation in Iran AML Act was approved on January 22, 2008 Executive By-Law was approved on December 2, 2009 Directives for reporting entities Directives on Banks and Financial Institutions(May 2011) Directives on Stock Exchanges(October 2011) Directives on Insurance(January 2012) Directives on Tax Affairs(January 2012) Directives on Customs(October 2011)

1.1 AML/CFT legislation in Iran Directives on DNFBP: Auditing, Guilds, NPOs (May 2012) A) Executive Directive on Anti-Money Laundering by Auditors B) Directive on Anti-Money Laundering in Guilds C) Directive on Anti-Money Laundering in Commercial Companies and Non-Profit Organizations. Preparation and ratification of combating financing of terrorism (CFT) bill in compliance with international standards in government and submitting it to the parliament (Majlis). CFT approved by Parliament on 8 th February 2012. Under final phase of approval. Providing the criminology of 20 international Predicate offences related to Money- Laundering international standards in the internal Laws and Regulations of the Islamic Republic of Iran.

1.2. The High Council on Anti-Money Laundering

1.3. Task, structure and mission of the IRIFIU

1.3. Task, structure and mission of the IRIFIU Tasks: Receiving STRs related to ML/TF. Conducting financial analysis for the STRs. Deciding to maintain STRs proved to be free of any suspicions or. send STRs to the Judicial Authorities. Exchanging information at internal /international level. Conducting Awareness Programs and organizing courses, meetings, and workshops on AML/CFT issues. Investing in research into new trends of AML/CFT. Preparing necessary statistics of measures taken against ML/TF. Annually rating designated entities on the basis of their compliance with AML laws and regulations

1.3. Task, structure and mission of the IRIFIU IRIFIU mission is: Effectively detect and deter money laundering and terrorist financing. Collaboration with local law enforcement, regulators and international counterparts. Contributing towards a safe and stable financial and social economic environment. Cooperate with international bodies and organizations on AML/CFT issues Sharing expertise in fight against ML/TF and related crimes with any country that the United Nations demands.

1.3. Task, structure and mission of the IRIFIU- IT department

IRIFIU Network Map 15

1.3. Task, structure and mission of the IRIFIU- Analysis department

2.1. Executive Measures Preparation and announcement Roadmap and Action Plan of the year 2010-2012 Recognizing and preparing job description of all persons subject to the law such as: Banking system, Insurance system, Stock Exchange, Customs, Tax organization, Notaries, etc in the 4 main parts of Regulation, Executive and Infrastructure, Training and Informational, Supervisory and Controlling Measures. Updating and control all of the entities tasks under the software with MS Project. Developing a web-based software in IRIFIU to collect suspicious transaction reports (STRs) and cash transaction reports (CTRs) from all banks and credit institutions, Insurance companies, Stock Exchange, Tax organization, Customs, etc.

Roadmap of IRIFIU on AML completion Exalted IRIFIU 2012 Systematical IRIFIU-1 st 2011 Developed IRIFIU 2 nd half 2011 Full systematical Settlement of IRIFIU Internal and External cooperation Intelligent Management Of AML Kinds of FIU Specialty of each period Identification and gathering Identification and cooperation Actions Established IRIFIU 2008 Elementary IRIFIU 2009 Preparation the chart and procedure preparation Culture making Readiness Developing IRIFIU 2010 Designing and Gathering reports Systematic gathering organizing Scope of work responsibility Reporting Massive Information management Improving The AML International cooperation Supervising and controlling Systematical relation Comparative Reports Learning by Doing Software improvement Membership in relevant international organization Following up the reports systematical relation in AML First grade in middle east for AML Improving the international and internal cooperation full installation of intelligent systems in gathering, Analyzing and Disclosing the reports Operation Integration Effectiveness 20

2.1. MS Project for reporting entities

2.1. Example of MS Project output for reporting entities

2.1. Executive Measures Establishment of Anti-Money Laundering Computer Based Training (AML/CBT) center with assistance of UNODC in Sep 2009. Holding 2 courses for neighboring countries experts (Jan, Nov 2012). So far, more than 350 local and 20 foreign experts have passed this course awarded by UNODC-IRIFIU certificates.

