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(c) * * * For additional definitions gain or loss, other than any exchange DEPARTMENT OF THE TREASURY that apply for purposes of their gain or loss with respect to accrued but respective sections, see §§ 1.385–3(g) unpaid qualified stated interest that is Financial Crimes Enforcement Network and 1.385–4T(e). not taken into account under paragraph * * * * * (d)(1)(i) of this section at the time of the 31 CFR Part 1010 (4) * * * deemed exchange. * * * RIN 1506–AB42 (iv) * * * For purposes of the section (iii) Section 108(e)(8). For purposes of 385 regulations, a corporation is a section 108(e)(8), if the issuer of a debt Imposition of Fifth Special Measure member of an expanded group if it is Against the Islamic Republic of Iran as instrument is treated as having retired described in this paragraph (c)(4)(iv) a Jurisdiction of Primary Money all or a portion of the debt instrument immediately before the relevant time for Laundering Concern determining membership (for example, in exchange for stock under paragraph immediately before the issuance of a (d)(1)(i) of this section, the stock is AGENCY: Financial Crimes Enforcement debt instrument (as defined in § 1.385– treated as having a fair market value Network, (‘‘FinCEN’’), Treasury. 3(g)(4)) or immediately before a equal to the adjusted issue price of that ACTION: Final rule. distribution or acquisition that may be portion of the debt instrument as of the SUMMARY: subject to § 1.385–3(b)(2) or (3)). date of the deemed exchange. FinCEN is issuing this final rule, pursuant to Section 311 of the USA (iv) * * * * * * * * PATRIOT Act, to prohibit the opening (d) * * * (A) A debt instrument that is issued or maintaining of correspondent (1) * * * by a disregarded entity is deemed to be accounts in the United States for, or on (i) In general. If a debt instrument (as exchanged for stock of the regarded behalf of, Iranian financial institutions, defined in § 1.385–3(g)(4)) is deemed to owner under § 1.385–3T(d)(4); and the use of foreign financial be exchanged under the section 385 institutions’ correspondent accounts at regulations, in whole or in part, for * * * * * covered U.S. financial institutions to stock, the holder is treated for all § 1.385–2 [Removed] process transactions involving Iranian Federal tax purposes as having realized financial institutions. an amount equal to the holder’s ■ Par. 3. Section 1.385–2 is removed. adjusted basis in that portion of the debt DATES: This final rule is effective ■ instrument as of the date of the deemed Par. 4. Section 1.385–3 is amended by November 14, 2019. exchange (and as having basis in the revising paragraph (g)(4) to read as FOR FURTHER INFORMATION CONTACT: The stock deemed to be received equal to follows: FinCEN Resource Center, (800) 949– 2732, refer to FDMS Docket No. that amount), and, except as provided in § 1.385–3 Transactions in which debt paragraph (d)(1)(iv)(B) of this section, proceeds are distributed or that have a FinCEN–2019–0002. the issuer is treated for all Federal tax similar effect. SUPPLEMENTARY INFORMATION: purposes as having retired that portion * * * * * of the debt instrument for an amount I. Statutory Provisions equal to its adjusted issue price as of the (g) * * * On October 26, 2001, the President date of the deemed exchange. In (4) Debt instrument. The term debt signed into law the Uniting and addition, neither party accounts for any instrument means an interest that Strengthening America by Providing accrued but unpaid qualified stated would, but for the application of this Appropriate Tools Required to Intercept interest on the debt instrument or any section, be treated as a debt instrument and Obstruct Terrorism Act of 2001, foreign exchange gain or loss with as defined in section 1275(a) and Public Law 107–56 (USA PATRIOT respect to that accrued but unpaid § 1.1275–1(d). Act). Title III of the USA PATRIOT Act qualified stated interest (if any) as of the amended the anti-money laundering deemed exchange. This paragraph * * * * * (AML) provisions of the Bank Secrecy (d)(1)(i) does not affect any rules in Title ■ Par. 5. Section 1.1275–1 is amended Act (BSA), codified at 12 U.S.C. 1829b, 26 of the United States Code that by revising the last sentence of 12 U.S.C. 1951–1959, and 31 U.S.C. otherwise apply to the debt instrument paragraph (d) to read as follows: 5311–5314, 5316–5332, to promote the prior to the date of the deemed prevention, detection, and prosecution exchange (for example, this paragraph § 1.1275–1 Definitions. of international money laundering and (d)(1)(i) does not affect the issuer’s * * * * * the financing of terrorism. Regulations deduction of accrued but unpaid implementing the BSA appear at 31 CFR (d) * * * See § 1.385–3 for rules that qualified stated interest otherwise chapter X. The authority of the deductible prior to the date of the treat certain instruments that otherwise Secretary of the Treasury (Secretary) to deemed exchange). Moreover, the stock would be treated as indebtedness as administer the BSA and its issued in the deemed exchange is not stock for Federal tax purposes. implementing regulations has been treated as a payment of accrued but * * * * * delegated to FinCEN. unpaid original issue discount or Section 311 of the USA PATRIOT Act Sunita Lough, qualified stated interest on the debt (Section 311), codified at 31 U.S.C. instrument for Federal tax purposes. Deputy Commissioner for Services and 5318A, grants FinCEN the authority, (ii) * * * Notwithstanding the first Enforcement. upon finding that reasonable grounds sentence of paragraph (d)(1)(i) of this Approved: September 30, 2019. exist for concluding that a jurisdiction section, the rules of § 1.988–2(b)(13) David J. Kautter, outside of the United States, one or apply to require the holder and the Assistant Secretary of the Treasury (Tax more financial institutions operating issuer of a debt instrument that is Policy). outside of the United States, one or deemed to be exchanged under the [FR Doc. 2019–23817 Filed 10–31–19; 4:15 pm] more classes of transactions within or section 385 regulations, in whole or in involving a jurisdiction outside of the BILLING CODE 4830–01–P part, for stock to recognize any exchange United States, or one or more types of

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accounts is of primary money • whether the United States has a regulation.’’ 5 The APA exempts laundering concern, to require domestic mutual legal assistance treaty with that regulations involving ‘‘a military or financial institutions and domestic jurisdiction, and the experience of U.S. foreign affairs function of the United financial agencies to take certain law enforcement officials and regulatory States’’ from its requirements for notice ‘‘special measures.’’ The five special officials in obtaining information about of proposed rulemaking, the measures enumerated in Section 311 are transactions originating in or routed opportunity for public participation, preventative safeguards that defend the through or to such jurisdiction; and and a 30 day delay in effective date.6 As U.S. financial system from money • the extent to which that jurisdiction set forth in more detail below, this rule laundering and terrorist financing. is characterized by high levels of official imposes a special measure with regard FinCEN may impose one or more of or institutional corruption. to the jurisdiction of the Islamic these special measures in order to Upon finding that a jurisdiction is of Republic of Iran (Iran). Iran is the protect the U.S. financial system from primary money laundering concern, the subject of a national emergency these threats. Special measures one Secretary may require covered financial declaration identifying it as an unusual through four, codified at 31 U.S.C. institutions to take one or more special and extraordinary threat to the national 5318A(b)(1)–(b)(4), impose additional measures. In selecting which special security, foreign policy, and economy of recordkeeping, information collection, measure(s) to take, the Secretary ‘‘shall the United States and is the subject of and reporting requirements on covered consult with the Chairman of the Board multiple Executive Orders identifying it U.S. financial institutions. The fifth of Governors of the Federal Reserve as a supporter of terrorism as well as special measure, codified at 31 U.S.C. System, any other appropriate federal other malign activities.7 The special 5318A(b)(5), allows FinCEN to prohibit, banking agency (as defined in Section 3 measure described herein relates to or impose conditions on, the opening or of the Federal Deposit Insurance Act), important foreign policy goals of the maintaining in the U.S. of the Secretary of State, the Securities and U.S. Government, namely to deny the correspondent or payable-through Exchange Commission, the Commodity Iranian regime resources to support accounts for, or on behalf of, a foreign Futures Trading Commission, the terrorism, develop nuclear weapons bank, if such correspondent account or National Credit Union Administration and/or the proliferation of weapons of payable-through account involves the Board, and at the sole discretion of the mass destruction, advance its ballistic foreign jurisdiction, financial Secretary, such other agencies and missile program, oppress the Iranian institution, class of transaction, or type interested parties as the Secretary may people, and fuel conflicts in Syria, of account found to be of primary find appropriate.’’ 2 In imposing the fifth Afghanistan, Yemen and elsewhere. money laundering concern. special measure, the Secretary must do Rapid imposition of the fifth special Before making a finding that so ‘‘in consultation with the Secretary of measure pursuant to Section 311, reasonable grounds exist for concluding State, the Attorney General, and the without any procedural delays caused that a jurisdiction is of primary money Chairman of the Board of Governors of by soliciting public comments laundering concern, the Secretary is the Federal Reserve System.’’ 3 concerning U.S. foreign policy, will required to consult with both the In addition, in selecting which special further protect the U.S. financial system Secretary of State and the Attorney measure(s) to take, the Secretary shall from Iran by ensuring that U.S. financial General.1 The Secretary must also consider the following factors: institutions are not exposed to Iran’s • consider such information as the Whether similar action has been or ongoing illicit finance activities, Secretary determines to be relevant, is being taken by other nations or including its support for international including the following potentially multilateral groups; terrorism. Because this rule involves a • relevant factors: whether the imposition of any foreign affairs function, it is exempt • Evidence that organized criminal particular special measure would create from the provisions of the APA groups, international terrorists, or a significant competitive disadvantage, requiring notice of proposed entities involved in the proliferation of including any undue cost or burden rulemaking, the opportunity for public weapons of mass destruction (‘‘WMD’’) associated with compliance, for participation, and a 30 day delay in or missiles have transacted business in financial institutions organized or effective date. Because no notice of licensed in the United States; proposed rulemaking is required for this that jurisdiction; • • the extent to which that jurisdiction the extent to which the action or the rule, the Regulatory Flexibility Act or financial institutions operating in timing of the action would have a (RFA) (5 U.S.C. 601–612) does not that jurisdiction offer bank secrecy or significant adverse systemic impact on apply. To ensure orderly special regulatory advantages to the international payment, clearance, implementation, FinCEN will delay its nonresidents or nondomiciliaries of that and settlement system, or on legitimate effective date until November 14, 2019. business activities involving the jurisdiction; III. Summary of the Final Rule • particular jurisdiction, institution, class the substance and quality of This final rule sets forth (i) FinCEN’s administration of the bank supervisory of transactions, or type of account; and • the effect of the action on U.S. finding that Iran is a jurisdiction of and counter-money laundering laws of national security and foreign policy.4 primary money laundering concern that jurisdiction; • pursuant to Section 311, and (ii) the relationship between the II. Public Participation FinCEN’s imposition of a prohibition volume of financial transactions FinCEN’s decision to take this action under the fifth special measure on the occurring in that jurisdiction and the as a final rule is consistent with the opening or maintaining of size of the economy of the jurisdiction; • Administrative Procedure Act (APA) the extent to which that jurisdiction and in the interest of U.S. foreign 5 31 U.S.C. 5318A(a)(2)(C). is characterized as an offshore banking policy. Section 311’s fifth special 6 5 U.S.C. 553(a)(1). or secrecy haven by credible measure ‘‘may be imposed only by 7 See, e.g., E.O. 12957, ‘‘Prohibiting Certain international organizations or Transactions With Respect to the Development of multilateral expert groups; Iranian Petroleum Resources’’ (1995); E.O. 13848, 2 31 U.S.C. 5318A(a)(4)(A). ‘‘Reimposing Certain Sanctions With Respect to 3 31 U.S.C. 5318A(b)(5). Iran’’ (2018); E.O. 13876, ‘‘Imposing Sanctions With 1 31 U.S.C. 5318A(c)(1). 4 31 U.S.C. 5318A(a)(4)(B). Respect to Iran’’ (2019).

