The Financial Crimes Enforcement Network (FinCEN), an arm of the U.S. Department of the Treasury, released a sweeping new advisory this month aimed at strengthening the ability of American financial institutions to detect and report potential sanctions evasion and other illicit activity linked to the Islamic Republic of Iran.
The advisory, which updates and replaces FinCEN’s 2018 guidance, comes in the wake of a renewed “maximum pressure” campaign against Iran declared by President Trump through the issuance of National Security Presidential Memorandum 2 (NSPM-2) on February 4. The memorandum outlines a multi-pronged strategy to thwart Iran’s pursuit of nuclear weapons and intercontinental ballistic missiles (ICBMs), curb its weapons development capabilities, and degrade the operational and financial networks of the Iranian regime and the Islamic Revolutionary Guard Corps (IRGC), including its foreign proxies.
Targeting Oil Smuggling and “Shadow Banking”
A key focus of both the advisory and the broader policy is Iran’s oil trade—particularly the use of illicit maritime tactics to obscure oil shipments that finance the regime’s destabilizing regional activities. Iran’s shadowy oil exports have long provided critical funding to groups designated by the U.S. as terrorist organizations, including Hezbollah and other IRGC-linked entities.
To counter this, the Treasury Department’s Office of Foreign Assets Control (OFAC) has issued a series of sanctions designations, most recently on June 6, targeting Iranian oil smuggling operations and, for the first time under NSPM-2, an Iranian “shadow banking” network. These networks are often comprised of front companies, foreign exchange dealers, and trade-based money laundering systems that facilitate the movement of funds around formal banking controls.
Updated Red Flags and Reporting Guidelines
FinCEN’s updated advisory provides financial institutions with enhanced typologies, red flag indicators, and real-world case examples to aid in detecting suspicious activity. Specific areas of concern include:
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Use of front companies or third-country intermediaries to mask Iranian ownership or origin of funds
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Frequent changes in ownership or registration of vessels linked to Iranian oil exports
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Complex, opaque financial transactions routed through jurisdictions known for weak AML/CFT controls
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Trade documentation inconsistencies or transactions inconsistent with customer profiles
Financial institutions are expected to closely monitor for these patterns and to file Suspicious Activity Reports (SARs) where appropriate under the Bank Secrecy Act (BSA).
Strategic Alignment with National Priorities
The advisory aligns with several key U.S. Treasury initiatives, including FinCEN’s National AML/CFT Priorities, as well as findings from the 2024 National Terrorist Financing Risk Assessment and the 2024 National Proliferation Financing Risk Assessment. These reports emphasize the continuing threat posed by state actors and non-state proxies engaged in terrorist financing and sanctions evasion schemes.
According to FinCEN, the advisory draws on a combination of BSA reporting data, intelligence from law enforcement agencies, and publicly available information to provide the most current insights into Iran’s evasion tactics.
Financial Sector on the Front Line
The latest advisory underscores the vital role of banks and other financial intermediaries in safeguarding the integrity of the global financial system. By equipping institutions with actionable intelligence and updated risk indicators, FinCEN aims to fortify the financial sector’s ability to block Iranian efforts to circumvent sanctions and funnel resources into programs that threaten regional and global security.
Officials stress that this effort is not just about compliance, but about protecting national interests and reinforcing international norms. As Iran continues to adapt its evasion strategies, U.S. regulators are responding with tools that reflect both the complexity of modern financial crime and the urgency of counterproliferation objectives.
Read the advisory below
By FCCT Editorial Team