2.1. Executive Measures Holding more than 8 international on the job workshops on AML/CFT trends and methods (Sp. Analysis of STRs, International cooperation, IT and software, local coordination between competent authorities, etc) in IRIFIU with the presence of Judicial Authorities, Law enforcement agencies, Central Bank, Banks, Insurance companies, Stock Exchange, Customs, Tax authorities, etc.

2.2. Statistics, Figures and facts Distribution of the STRs From 2010 to 2012 Reporting Institute Suspicious Cases STRs in Watch list and Non-STRs Under Analysis STRs Total No. Banks, Customs, Financial institutions, Stock Exchanges, and Tax Affairs Organization 91 242 145 482

2.2. Statistics, Figures and facts STRs forward to the Judiciary System Reporting Institute STRs forward to Judiciary System STRs Total No. Banks, Customs, Financial institutions, Stock Exchanges, Tax Affairs Organization and IACPA. 91 482

2.2. Statistics, Figures and facts Number of CTRs received by IRIFIU by the end of 2012 Number of the CTRs From 2010 to 2012 Reporting Institute 2010 2011 2012 Total Banks, and Financial Institutions 620 10375 68347 79342

2.3. Hawala and ARS in I.R of Iran Hawala definition: An informal remittance system that does not require transferors identity verification, or detecting and reporting suspicious transactions. The transfer of money is carried out through unregulated network with no physical or electronic movement of money. The settlement takes place between the hawaladar (intermediary commander) and the other hawaladar (intermediary receiver) from whom the money is received. Hawala in I.R Iran Legisltion: AML Executive Bylaw Article 28- Sale and purchase of foreign currencies in any manner, including payment of local currency (Rial) inside and receipt of foreign currency outside the country and vice versa, are only lawful through the banking system and licensed exchange bureau observing [relevant] laws and regulations. Failing to do so, sale and purchase of foreign currencies shall be considered as unlawful and shall fall under the Law of Procedure of Applying Government Penalties Regarding Commodity and Foreign Currency Smuggle - approved in 1995 by the State Expediency Council.

2.3. Hawala and ARS in I.R of Iran Number of Cases suspected to be involved in Hawala sent to Judiciary by IRIFIU Year 2010 2011 2012 Total Number of Suspicious Cases - 5 30 35

3.1 FIU to FIU Program for the I.R. of Iran Signature of MOU between IRIFIU and Armenia (May 2010), Brazil (January 2011), Slovenia (June 2011), Ecuador (Aug 2011), Tajikistan (May 2012) FIUs.

3.1 FIU to FIU Program for the I.R. of Iran Final agreement to sign MOU with Russia, Thailand, Kazakhstan, Turkmenistan FIUs Negotiation and sending proposed MOU to the competent authorities of Italy, Turkey, India, Bangladesh, Venezuela, Algeria, Mexico, Poland, UAE, etc.

3.2. Data exchange and active co-operation with other countries on AML/CFT Data exchange with Armenia (FMC) 8 times Data exchange with Slovenian FIU 2 times Data exchange with Turkmenistan and Afghanistan FIU (ongoing) 1 time Holding the official inauguration ceremony of the High Council Secretariat and IRIFIU on 7 th of February 2010 with the presence of the ambassadors and delegates of 34 foreign countries in Tehran.

3.2. Data exchange and active co-operation with other countries on AML/CFT Holding the common meeting of the esteemed minister of Economic Affairs and Finance with the delegates and ambassadors of over 30 MDG on the 1 st of June 2010. Holding common meetings with the delegates of the CIS countries on AML/CFT (4 times: July 2010, January 2011, July2011 and February 2012). Active participation in UNODC FIU to FIU program under the program for Afghanistan and neighboring countries (7 times)

3.2. Data exchange and active co-operation with other countries on AML/CFT Holding triangular coordination meetings among the Islamic Republic of Iran, Afghanistan and Pakistan FIUs (3 times), to negotiate and sign MOUs on AML/CFT sphere. Active Participation in the workshop on Anti-Money Laundering and Criminal Matters in Kazakhstan (Jul 2010, 2011).