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correspondent accounts in the United that Iran is a jurisdiction of primary In September 2019, Treasury States for, or on behalf of, Iranian money laundering concern. While designated the CBI and NDF under its financial institutions, and the use of FinCEN has considered all factors set counterterrorism authority, Executive foreign financial institutions’ forth in Section 5318A(c)(2)(A), a Order (E.O.) 13224, as amended by E.O. correspondent accounts at covered U.S. discussion of those factors most relevant 13886. The Iranian government financial institutions to process to this finding follows. established the NDF to serve the welfare of the Iranian people by allocating transactions involving Iranian financial Iran’s Abuse of the International revenues from oil and gas sales to institutions. Financial System economic investments, but has instead IV. Treasury Actions Involving Iran Iran has developed covert methods for used the NDF as a slush fund for the The U.S. Department of the Treasury accessing the international financial IRGC–QF, for years disbursing hundreds (Treasury) has taken numerous actions system and pursuing its malign of millions of USD in cash to the IRGC– to publicly highlight and counter Iran’s activities, including misusing banks and QF. In coordination with the CBI, the malign activities, including exchange houses, operating NDF provided the IRGC–QF with half a implementation of a multitude of procurement networks that utilize front billion USD in 2017 and hundreds of sanctions programs and issuance of or shell companies, exploiting millions of USD in 2018. several advisories. On November 5, commercial shipping, and masking In November 2018, Treasury 2018, the United States fully re-imposed illicit transactions using senior officials, designated nine persons—including two the sanctions on Iran that had been including those at the Central Bank of CBI officials—involved in an lifted or waived under the Joint Iran (CBI). Iran has also used precious international network through which Comprehensive Plan of Action metals to evade sanctions and gain Iran provided millions of barrels of oil (JCPOA).8 However, Iran has continued access to the financial system, and may to Syria via Russian companies, in to evade these sanctions, fund terror and in the future seek to exploit virtual exchange for Syria’s facilitation of the destabilizing activities, and advance its currencies. These efforts often serve to movement of hundreds of millions of ballistic missile development. As a fund the Islamic Revolutionary Guard USD to the IRGC–QF, for onward result, Treasury and the U.S. Corps (IRGC), its Islamic Revolutionary transfer to Hizballah and Hamas.14 The Department of State (State Department) Guard Corps Qods Force (IRGC–QF), designations highlighted, as the have continued imposing sanctions on Lebanese Hizballah (Hizballah), Hamas, Secretary stated, that ‘‘[CBI] officials 12 Iranian persons, as well as persons in the Taliban and other terrorist groups. continue to exploit the international third countries who have continued to Factor 1: Evidence That Organized financial system, and in this case even transact with Iran, or who have acted for Criminal Groups, International used a company whose name suggests a or on behalf of designated Iranian Terrorists, or Entities Involved in the trade in humanitarian goods as a tool to persons. Proliferation of Weapons of Mass facilitate financial transfers supporting On November 28, 2011, FinCEN Destruction or Missiles Have Transacted this oil scheme.’’ 15 issued an NPRM proposing the Business in That Jurisdiction 13 The scheme was centered on Syrian implementation of the fifth special national Mohammad Amer Alchwiki a. Role of CBI Officials in Facilitating measure against Iran as a jurisdiction of and his Russia-based company, Global Terrorist Financing primary money laundering concern Vision Group. Global Vision worked pursuant to Section 311.910 Senior CBI officials have played a with Russian state-owned company critical role in enabling illicit networks, Promsyrioimport to facilitate shipments V. Finding Iran To Be a Jurisdiction of using their official capacity to procure of Iranian oil to Syria. To assist the Primary Money Laundering Concern hard currency and conduct transactions Bashar Al-Assad regime in paying Based on information available to for the benefit of the IRGC–QF and its Russia for this service, Iran sent funds FinCEN, including both public and non- terrorist proxy groups. The CBI has been to Russia through Alchwiki and Global public reporting,11 and after considering complicit in these activities, including Vision. To conceal its involvement, the the factors listed in the 311 statute and providing billions of U.S. dollars (USD) CBI made payments to Mir Business performing the requisite interagency and euros to the IRGC–QF, Hizballah Bank 16 using Iran-based Tadbir Kish consultations with the Secretary of State and other terrorist organizations. Since Medical and Pharmaceutical Company. and Attorney General as required by 31 at least 2016, the CBI has provided the Following the CBI’s transfer of funds U.S.C. 5318A(c)(1), FinCEN finds that IRGC–QF with the vast majority of its from Tadbir Kish to Global Vision, reasonable grounds exist for concluding foreign currency. During 2018 and early Global Vision transferred payments to 2019, the CBI transferred several billion Promsyrioimport. 8 The JCPOA was finalized on July 14, 2015, USD and euros from the Iranian CBI senior officials were crucial to the between the U.S., China, France, Germany, Russia, National Development Fund (NDF) to scheme’s success. CBI International the United Kingdom, the European Union, and Iran the IRGC–QF. Department Director Rasul Sajjad and to ensure that Iran’s nuclear program would be exclusively peaceful. The U.S. announced it would CBI Vice Governor for International 12 cease its participation in the JCPOA on May 8, Advisory on the Iranian Regime’s Illicit and Affairs Hossein Yaghoobi both assisted 2018. Malign Activities and Attempts to Exploit the Financial System, FinCEN, October 11, 2018. in facilitating Alchwiki’s transfers. First 9 See 76 FR 72878 (November 28, 2011), 13 31 U.S.C. 5318A(c)(2) states that in making a Deputy Director of Promsyrioimport Imposition of Special Measure Against the Islamic finding that a jurisdiction is of primary money Republic of Iran as a Jurisdiction of Primary Money Andrey Dogaev worked closely to laundering concern, the Secretary shall consider in Laundering Concern. addition to such information as the Secretary 10 14 Treasury Designates Illicit Russia-Iran Oil FinCEN intends to issue a separate document determines to be relevant, the potentially relevant withdrawing the 2011 NPRM. factors enumerated in section 5318A(c)(2)(A). Due Network Supporting the Assad Regime, Hizballah, 11 FinCEN may submit classified information to Iran’s role as a state sponsor of terrorism and the and Hamas, November 20, 2018, https:// used in support of a Section 311 finding and special extraterritorial nature of its malign conduct, home.treasury.gov/news/press-release/sm553. measure(s) determination to a reviewing court ex FinCEN determined it was relevant to consider 15 Id. parte and in camera. See Section 376 of the terrorism and weapons proliferation transactions 16 Treasury designated Mir Business Bank on Intelligence Authorization Act for fiscal year 2004, with the government of Iran in addition to such November 5, 2018. It is a wholly-owned subsidiary Public Law 108–177 (amending U.S.C. 5318A by transactions in the jurisdiction of Iran, as discussed of Iran’s Bank Melli, which was designated for adding new paragraph (f)). in this section. acting as a conduit for payments to the IRGC–QF.