3.3. Cooperation with international organizations Effective interaction with international organizations dealing with AML/CFT issues such as (IMF, FATF, UNODC, EGMONT)

3.3. Cooperation with international organizations IMF: 2 workshops in Austria (2008 and 2009). Precise survey of the two IMF sent reports.(october 2008 and June 2010) Submission of the latest information to the Iran delegation in IMF. Propose an agreement to have a mutual technical assistance program between authorities. Propose an agreement to have the assessment of I.R of Iran AML/CFT regime by Fund in 2013.

3.3. Cooperation with international organizations FATF: Sending reply and report of measures to FATF president letters and ICRG Review (from 2010-2012) more than 6 times. Sending technical delegation to Paris and holding a common meeting with the Secretary and specialists of this secretariat (Feb 2010). Sending request to EAG to be an observer member on May 2011, Oct 2012.

3.3. Cooperation with international organizations UNODC: Active participation in 8 local conferences and workshops held by this office in Iran in the period of 2008-2012. Establishment of AML/CBT with assistance of this office Final joint to the (UNCAC), and ratified it in Feb, 2009. Participating in the study and research missions abroad held by this office in Italy, Austria and Thailand. Holding several seminars (more than 10times)with UNODC experts and representatives of local designated entities concerning AML/CFT metters.

3.3. Cooperation with international organizations EGMONT GROUP: Evaluation of joining procedure to this group and preparation of the required documents and papers (Laws, Regulations, Measures, etc.). Sending a specialist board to Armenia as the 1 st sponsor of the Islamic Republic of Iran Financial Intelligent Unit (IRIFIU) in joining to EGMONT GROUP and commencing the process with special timetable for the membership in this group as well as signature of MOU (May 2010). Negotiation with Ukraine FIU as a 2 nd sponsor for MOU signature and joining to this group.

4.1. Development of AML/CFT framework towards full compliance with international standards Best implement the responsibilities as stipulated in Anti-Money Laundering Act and also the Executive By-Law of this Act. Continue the procedures related to the updating and issuance of the AML/CFT regulations Implementation of smart software in all of the reporting entities to determine suspicious transactions from databases and send to FIU as well as developing such a software for STR analysis in FIU.

4.2. IRIFIU outlook 2013-2015 Continue receiving and analyzing STRs, CTRs and forward to the judiciary through new techniques Adopt new measures to deal with the identified deficiencies in relation regarding the international standards. Actively participate in international forums and expanding IRIFIU relation with foreign FIUs as well as international organizations.

4.2. IRIFIU outlook 2013-2015 Develop the workflow system in the IRIFIU in conformity with the international developments. Enhance national cooperation with the supervisory authorities and the other competent authorities, along with establishing and implementing the work mechanisms suitable. Introduce more developments on the programs used in the FIU, completing the current web linking stage and working on accomplishing a web linking with the other authorities

4.2. IRIFIU outlook 2013-2015 Find national statistics in the field of combating economic crimes for using them in performing studies and research in this field Implement new financial transaction monitoring procedures including Risk-Based Approach. Organize new practical trainings for FIU and reporting entities to enhance their knowledge and expertise. Enhance partner relations with public and private sectors concerning counteraction to the money laundering and terrorist financing.

4.2. IRIFIU outlook 2013-2015 Develop cooperation and integration among the internal agents of the AML/CFT system such as Judicial Authorities, Law Enforcement agencies, etc. Improve the legal framework in light of the international recommendations that inspire extinction of a series of predicate offences and expansion of obligated sectors, for a better effectiveness of the AML/CFT system

The End For Your Attention! 45