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coordinate the sale of Iranian crude oil of business with Iran that is in violation foreign policy. The IRGC is integrally to Syria with Yaghoobi, who has a of U.S. sanctions targeting Iran. These woven into the Iranian economy, history of working with Hizballah in third-country exchange houses or operating institutions and front Lebanon and has coordinated financial trading companies frequently lack their companies worldwide, so that the transfers to Hizballah with IRGC–QF own U.S. Dollar accounts and instead profits from seemingly legitimate and Hizballah personnel. Using this rely on the correspondent accounts of business deals may actually fund scheme, the network exported millions their regional banks to access the U.S. Iranian terrorism.22 of barrels of Iranian oil into Syria, and financial system.20 The IRGC–QF’s misuse of the funneled millions of USD between the Additionally, according to international financial system to enable CBI and Alchwiki’s Mir Bank account in information provided to FinCEN, in its nefarious activities include Russia.17 2017, the CBI coordinated with numerous examples that have occurred Separately, in May 2018, in Hizballah to arrange a single EUR funds in the United States. In May 2018, the connection with a scheme to move transfer to a Turkish bank worth over United States and the UAE took joint millions of USD for the IRGC–QF, $50 million USD. action to disrupt an extensive currency Treasury designated the then-governor b. IRGC’s Abuse of the International exchange network that was procuring of the CBI, Valiollah Seif, the assistant Financial System and transferring millions in USD- director of CBI’s international denominated bulk cash to the IRGC–QF department, Ali Tarzali, Iraq-based al- Iran is the world’s leading state to fund its malign activities and regional Bilad Islamic Bank, Aras Habib, Al- sponsor of terrorism, providing material proxy groups. Treasury designated nine Bilad’s Chairman and Chief Executive, support to numerous Treasury- Iranian individuals and entities, and and Muhammad Qasir, a Hizballah designated terrorist groups, including noted that key CBI officials supported official. Treasury designated them as Hizballah, Hamas, and the Taliban, the transfer of funds.23 Specially Designated Global Terrorists often via its IRGC–QF. The IRGC–QF is On November 5, 2018, in connection (SDGTs) pursuant to E.O. 13224. an elite unit within the IRGC, the with the re-imposition of U.S. nuclear- Treasury stated that Seif had covertly military and internal security force related sanctions that had been lifted or funneled millions of USD on behalf of created after the Islamic Revolution. waived under the JCPOA, Treasury the IRGC–QF through al-Bilad Bank to IRGC–QF personnel advise and support sanctioned over 700 individuals, support Hizballah’s radical agenda, an pro-Iranian regime factions worldwide, entities, aircraft, and vessels in its action that undermined the credibility including several which, like Hizballah, largest ever single-day action targeting of his commitment to protecting CBI’s Hamas, and the Taliban, the United Iran. The action included the integrity.18 States has similarly designated as designations of more than 70 Iran-linked Also in May 2018, Treasury, in a joint terrorists. financial institutions and their foreign Treasury has designated the IRGC action with the United Arab Emirates and domestic subsidiaries. Bank Melli pursuant to several E.O.s: E.O. 13382 in (UAE), designated nine Iranian was among those banks designated connection with its support to Iran’s individuals and entities involved in an pursuant to E.O. 13224 for assisting in, ballistic missile and nuclear programs; extensive currency exchange network sponsoring, or providing financial, E.O. 13553 for serious human rights that was procuring and transferring material, or technological support for, or abuses by the Iranian government; E.O. millions in USD-denominated bulk cash other services to or in support of, the 13606 in connection with grave human to the IRGC–QF to fund its malign IRGC–QF. As of 2018, the equivalent of rights abuses; E.O. 13224 for global activities and regional proxy groups. billions of USD in funds had transited terrorism, and consistent with the The CBI was complicit in the IRGC– IRGC–QF controlled accounts at Bank Countering America’s Adversaries QF’s scheme, actively supported the Melli. Moreover, Bank Melli had Through Sanctions Act, for its support network’s currency conversion, and enabled the IRGC and its affiliates to of the IRGC–QF. Treasury has enabled it to access funds that it held in move funds into and out of Iran, while 19 designated the IRGC–QF pursuant to its foreign bank accounts. the IRGC–QF, using Bank Melli’s E.O. 13224 for providing material The CBI and senior CBI officials have presence in Iraq, had used Bank Melli a history of using exchange houses to support to terrorist groups, including to pay Iraqi Shia militant groups.24 conceal the origin of funds and procure the Taliban, E.O. 13572 for support to On November 20, 2018, Treasury foreign currency for the IRGC–QF. the Syrian General Intelligence designated nine individuals and entities During periods of heightened sanctions Directorate, the Assad regime’s civilian in an international network through pressures, Iran has relied heavily on intelligence service, and E.O. 13553 for which the Iranian regime worked with third-country exchange houses and serious human rights abuses by the Russian companies to provide millions trading companies to move funds to Iranian government. of barrels of oil to the Assad regime in In April 2019, the State Department evade sanctions. Iran uses them to act as Syria. The Assad regime, in turn, designated the IRGC, including the money transmitters in processing funds facilitated the movement of hundreds of transfers through the United States to IRGC–QF, as a Foreign Terrorist Organization (FTO).21 It was the first third-country beneficiaries, in support 22 Intent to Designate the Islamic Revolutionary time that the United States designated a Guard Corps as a Foreign Terrorist Organization, 17 Treasury Designates Illicit Russia-Iran Oil part of another government as an FTO— April 8, 2019, https://www.state.gov/intent-to- Network Supporting the Assad Regime, Hizballah, an action that highlighted Iran’s use of designate-the-islamic-revolutionary-guard-corps-as- and Hamas, November 20, 2018, https:// terrorism as a central tool of its a-foreign-terrorist-organization/. home.treasury.gov/news/press-release/sm553. 23 United States and United Arab Emirates 18 Treasury Targets Iran’s Central Bank Governor statecraft and an essential element of its Disrupt Large Scale Currency Exchange Network and an Iraqi Bank Moving Millions of Dollars for Transferring Millions of Dollars to the IRGC–QF, IRGC-Qods Force, May 15, 2018, https:// 20 Advisory on the Iranian Regime’s Illicit and May 10, 2018, https://home.treasury.gov/news/ home.treasury.gov/news/press-release/sm0385. Malign Activities and Attempts to Exploit the press-releases/sm0383. 19 United States and United Arab Emirates Financial System, FinCEN, October 11, 2018. 24 U.S. Government Fully Re-Imposes Sanctions Disrupt Large Scale Currency Exchange Network 21 Designation of the Islamic Republic on the Iranian Regime As Part of Unprecedented Transferring Millions of Dollars to the IRGC–QF, Revolutionary Guard Corps, April 8, 2019, https:// U.S. Economic Pressure Campaign, November 5, May 10, 2018, https://home.treasury.gov/news/ www.state.gov/designation-of-the-islamic- 2018, https://home.treasury.gov/news/press- press-releases/sm0383. revolutionary-guard-corp/. releases/sm541.

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millions of USD to the IRGC–QF for c. Iranian Support to Terrorists to E.O. 13224, Treasury identified onward transfer to Hamas and Hizballah several vessels as property in which Hizballah.25 blocked persons have an interest, and Despite its attempts to portray itself as pursuant to E.O. 13224, designated 16 In March 2019, Treasury took action a legitimate political entity, Hizballah is against 25 individuals and entities, entities and 10 individuals, including first and foremost a terrorist senior IRGC–QF official and former including a network of Iran, UAE, and organization, responsible for the most Turkey-based front companies that Iranian Minister of Petroleum Rostam American deaths by terrorism prior to Qasemi, who oversees the network. transferred over a billion USD and euros the September 11, 2001 terrorist attacks. Treasury Under Secretary for Terrorism to the IRGC, IRGC–QF and Iran’s A Lebanon-based Shia militant group and Financial Intelligence Sigal Ministry of Defense and Armed Forces formed in Lebanon in 1982, Hizballah Mandelker noted that the designations Logistics (MODAFL). The action was responsible for the suicide truck demonstrated Iran’s economic reliance included a designation of Ansar Bank, bombings of the U.S. Embassy in Beirut, on the terrorist groups IRGC–QF and an Iranian bank controlled by the IRGC, Lebanon in April 1983, the U.S. Marine Hizballah as financial lifelines.31 and its currency exchange arm, Ansar barracks in Beirut in October 1983, the In July 2019, Treasury designated key Exchange, for providing banking U.S. Embassy annex in Beirut in 1984, Hizballah political and security 26 services to the IRGC–QF. the hijacking of TWA 847 in 1985, and figures—two members of Lebanon’s In June 2019, Treasury designated an the Khobar Towers attack in Saudi Parliament and one Hizballah security Iraq-based IRGC–QF financial conduit, Arabia in 1996.29 Iran provides upwards official—who were leveraging their South Wealth Resources Company of $700 million USD annually toward positions to facilitate Hizballah’s agenda (SWRC), which trafficked hundreds of Hizballah’s estimated $1 billion USD and do Iran’s bidding. Noting that one millions of U.S. dollars’ worth of budget. of the Parliament members, Amin weapons to IRGC–QF-backed militias. Hizballah is listed in the annex to Sherri, has been photographed with SWRC and its two Iraqi associates E.O. 12947 from January 1995, IRGC–QF Commander Soleimani, covertly facilitated the IRGC–QF’s ‘‘Prohibiting Transactions With Treasury stated that Hizballah uses its access to the Iraqi financial system to Terrorists Who Threaten to Disrupt The operatives in Lebanon’s Parliament to evade sanctions, while also generating Middle East Peace Process.’’ The State bolster Iran’s malign activities.32 Also in profits in the form of commission Department designated Hizballah in July 2019, Treasury designated Salman October 1997 as an FTO and in October payments for a Treasury-designated Raouf Salman pursuant to E.O. 13224. 2001 as an SDGT pursuant to E.O. advisor to the IRGC–QF’s commander, Salman, a senior member of an 13224. Treasury issued additional Qasem Soleimani. Soleimani has run Hizballah organization dedicated to sanctions against Hizballah in August weapons smuggling networks, carrying out attacks outside Lebanon, 2012 pursuant to E.O. 13582 (which participated in bombings of Western coordinated the devastating attack in targets the government of Syria and its embassies, and attempted assassinations 1994 against the AMIA Jewish supporters) specifically in connection in the region.27 community center in Buenos Aires, with Hizballah’s efforts to coordinate Argentina, and has been directing Iran’s activities include acts of with the IRGC–QF in support of the terrorist operations in the Western attempted violence in the United States. Assad regime.30 At the request of the Hemisphere ever since. The designation In October 2011, pursuant to E.O. IRGC–QF, Hizballah has deployed of Salman marked over 50 Hizballah- 13224, Treasury designated four senior thousands of fighters into Syria in linked designations by Treasury since IRGC–QF officers and Mansoor support of the Assad regime. 2017.33 Arbabsiar, a naturalized U.S. citizen, for As recently as September 2019, Hizballah is a global terrorist plotting to assassinate the Saudi Treasury took action against a large organization, active in Syria, Iraq, and Arabian Ambassador to the United shipping network directed by and Yemen, and Hizballah plots have been States. In an example that laid bare the financially supporting both the IRGC– thwarted in South America, Asia, risks financial institutions take when QF and Hizballah. In the past year, the Europe, and the United States. In June transacting with Iran, payment for the IRGC–QF has moved Iranian oil worth 2017 in New York, Ali Kourani and assassination reached Arbabsiar from at least hundreds of millions of USD Samer El Debek were arrested and Tehran via two wire transfers totaling through the network for the benefit of charged for alleged activities on behalf approximately $100,000 USD, sent from the Assad regime and other illicit actors. of Hizballah. Kourani conducted a non-Iranian foreign bank to a U.S. The sprawling network uses dozens of surveillance of potential U.S. targets, bank.28 ship managers, vessels, and other including military and law enforcement facilitators and intermediaries to enable facilities in New York City, and was 25 Treasury Designates Illicit Russia-Iran Oil the IRGC–QF to obfuscate its subsequently convicted on all eight Network Supporting the Assad Regime, Hizballah, involvement; to broker associated counts, which included terrorism, and Hamas, November 20, 2018, https:// contracts, it also relies heavily on front sanctions, and immigration-related home.treasury.gov/news/press-release/sm553. companies and Hizballah officials offenses. El Debek allegedly conducted 26 United States Disrupts Large Scale Front Company Network Transferring Hundreds of (including Muhammad Qasir, missions in Panama to locate U.S. and Millions of Dollars and Euros to the IRGC and Iran’s designated by Treasury in November Ministry of Defense, March 26, 2019, https:// 2018 in connection with the illicit 31 Treasury Targets Wide Range of Terrorists and home.treasury.gov/news/press-release/sm639. Russia-Iran oil network supporting Their Supporters Using Enhanced Counterterrorism 27 Treasury Targets IRGC-Qods Force Financial Sanctions Authorities, September 10, 2019, https:// Conduit in Iraq for Trafficking Weapons Worth Assad, Hizballah, and Hamas). Pursuant home.treasury.gov/news/press-release/sm772. Hundreds of Millions of Dollars, June 12, 2019, 32 Treasury Targets Iranian-Backed Hizballah https://home.treasury.gov/news/press-release/ 29 Hizballah, Counterterrorism Guide, Office of Officials for Exploiting Lebanon’s Political and sm706. the Director of National Intelligence, https:// Financial System, July 9, 2019, https:// 28 Treasury Sanctions Five Individuals Tied to www.dni.gov/nctc/groups/hizballah.html. home.treasury.gov/news/press-release/sm724. Iranian Plot to Assassinate the Saudi Arabian 30 Treasury Targets Hizballah for Supporting the 33 Treasury Targets Senior Hizballah Operative Ambassador to the United States, October 11, 2011, Assad Regime, August 10, 2012, https:// for Perpetrating and Plotting Terrorist Attacks in https://www.treasury.gov/press-center/press- www.treasury.gov/press-center/press-releases/ the Western Hemisphere, July 19, 2019, https:// releases/pages/tg1320.aspx. Pages/tg1676.aspx. home.treasury.gov/news/press-release/sm737.

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Israeli Embassies and assess the Hamas Brigades received funds. The IRGC–QF vulnerabilities of the Panama Canal and transferred over $200 million USD to 34 35 Iran also has a history of supporting the ships that transit it. Hamas. Hamas was established in 1987 the Izz-Al-Din Al-Qassam Brigades in According to information available to 40 at the onset of the first Palestinian the past four years. FinCEN, in early 2015, the IRGC–QF In September 2019, in an action intifada. Prior to 2005, Hamas’ provided approximately $20 million targeting a wide range of terrorists and numerous attacks on Israel included USD to Hizballah, over half of which their supporters using enhanced U.S. citizens as casualties. The State was to be used for ballistic missile counterterrorism sanctions authorities, Department designated Hamas as an expenses. In 2017, the CBI coordinated Treasury designated two Iran-linked FTO in October 1997, and Treasury with Hizballah to arrange a single EUR Hamas officials. Pursuant to the designated it as an SDGT pursuant to funds transfer to a Turkish bank worth amended counterterrorism E.O., E.O. E.O. 13224 in October 2001.38 over $50 million USD. 13224, Treasury designated Turkey- More recently, and as noted in the Iran provides Hamas with funds, based Redin Exchange and its Deputy previous section, in November 2018, weapons, and training. During periods Head, Ismael Tash. Since at least 2017, Treasury designated nine persons of substantial Iran-Hamas collaboration, Tash has had contact with a money involved in an international network Iran’s support to Hamas has been transfer channel managed by through which Iran provided millions of estimated to be as high as $300 million Mohammad Sarur that transferred barrels of oil to Syria via Russian USD per year, but at a baseline amount, IRGC–QF money to Hamas; as of companies, in exchange for Syria’s is widely assessed to be in the tens of January 2019, Tash was a key player in facilitation of the movement of millions per year. The Iran-Hamas many Iran-Hamas financial transfers. hundreds of millions of USD banknotes relationship was forged in the 1990s as Treasury also designated Zaher Jabarin, to the IRGC–QF for onward transfer to part of an attempt to disrupt the Israeli- the Turkey-based head of Hamas’ Hizballah and Hamas. Treasury noted at Palestinian peace process, but in 2012, Finance Office. Jabarin has overseen the the time of the designations that their divergent positions on Syria transfer of hundreds of thousands of Mohammad Amer Alchwiki, a central caused a rift. Subsequently, Iran sought USD in the West Bank to finance player in this scheme, was acting as a to rebuild the relationship, and in Hamas’ terrorist activities; he has also critical conduit for the transfer of the October 2017, Hamas leaders restored served as a primary interlocutor USD banknotes. Alchwiki worked with the group’s relations with Iran during a between Hamas and the IRGC–QF.41 visit to Tehran.39 the Central Bank of Syria to coordinate Taliban transfers to Hizballah official According to information available to Muhammad Qasir, in charge of the FinCEN, in March 2015, Hamas Iran seeks influence in Afghanistan in Hizballah unit responsible for weapons, expressed gratitude for Iran’s previous a number of ways, including by offering technology, and other support transfers. financial support, and requested that economic assistance and engaging the In its press release, Treasury included a Iran resume providing aid. In January central government—but also by arming photo of a letter dated April 17, 2018, 2016, Hamas officials in Gaza were Taliban fighters and supporting pro- from Alchwiki and Qasir to a CBI awaiting monetary payments from the Iranian groups. In October 2010, then- official, confirming receipt of $63 IRGC–QF. The Hamas officials expected President Hamid Karzai admitted that million USD.36 the Iranian government to transfer Iran was providing about $2 million Also as noted previously, in May money to the IRGC–QF in Beirut, who USD annually in cash payments to his 42 2018, in connection with a scheme to would then transfer it onward to them. government. Treasury designated the move millions of USD for the IRGC–QF, Additionally, in 2016, Hamas had Taliban as an SDGT in 2002. Treasury designated a network that received a significant sum of IRGC–QF In October 2018, the seven member funding via financiers in Turkey. nations of the Terrorist Financing included Valiollah Seif, Iran’s then- 43 governor of the CBI, Iraq-based al-Bilad In August 2019, Treasury, in Targeting Center (TFTC), designated Islamic Bank, and Muhammad Qasir, a partnership with the Sultanate of Oman, nine Taliban-associated individuals, Hizballah official. Treasury designated designated financial facilitators who including those facilitating Iranian them as SDGTs pursuant to E.O. 13224 funneled tens of millions of USD support to bolster the Taliban. The after finding that Seif had covertly between the IRGC–QF and Hamas’s Secretary described Iran’s provision of funneled millions of USD on behalf of operational arm, the Izz-Al-Din Al- support to the Taliban as yet another the IRGC–QF through al-Bilad Bank to Qassam Brigades, for terrorist attacks example of its support for terrorism, and support Hizballah’s radical agenda.37 originating from Gaza. The Izz-Al-Din its utter disregard for United Nations Al-Qassam Brigades is a designated FTO Security Council Resolutions (UNSCRs) 34 Bronx Man and Michigan Man Arrested for and SDGT. At the center of the scheme and other international norms. Treasury Terrorist Activities On Behalf Of Hizballah’s Islamic uncovered by Treasury and Oman was noted that the action’s inclusion of Jihad Organization, June 8, 2017, https:// Mohammad Sarur, a Lebanon-based IRGC–QF members supporting Taliban www.justice.gov/usao-sdny/pr/bronx-man-and- financial operative in charge of all elements highlighted the scope of Iran’s michigan-man-arrested-terrorist-activities-behalf- hizballah-s-islamic. financial transfers between the IRGC– regionally destabilizing behavior. 35 Ali Kourani Convicted in Manhattan Federal QF and the Izz-Al-Din Al-Qassam Court for Covert Terrorist Activities on Behalf of Brigades. Sarur was a middle-man 40 Treasury Targets Facilitators Moving Millions Hizballah’s Islamic Jihad Organization, May 17, between the IRGC–QF and Hamas and to HAMAS in Gaza, August 29, 2019, https:// 2019, https://www.justice.gov/opa/pr/ali-kourani- home.treasury.gov/news/press-release/sm761. convicted-manhattan-federal-court-terrorist- worked with Hizballah operatives to 41 Treasury Targets Wide Range of Terrorists and activities-behalf-hizballah-s. ensure the Izz-Al-Din Al-Qassam Their Supporters Using Enhanced Counterterrorism 36 Treasury Designates Illicit Russia-Iran Oil Sanctions Authorities, September 10, 2019, https:// Network Supporting the Assad Regime, Hizballah, 38 Country Reports on Terrorism 2016, U.S. home.treasury.gov/news/press-release/sm772. and Hamas, November 20, 2018, https:// Department of State, Chapter 3: State Sponsors of 42 Iran’s Foreign and Defense Policies, home.treasury.gov/news/press-release/sm553. Terrorism, Iran, Chapter 6, Foreign Terrorist Congressional Research Service, R44017, Version 37 Treasury Targets Iran’s Central Bank Governor Organizations, Hamas. 70, Updated July 23, 2019. and an Iraqi Bank Moving Millions of Dollars for 39 Iran’s Foreign and Defense Policies, 43 The seven TFTC member states are the U.S., IRGC-Qods Force, May 15, 2018, https:// Congressional Research Service, R44017, Version Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and home.treasury.gov/news/press-release/sm0385. 56, Updated October 9, 2018. the UAE.

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Among those designated were linked networks pursuant to E.O. 13382 one of whom was a military attache´ at Mohammad Ebrahim Owhadi, an IRGC– for engaging in covert procurement Iran’s Embassy in Kiev.52 QF officer, and Abdullah Samad activities benefiting multiple Iranian According to information available to Faroqui, the Taliban Deputy Shadow military organizations. One network has FinCEN, Iran’s Shahid Bakeri Industrial Governor for Herat Province. In 2017, used a Hong Kong-based front company Group (SBIG) and Shahid Hemmat Owhadi and Faroqui reached an to evade U.S. and international Industrial Group (SHIG), respectively its agreement for the IRGC–QF’s provision sanctions and procure tens of millions solid and liquid propellant ballistic of military and financial assistance to of dollars’ worth of U.S. technology and missile producers, utilize foreign Faroqui, in exchange for Faroqui’s electronic components on behalf of the entities and networks to procure forces attacking the Afghan government IRGC and Iran’s missile program. The missile-related materials and technology in Herat. Also designated were Esma’il other network has procured NSG- and disguise their involvement in the Razavi, who was in charge of the process. SBIG and SHIG are listed in the controlled aluminum alloy products on training center at the IRGC–QF base in annex to E.O. 13382, which targets behalf of MODAFL subsidiaries.47 Birjand, Iran, which as of 2014, proliferators of WMD and their provided training, intelligence, and Iran’s ongoing pursuit of ballistic supporters. Among the targets in weapons to Taliban forces in Farah, missile technology is well known. In Treasury’s August 2019 designation Ghor, Badhis, and Helmand Provinces, 2018, Iran conducted nine ballistic action was the Iranian firm Ebtekar Afghanistan. In 2008, as the senior missile tests in defiance of UNSCR 2231 Sanat Ilya, which helped procure more IRGC–QF official in Birjand, Razavi’s (2015), including the launch of short than one million dollars’ worth of base supported anti-coalition militants range ballistic missiles in September export-controlled, military-grade in Farah and Herat. Also designated by and October 2018, which were electronic components for Iranian the TFTC were Naim Barich, previously inconsistent with paragraph 3 of Annex military clients—including both SBIG Treasury- and UN-sanctioned, who as of B of UNSCR 2231.48 The U.S. Secretary and SHIG. late 2017 was the Taliban Shadow of State described Iran’s test-firing of a In February 2017, Treasury designated Minister of Foreign Affairs managing medium-range ballistic missile capable entities and individuals that were part Taliban relations with Iran, and Sadr of carrying multiple warheads in of the Abdollah Asgharzadeh network in Ibrahim, the leader of the Taliban’s December 2018 as another violation of connection with their procurement of Military Commission, whom Iranian UNSCR 2231.49 In July 2017, Iran tested dual-use and other goods on behalf of officials agreed to provide with financial a Simorgh space launch vehicle, which organizations involved in Iran’s ballistic and training support in order to build the United States, France, Germany, and missile program. The network the Taliban’s tactical and combat the United Kingdom all assessed to have coordinated procurement through capabilities.44 used technology similar to that of intermediary companies that obfuscated d. Entities Involved in the Proliferation intercontinental ballistic missiles.50 In the true end-user of the goods, and relied on the assistance of trusted of WMD or Missiles January 2017, Iran launched a medium- brokers based in China.53 Under UNSCR 2231 (2015), which range missile able to carry a payload endorsed the JCPOA, the sale, supply, or greater than 500 kilograms in excess of Factor 2: The Extent to Which That transfer to Iran of Nuclear Suppliers 300 kilometers, making it inherently Jurisdiction Is Characterized by High Group (NSG) 45-controlled items capable of delivering a nuclear Levels of Official or Institutional requires advance approval by the UNSC. explosive device. In 2016, Iran unveiled Corruption Despite this, in July 2019, Treasury two short-range ballistic missiles and The endemic corruption of Iran’s identified and acted against a network announced that it was pursuing long- government is well-known. According of front companies and agents involved range precision-guided missiles.51 to information available to FinCEN, in in procuring sensitive materials— In January 2018, two Iranian nationals late 2017, IRGC officials were aware of including NSG-controlled materials— tried to buy Kh-31 missile components corruption and mismanagement at an without UNSC approval for sanctioned in Kiev, Ukraine, which would have IRGC economic development firm. The elements of Iran’s nuclear program. been a violation of the UN arms officials estimated the cost of the Treasury designated seven entities and corruption to be approximately $5.5 five individuals in Iran, China, and embargo on Iran. Ukraine’s security service detained the men while they billion USD—a figure which Belgium, for acting as a procurement represented losses, debts, and funds network for Iran’s Centrifuge were in possession of the missile parts and technical documents on their use. required for a capital injection to Technology Company, which plays a facilitate the firm’s dissolution. Ukraine subsequently deported the men, crucial role in Iran’s uranium Also according to information enrichment through the production of available to FinCEN, as of mid-January centrifuges for Atomic Energy 47 Treasury Targets Procurement Networks 2018, after hearing complaints about Organization of Iran facilities.46 Supporting Iran’s Missile Proliferation Programs, August 28, 2019, https://home.treasury.gov/news/ corruption in the armed forces’ financial Additionally, in August 2019, press-release/sm759. institutions, Iranian Supreme Leader Ali Treasury designated two Iranian regime- 48 Letter from the Permanent Representative of Hoseini Khamenei issued a directive Israel to the UN, November 23, 2018. requiring Iran’s armed forces to sell the 44 Treasury and the Terrorist Financing Targeting 49 Pompeo Condemns Iran Missile Test, Reuters, private companies they owned. Center Partners Sanction Taliban Facilitators and December 1, 2018. their Iranian Supporters, October 23, 2018, https:// 50 Letter from the Permanent Mission of the However, because Khamenei permitted home.treasury.gov/news/press-release/sm532. Federal Republic of Germany to the UN, United 45 The NSG is a multinational export control Kingdom Mission to the UN, and the Mission 52 Busted: Ukraine Catches Iranian Military regime that seeks to prevent nuclear proliferation by Permanente De La France Aupres Des Nations Attache´ Trying to Smuggle KH–31 Parts out of Kiev, controlling the export of materials, equipment, and Unies to H.E. Mr. Ma Zhaoxu, Ambassador, The National Interest, July 2, 2019. technology that can be used to manufacture nuclear Permanent Representative of the People’s Republic 53 Treasury Sanctions Supporters of Iran’s weapons. of China to the UN, November 20, 2018. Ballistic Missile Program and Iran’s Islamic 46 Treasury Sanctions Global Iranian Nuclear 51 Iran’s Missile Proliferation: A Conversation Revolutionary Guard Corps-Qods Force, February Enrichment Network, July 18, 2019, https:// with Special Envoy Brian Hook, Hudson Institute, 23, 2017, https://www.treasury.gov/press-center/ home.treasury.gov/news/press-release/sm736. September 19, 2018. press-releases/Pages/as0004.aspx.

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the armed forces to use revenue from diligence.56 In February 2009, the FATF transfers contain complete originator the sales to then purchase shares in the elevated its call for enhanced due and beneficiary information.59 60 same companies, the directive appeared diligence by calling upon its members Due to these critical deficiencies, in to be a mere symbolic gesture to placate and urging all jurisdictions to apply June 2019, the FATF decided to call public pressure, not a genuine effort to effective counter-measures to protect upon its members and urge all lessen the IRGC’s role in the economy their financial sectors from money jurisdictions to increase supervisory or curb corruption. laundering and terrorist financing risks examination for branches and In October 2018, Treasury designated emanating from Iran. subsidiaries of financial institutions 61 an Iran-based network comprised of In June 2016, due to Iran’s adoption based in Iran. In October 2019, the businesses providing financial support of, and high-level political commitment FATF decided to call upon its members to the Basij Resistance Force, a to, an Action Plan to address its and urge all jurisdictions to introduce paramilitary force subordinate to the strategic AML/CFT deficiencies, the enhanced relevant reporting IRGC. As noted at the time of the FATF agreed to suspend counter- mechanisms or systematic reporting of designation, among other malign measures for 12 months in order to financial transactions; and require activities, the IRGC Basij militia monitor Iran’s progress in implementing increased external audit requirements its Action Plan. At the same time recruits, trains, and deploys child for financial groups with respect to any however, the FATF expressed its soldiers to fight in IRGC-fueled conflicts of their branches and subsidiaries continuing concern with the terrorist 62 across the region. The Basij also located in Iran. The FATF followed financing risk emanating from Iran and employs shell companies and other this new requirement with a warning the threat this posed to the international measures to mask its ownership and stating that if before February 2020, Iran financial system, and called for control over a variety of multibillion- does not enact the Palermo and Terrorist financial institutions to continue dollar business interests in Iran’s Financing Conventions in line with the applying enhanced due diligence with automotive, mining, metals, and FATF Standards, then the FATF will respect to Iran-related business banking industries.54 fully lift the suspension of counter- relationships and transactions.57 The measures and call on its members and In June 2019, Treasury designated FATF issued similar statements between urge all jurisdictions to apply effective Iran’s largest and most profitable October 2016 and June 2017, and in counter-measures.63 petrochemical holding group, Persian October 2018 and February 2019 A number of public statements from Gulf Petrochemical Industries Company, identified specific types of enhanced senior Iranian government officials for providing financial support to due diligence measures to be applied suggest that Iran has no real intention of Khatam al-Anbiya Construction against Iran-related business adhering to international norms, Headquarters, the engineering arm of relationships and transactions.58 including the FATF standards. On the IRGC. Treasury noted that the IRGC In its June 2019 and October 2019 March 8, 2019, Gholamreza Mesbahi and its major holdings have a dominant Public Statements, the FATF noted that Moghaddam, senior member of Iran’s presence in Iran’s commercial and Iran’s Action Plan had expired in Expediency Council, the highest-level financial sectors, maintaining extensive January 2018 and that major items political institution after the office of economic interests in the defense, remained outstanding, including (1) the Supreme Leader, said ‘‘Passing CFT construction, aviation, oil, banking, adequately criminalizing terrorist and Palermo means giving away our metal, automobile, and mining financing, including by removing the only remaining mechanism to bypass industries.55 exemption for designated groups U.S. sanctions which is to register shell ‘‘attempting to end foreign occupation, Factor 3: The Substance and Quality of corporations in Iran and other countries colonialism, and racism;’’ (2) identifying 64 Administration of the Bank Supervisory to do international trade deals.’’ On and freezing terrorist assets in line with and Counter-Money Laundering Laws of February 1, 2019, former Iranian the relevant UNSCRs; (3) ensuring an That Jurisdiction Defense Minister Brigadier General adequate and enforceable customer due Ahmad Vahidi, also an Expediency For more than a decade, the diligence regime; (4) clarifying that the Council member, said, the [FATF] international community has been submission of suspicious transaction recommendations threaten Iran’s concerned about the deficiencies in reports for attempted terrorist financing- economy and it is a framework adopted Iran’s anti-money laundering/countering related transactions is covered under by the global arrogance to impose the financing of terrorism (AML/CFT) Iran’s legal framework; (5) restrictions on Iran and pursue the program. As far back as October 11, demonstrating how authorities are 2007, the Financial Action Task Force identifying and sanctioning unlicensed 59 Public Statement—June 2019, https://www.fatf- (FATF) issued a statement on Iran’s lack money/value transfer service providers; gafi.org/publications/high-risk-and-other- of a comprehensive AML/CFT regime, (6) ratifying and implementing the monitored-jurisdictions/documents/public- statement-june-2019.html. noting it represented a significant Palermo and Terrorist Financing Conventions and clarifying the 60 Public Statement—October 2019, https:// vulnerability in the international www.fatf-gafi.org/publications/high-risk-and-other- financial system. The FATF called upon capability to provide mutual legal monitored-jurisdictions/documents/public- Iran to urgently address its AML/CFT assistance; and (7) ensuring that statement-october-2019.html. deficiencies, and advised financial financial institutions verify that wire 61 Public Statement—June 2019, https://www.fatf- gafi.org/publications/high-risk-and-other- institutions to apply enhanced due 56 FATF Statement on Iran, 11 October 2007, monitored-jurisdictions/documents/public- https://www.fincen.gov/sites/default/files/shared/ statement-june-2019.html. 54 Treasury Designates Vast Financial Network FATFOct2007.pdf. 62 Public Statement—October 2019, https:// Supporting Iranian Paramilitary Force That 57 Public Statement—24 June 2016, https:// www.fatf-gafi.org/publications/high-risk-and-other- Recruits and Trains Child Soldiers, October 16, www.fatf-gafi.org/publications/high-riskandnon- monitored-jurisdictions/documents/public- 2018, https://home.treasury.gov/news/press-release/ cooperativejurisdictions/documents/public- statement-october-2019.html. sm524. statement-june-2016.html. 63 Id. 55 Treasury Sanctions Iran’s Largest 58 Public Statement—23 June 2017, https:// 64 Mesbahi Moghaddam: We Will Not Stop Petrochemical Holding Group and Vast Network of www.fatf-gafi.org/publications/high-riskandnon- Evading Sanctions, Iran International, March 9, Subsidiaries and Sales Agents, June 7, 2019, https:// cooperativejurisdictions/documents/public- 2019, https://iranintl.com/en/iran/mesbahi- home.treasury.gov/news/press-release/sm703. statement-june-2017.html. moghaddam-we-will-not-stop-evading-sanctions.

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sanctions re-imposed against Tehran in VI. Considerations in Selecting the Fifth Whether the Imposition of the Fifth smarter ways.’’ 65 On September 9, 2018, Special Measure Special Measure Would Create a Ayatollah Ahmad Jannati, secretary of Significant Competitive Disadvantage, Iran’s powerful Guardian Council, said, Below is a discussion of the relevant Including Any Undue Cost or Burden ‘‘I’ve studied both the Persian and criteria FinCEN considered in selecting Associated With Compliance, for English versions and I soon came to the a prohibition under the fifth special Financial Institutions Organized or conclusion that they want to give our measure with respect to Iran, after Licensed in the United States financial and banking information to the having completed the required Existing sanctions programs on Iran enemy. They want us to sanction interagency consultations with administered by OFAC generally ourselves. They want us to sanction the Chairman of the Board of Governors of prohibit the exportation, reexportation, individuals and institutions that the the Federal Reserve System, the sale, or supply, directly or indirectly, enemy disagrees with. They want us to Secretary of State, the Securities and from the United States, or by a U.S. sanction the [IRGC], revolutionary Exchange Commission, the Commodity person, wherever located, of any goods, 66 institutions, and individuals.’’ Futures Trading Commission, and the technology, or services to Iran. As a Factor 4: Whether the United States Has National Credit Union Administration result, U.S. financial institutions are a Mutual Legal Assistance Treaty Board in accordance with 31 U.S.C. already broadly prohibited under (MLAT) With That Jurisdiction, and the 5318A(a)(4)(A) and the Secretary of existing OFAC sanctions from opening Experience of U.S. Law Enforcement State, the Attorney General, and the or maintaining correspondent accounts Officials and Regulatory Officials in Chairman of the Board of Governors of for, or on behalf of, Iranian financial Obtaining Information About the Federal Reserve System in institutions, or conducting any financial Transactions Originating in or Routed accordance with 31 U.S.C. 5318A(b)(5). transactions involving Iranian financial institutions unless exempt from U.S. Through Such Jurisdiction Whether Similar Action Has Been or sanctions or authorized by OFAC. In The United States and Iran have not Will Be Taken by Other Nations or addition, as of late September 2019, 24 had a substantive relationship since the Multilateral Groups Against Iran Iranian financial institutions had been hostage-taking of U.S. Embassy designated under E.O. 13224, ten personnel by Iranians in November FinCEN notes that two Iranian banks Iranian financial institutions under E.O. 1979, and subsequent severing of are currently designated by the 13382, one Iranian financial institution diplomatic relations in April 1980. European Union as entities subject to an MLATs facilitate the exchange of asset freeze and prohibition to make under E.O. 13846, and one Iranian information and financial records with funds available: Ansar Bank and Mehr financial institution under E.O. 13553. treaty partners in criminal and related Bank. FinCEN is unaware of any other Secondary sanctions apply to certain matters. The State Department nation or multilateral group that has transactions with each of these Iranian 68 negotiates MLATs in cooperation with prohibited or placed conditions on banks. FinCEN assesses that the U.S. Department of Justice. As of the Iranian banks’ correspondent banking secondary sanctions already deter most date of this document, no MLAT is in relationships, or has plans to do so. foreign financial institutions from doing force with Iran. Additionally, the However, as noted previously, in business with targeted Iranian financial Egmont Group is an international October 2019, the FATF decided to call institutions, and the correspondent organization through which many upon its members and urge all account prohibition under the fifth countries’ financial intelligence units jurisdictions to introduce enhanced special measure will create no (FIUs) share invaluable financial and relevant reporting mechanisms or competitive disadvantage for U.S. other information useful in law systematic reporting of financial financial institutions. enforcement and regulatory transactions; and require increased The Extent to Which the Action or investigations. As the U.S. FIU, FinCEN external audit requirements for financial Timing of the Action Will Have a is the U.S. representative to the Egmont groups with respect to any of their Significant Adverse Systemic Impact on Group. No Iranian government entity is, branches and subsidiaries located in the International Payment, Clearance, nor ever has been, a member of the Iran. The FATF followed this new and Settlement System, or on Legitimate Egmont Group. requirement with a warning stating that Business Activities of Iranian Financial Given the lack of any cooperative if before February 2020, Iran does not Institutions relationship generally, as well as Iran’s enact the Palermo and Terrorist FinCEN has no information indicating inability to share information with the Financing Conventions in line with the United States via an MLAT or the that Iranian financial institutions are FATF Standards, then the FATF will major participants in the international Egmont Group, the level of U.S.-Iran fully lift the suspension of counter- cooperation on AML/CFT matters is payment system or that they are relied measures and call on its members and upon by the international banking nonexistent. As a result, U.S. law urge all jurisdictions to apply effective enforcement and regulatory officials community for clearance or settlement counter-measures.67 Regardless of the have an extremely limited ability to services. Further, as of mid-November FATF’s future actions, FinCEN assesses obtain information about transactions 2018, the Society for Worldwide that the correspondent account originating in or routed through Iran. Interbank Financial Telecommunication prohibition under the fifth special (SWIFT) had disconnected designated measure is necessary to ensure the 65 Iran Warns Europe to Avoid Tying Up INSTEX Iranian financial institutions, including to FATF, February 5, 2019, https:// security of the U.S. financial system and the CBI, from its financial messaging en.farsnews.com/ combat Iran’s malign and illicit service. Lastly, FinCEN assesses that newstext.aspx?nn=13971116000195. activities, including its support for most Iranian payments are made using 66 Iran Faces Challenges in Implementing Its international terrorism. FATF Action Plan, October 26, 2016, https:// currencies other than USD due to a long www.washingtoninstitute.org/policy-analysis/view/ iran-faces-challenges-in-implementing-its-fatf- 67 Public Statement—June 2019, https://www.fatf- 68 Secondary sanctions generally are directed action-plan; https://www.aryanews.com/news/ gafi.org/publications/high-risk-and-other- toward non-U.S. persons for specified conduct 20160909150648732 (original Farsi-language monitored-jurisdictions/documents/public- involving Iran that occurs entirely outside of U.S. article) statement-june-2019.html. jurisdiction, according to OFAC’s website.

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history of U.S. sanctions and actions threat, that the jurisdiction of Iran poses implementing the provisions of Section targeting Iran. Thus, there is no reason to the United States and the U.S. 312 of the USA PATRIOT Act requiring to conclude that the imposition of a financial system, Iran’s well- enhanced due diligence for prohibition under the fifth special documented history of obscuring the correspondent accounts maintained for measure against the jurisdiction of Iran true nature of its illicit finance certain foreign banks.69 Under this will have an adverse systemic impact on activities, and Iran’s apparent disregard definition, ‘‘payable-through accounts’’ the international payment, clearance, of regulatory reform and enforcement are a type of correspondent account. In and settlement system. FinCEN also measures, as evidenced by the FATF’s the case of securities broker-dealers, considered the extent to which this longstanding criticisms of its inadequate futures commission merchants, action could have an impact on the AML/CFT program, FinCEN assesses introducing brokers-commodities, and legitimate business activities of Iranian that any condition, additional investment companies that are open-end financial institutions, and has recordkeeping, information collection, companies (‘‘mutual funds’’), FinCEN is concluded that the need to protect the or reporting requirement would be also using the same definition of U.S. financial system from Iran strongly insufficient to guard against the risks ‘‘account’’ for purposes of this final rule outweighs any such impact. posed by covered financial institutions as was established for these entities in that process Iran-related transactions The Effect of the Action on U.S. the final rule implementing the designed to obscure the transactions’ National Security and Foreign Policy provisions of Section 312 of the USA true purpose, and that are ultimately for PATRIOT Act requiring enhanced due FinCEN assesses that prohibiting the benefit of illicit Iranian actors or diligence for correspondent accounts covered financial institutions from activities. Special measures one through maintained for certain foreign banks.70 maintaining correspondent accounts for four and the imposition of conditions Iranian financial institutions, and under special measure five would 3. Covered Financial Institution preventing Iranian financial institutions’ therefore fail to prevent Iran from indirect access to U.S. correspondent The final rule defines ‘‘covered accessing the U.S. financial system, financial institution’’ with the same accounts, will enhance national either directly or indirectly, through the security. The action serves as a measure definition used in the final rule correspondent accounts at U.S. financial implementing the provisions of Section to further prevent illicit Iranian actors institutions. FinCEN assesses that a from accessing the U.S. financial 312 of the USA PATRIOT Act, which in prohibition under the fifth special general includes the following: system. It will further the U.S. national measure is the only special measure that • security and foreign policy goals of can adequately protect the U.S. financial An insured bank (as defined in thwarting and exposing illicit Iranian system from the illicit financial risk section 3(h) of the Federal Deposit financial activity. Further, to the extent posed by Iran. Insurance Act (12 U.S.C. 1813(h))); that other nations, particularly those • a commercial bank; VII. Section-by-Section Analysis for the that are strong U.S. trading partners, • Imposition of a Prohibition Under the an agency or branch of a foreign choose to transact with Iran, there is a bank in the United States; greater risk of indirect activity occurring Fifth Special Measure • a Federally-insured credit union; between U.S. financial institutions and Section 1010.661(a)—Definitions Iran. Imposition of the fifth special • a savings association; 1. Iranian Financial Institution measure will impose a higher standard • a corporation acting under section of due diligence on U.S. financial The final rule defines ‘‘Iranian 25A of the Federal Reserve Act (12 institutions in their engagement with financial institution’’ as any foreign U.S.C. 611); financial institution, as defined at 31 non-U.S. financial institutions. • a trust bank or trust company; CFR 1010.605(f), organized under • Consideration of Alternative Special Iranian law wherever located, including a broker or dealer in securities; Measures any agency, branch, office, or subsidiary • a futures commission merchant or As an alternative to a prohibition of such a financial institution operating an introducing broker-commodities; and under the fifth special measure on the in any jurisdiction, and any branch or • a mutual fund. opening or maintenance of office within Iran of any foreign 4. Foreign bank correspondent accounts in the United financial institution. States for or on behalf of Iranian The final rule defines ‘‘foreign bank’’ financial institutions, and the use of 2. Correspondent Account to mean a bank organized under foreign foreign financial institutions’ The final rule defines ‘‘correspondent law, or an agency, branch, or office correspondent accounts at covered U.S. account’’ to have the same meaning as located outside the United States of a financial institutions to process the definition contained in 31 CFR bank. The term does not include an transactions involving Iranian financial 1010.605(c). In the case of a U.S. agent, agency, branch, or office within institutions, FinCEN considered special depository institution, this broad the United States of a bank organized measures one through four, which definition includes most types of under foreign law. This is consistent impose additional recordkeeping, banking relationships between a U.S. with the definition of ‘‘foreign bank’’ information collection, and reporting depository institution and a foreign under 31 CFR 1010.100. requirements on covered U.S. financial bank that are established to provide 5. Subsidiary institutions. Under special measure five, regular services, dealings, and other FinCEN also considered imposing financial transactions, including a The final rule defines ‘‘subsidiary’’ to conditions on the opening or demand deposit, savings deposit, or mean a company of which more than 50 maintaining of correspondent accounts other transaction or asset account, and percent of the voting stock or analogous as an alternative to a prohibition on the a credit account or other extension of equity interest is owned by another opening or maintaining of credit. FinCEN is using the same company. correspondent accounts. definition of ‘‘account’’ for purposes of Given the nature of the illicit finance this final rule as was established for 69 See 31 CFR 1010.605(c)(2)(i). threat, including the terrorist-finance depository institutions in the final rule 70 See 31 CFR 1010.605(c)(2)(ii)–(iv).

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Section 1010.661(b)—Prohibition on have reason to believe, provide services or otherwise referenced an Iranian Accounts and Due Diligence to Iranian financial institutions, that financial institution in a manner Requirements for Covered Financial such correspondent institutions may not detectable under the financial Institutions provide the Iranian financial institution’s normal screening institutions with access to the mechanisms. An appropriate screening 1. Prohibitions on Opening or Maintaining Correspondent Accounts correspondent accounts maintained at mechanism could be the mechanisms the covered financial institutions to used by a covered financial institution Section 1010.661(b)(1) and (2) of this process prohibited transactions. A to comply with various legal final rule prohibits covered financial covered financial institution may satisfy requirements, such as the commercially institutions from opening or this notification requirement using the available software programs used to maintaining in the United States following notice: comply with the economic sanctions correspondent accounts for, or on behalf programs administered by OFAC. of, Iranian financial institutions, unless Notice: Pursuant to U.S. regulations issued under Section 311 of the USA PATRIOT Act, 3. Recordkeeping and Reporting such account is authorized by OFAC. In see 31 CFR 1010.661, we are prohibited from addition, under § 1010.661(b)(2) of this opening or maintaining in the United States Section 1010.661(b)(4) of this rule final rule, a covered financial institution a correspondent account for, or on behalf of, clarifies that paragraph (b) of the rule shall take reasonable steps to not any Iranian financial institution. The does not impose any reporting process a transaction for the regulations also require us to notify you that requirement upon any covered financial correspondent account of a foreign bank you may not provide an Iranian financial institution, including any of its agencies, institution that is not otherwise required in the United States if such a transaction by applicable law or regulation. A involves an Iranian financial institution, branches, offices, or subsidiaries, with access to the correspondent account you hold at our covered financial institution must, unless such transactions or payments financial institution to process transactions however, document its compliance with are authorized by OFAC. that are prohibited, and not authorized or the notification requirement under Section 1010.661(b)(2) requires exempt, pursuant to the International § 1010.661(b)(3)(i)(A). covered financial institutions to take Emergency Economic Powers Act (50 U.S.C. reasonable steps to not process 1701 et seq.) (IEEPA), any regulation, order VIII. Paperwork Reduction Act transactions for the correspondent directive or license issued pursuant thereto, or any other sanctions program administered The collection of information accounts of foreign banks in the United contained in this final rule is being States involving Iranian financial by the Department of the Treasury’s Office of Foreign Asset Control (‘‘prohibited submitted to the Office of Management institutions that are prohibited transactions’’). If we become aware that the and Budget for review in accordance transactions. correspondent account you hold at our with the Paperwork Reduction Act of The general licenses (i.e., those of financial institution has processed any 1995 (44 U.S.C. 3507(d)), and has been general applicability) issued pursuant to prohibited transactions involving Iranian assigned OMB Control Number 1506– the Iranian Transactions Sanctions financial institutions, including any agencies, 0074. An agency may not conduct or Regulations (ITSR) 31 CFR part 560 are branches, offices, or subsidiaries thereof, we sponsor, and a person is not required to either published in the ITSR or available will be required to take appropriate steps to respond to, a collection of information on OFAC’s website: http:// prevent such access, including terminating unless it displays a valid OMB control www.treasury.gov/resource-center/ your account. number. sanctions/programs/pages/iran.aspx. To The purpose of the notice requirement ensure that those permitted activities is to aid cooperation with correspondent Description of Affected Financial are available as a practical matter, account holders in preventing Institutions: Banks, broker-dealers in correspondent accounts covered by the transactions involving Iranian financial securities, futures commission exception may continue to be used to institutions from accessing the U.S. merchants, introducing brokers- conduct those permitted transactions. financial system. FinCEN does not commodities, and mutual funds. Such reasonable steps are described in require or expect a covered financial Estimated Number of Affected 71 § 1010.661(b)(3), which sets forth the institution to obtain a certification from Financial Institutions: 23,615. special due diligence requirements a any of its correspondent account Estimated Average Annual Burden in covered financial institution will be holders that access will not be provided Hours per Affected Financial required to take when it knows or has to comply with this notice requirement. Institution: The estimated average reason to believe that a transaction Methods of compliance with the notice burden associated with the collection of involves an Iranian financial institution. requirement could include, for example, information in this final rule is two transmitting a notice by mail, fax, or 2. Special Due Diligence for email. The notice should be transmitted 71 This number is a total of: (1) The institutions Correspondent Accounts whenever a covered financial institution represented in the most recent reports of the following regulators: the NCUA, who reported 5,375 As a corollary to the prohibition set knows or has reason to believe that a institutions as of December 31, 2018 in its Quarterly forth in § 1010.661(b)(1) and (2), foreign correspondent account holder Credit Union Data Summary: 2018 Q4, and the § 1010.661(b)(3) of the final rule will provides services to an Iranian financial FDIC, who reported 5,358 FDIC-insured institutions require covered financial institutions to institution. in its Key Statistics as of April 25, 2019; (2) a March 2017 Government Accountability Office Report apply to all of their foreign Special due diligence also includes PRIVATE DEPOSIT INSURANCE: Credit Unions correspondent accounts special due implementing risk-based procedures Largely Complied with Disclosure Rules, but Rules diligence that is reasonably designed to designed to identify any use of Should Be Clarified, that indicated that guard against such accounts being used correspondent accounts to process approximately 125 credit unions were insured privately; (3) 1,130 introducing brokers and 64 to process prohibited transactions transactions involving Iranian financial futures commodities merchants reported by the involving Iranian financial institutions. institutions. A covered financial National Futures Association on its website as of As part of that special due diligence, institution is expected to apply an March 31, 2019; (4) 3,607 securities firms as of covered financial institutions are appropriate screening mechanism to December 31, 2018 as reported by FINRA on its website; and, (5) 7,956 U.S. mutual funds, required to notify those foreign identify a funds transfer order that on its according to the 2018 Investment Company Fact correspondent account holders that the face listed an Iranian financial Book published by the Investment Company covered financial institutions know, or institution as originator or beneficiary, Institute.

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hours per affected financial Treasury’s Office of Foreign Assets (iii) A covered financial institution institution.72 Control (OFAC). that knows or has reason to believe that Estimated Total Annual Burden: Note 1 to paragraph (b)(1): Note that a foreign bank’s correspondent account 47,230 hours. covered financial institutions should block has been or is being used to process prohibited transactions involving List of Subjects in 31 CFR Part 1010 and report to OFAC any accounts that are blocked pursuant to any OFAC sanctions Iranian financial institutions shall take Administrative practice and authority and therefore should continue to all appropriate steps to further procedure, Banks and banking, Brokers, maintain such accounts in accordance with investigate and prevent such access, Counter-money laundering, Counter- the Reporting Procedures and Penalties including the notification of its Regulations, 31 CFR part 501. terrorism, Foreign banking. correspondent account holder under (2) Prohibition on use of Authority and Issuance paragraph (b)(3)(i)(A) of this section correspondent accounts. A covered and, where necessary, termination of the For the reasons set forth in the financial institution shall take correspondent account. preamble, Part 1010, chapter X of title reasonable steps to not process a (4) Recordkeeping and reporting. (i) A 31 of the Code of Federal Regulations, transaction for the correspondent covered financial institution is required is amended as follows: account of a foreign bank in the United to document its compliance with the States if such a transaction involves an notice requirement set forth in this PART 1010—GENERAL PROVISIONS Iranian financial institution, unless the section. transaction is authorized by, exempt ■ (ii) Nothing in this section shall 1. The authority citation for Part 1010 from, or not prohibited under the continues to read as follows: require a covered financial institution to International Emergency Economic report any information not otherwise Authority: 12 U.S.C. 1829b and 1951– Powers Act (IEEPA) (50 U.S.C. 1701 et required to be reported by law or 1959; 31 U.S.C. 5311–5314, 5316–5332; Title seq.), any regulation, order, directive, or regulation. III, sec. 314, Pub. L. 107–56, 115 Stat. 307; license issued pursuant thereto, or any sec. 701, Pub. L. 114–74, 129 Stat. 599. other sanctions program administered Kenneth A. Blanco, ■ 2. Add § 1010.661 to read as follows: by the Department of the Treasury’s Director, Financial Crimes Enforcement Office of Foreign Asset Control. Network. § 1010.661 Special measures against Iran. (3) Special due diligence of [FR Doc. 2019–23697 Filed 11–1–19; 8:45 am] (a) Definitions. For purposes of this correspondent accounts to prohibit use. BILLING CODE 4810–02–P section: (i) A covered financial institution shall (1) Iranian financial institution means apply special due diligence to the any foreign financial institution, as correspondent accounts of a foreign NATIONAL FOUNDATION ON THE defined at § 1010.605(f), organized bank that is reasonably designed to ARTS AND THE HUMANITIES under Iranian law wherever located, guard against their use to process including any agency, branch, office, or transactions involving Iranian financial National Endowment for the subsidiary of such a financial institution institutions that are prohibited, and not Humanities operating in any jurisdiction, and any authorized or exempt, pursuant to the branch or office within Iran of any IEEPA, any regulation, order, directive, 45 CFR Part 1169 foreign financial institution. or license issued pursuant thereto, or (2) Correspondent account has the any other sanctions program RIN 3136–AA18 same meaning as provided in administered by the Department of the Implementation of the Privacy Act of § 1010.605(c). Treasury’s Office of Foreign Asset (3) Covered financial institution has Control (‘‘prohibited transactions’’). At a 1974 the same meaning as provided in minimum, that special due diligence AGENCY: National Endowment for the § 1010.605(e)(1). must include: Humanities, National Foundation on the (4) Foreign bank has the same (A) Notifying those foreign Arts and the Humanities. correspondent account holders that the meaning as provided in § 1010.100. ACTION: Final rule; technical correction. (5) Subsidiary means a company of covered financial institution knows or which more than 50 percent of the has reason to believe the correspondent SUMMARY: On July 19, 2019, the National voting stock or analogous equity interest account is being used to process Endowment for the Humanities (NEH) is owned by another company. transactions involving Iranian financial published in a final rule implementing (b) Prohibition on accounts and due institutions that such prohibited its agency-specific Privacy Act diligence requirements for covered transactions may not take place; and regulation. This document makes financial institutions—(1) Opening or (B) Taking reasonable steps to identify technical corrections to that rule. any use of its foreign correspondent maintaining correspondent accounts for DATES: Effective November 4, 2019. Iranian financial institutions. A covered accounts for prohibited transactions FOR FURTHER INFORMATION CONTACT: financial institution shall not open or involving Iranian financial institutions, maintain in the United States a to the extent that such use can be Elizabeth Voyatzis, Deputy General correspondent account for, or on behalf determined from transactional records Counsel, Office of the General Counsel, of, an Iranian financial institution, maintained in the covered financial National Endowment for the unless such account is authorized by institution’s normal course of business. Humanities, 400 Seventh Street SW, United States Department of the (ii) A covered financial institution Room 4060, Washington, DC 20506; shall take a risk-based approach when (202) 606–8322; [email protected]. 72 The estimated burden is two hours per deciding what, if any, other due SUPPLEMENTARY INFORMATION: On July financial institution—one hour for a senior diligence measures it reasonably must 19, 2019, NEH published a final rule at executive of the financial institution to review and adopt to guard against the use of its 84 FR 34788 implementing its agency- approve the notice to be provided to correspondent account holders, and one hour for a compliance foreign correspondent accounts to specific Privacy Act regulation. That officer to provide notice to correspondent account process prohibited transactions rule amended 45 CFR chapter XI, holders. involving Iranian financial institutions. subchapter D, by adding part 1169.

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