How could the Iran-nuclear deal affect your compliance department?

Flag of Iran

Assuming your bank performs transactions for people with international connections, Americans are barred from doing most types of transactions with Iran interests because of the economic sanctions. There are several sets of economic sanctions on Iran and only the the set that were implemented because of the nuclear activity were lifted. Practically, very little has changed for your bank, so, very little has changed for your compliance department.

Even, still, the elation alone is building interest in investment and trade activity with Iran. American entities with subsidiaries in Europe are likely to try to get around these sanction by claiming European sovereign rule. But this only works if the subsidiary can prove that it is not controlled by the American umbrella.

There’s no way to prove this. Just the fact that the subsidiary is a subsidiary and not a joint venture or minority interest deems it American jurisdiction on transactions because the net income is accounted for here in the States.

Minority interest is where things get tricky. If a client is doing business with an entity which has American minority interests and does business with Iran, then that’s territory that requires some legal analysis. The reason for the complication is even though there are many situations where Americans may have minority interests in European entities that will do business with Iran, one of those entities could be a fund that is specifically initiated to do that business. Wealth Americans have access to foreign markets without working through the American markets. It is possible that an American investor can buy into a Iran direct investment fund in London using his British assets. If he is able to do this, then he adds a legal entity layer. He will own a majority interest in an entity that is investing into a fund as a minority investor.

Your department will have to decide whether American jurisdiction applies to ownership of legal entities or if business will benefit the American.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


Obama to Create New Central Cybersecurity Agency

The private sector plays a more central role in spotting and responding to cyber incidents than they do in the counterterrorism realm, where the government largely takes the lead. – Lisa O. Monaco, President’s Homeland Security and Counterterrorism Advisor
Seal of the Office of the Director of National Intelligence

Lisa Monaco announced the launch of Cyber Threat Intelligence Integration Center (CTIIC), which will provide analysis to policymakers and intelligence operatives using private sector data.

CTIIC will report to the Director of National Intelligence.

This was also written about in a previous post.




About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.

Adam Szubin’s Key Note

On Monday, January 26, Associations of Certified Anti-Money Laundering Specialists (hereon ACAMS) held its Third Annual AML Risk Management Conference at The Conrad Hotel in downtown New York. Over the course of this week, summaries and takeaways from the key notes and panel discussions will be shared in this blog.

Adam Szubin is the exiting director of Office of Foreign Assets Control (OFAC) in the Department of Treasury. Soon, he will be the acting under secretary for Terrorism and Financial Intelligence, another office in the Treasury.

HeaderSzubin has a history of speaking at Financial Crimes-related conferences because of his long held position as the director of OFAC. Applauded members of ACAMS for doing their best to make Anti-Money Laundering profession a serious endeavor. Then he alerted to three nuanced risks for the profession.

CUBA was his first concern. As the United States lifts nearly all of its sanctions against the communist island nation this year, it opens up another route for corruption to take place.

RUSSIA was his second concern. OFAC’s Magnitsky Sanctions List enumerates targets explicitly, but not all activities are sanctioned and not all enumerated have been sanctioned the in the same manner. The theme of this sanction is debt and equity financing, or the limit thereof. This is a target on a crucial source of currency for Russia in order for it to succeed. The capital markets have also worked against Russia by lowering the price of oil, the primary source of revenue for Russia. It’s an additional wind behind OFAC’s sanctions.

IRAN was his final enumerated concerns. Even more nuanced than the previous two examples. Iran’s domestic politics indicate the type and length to which the regime is willing to evade western powers to fund terror.

Transparency is the key to successful sanctions compliance. Breach of compliance is often accidental. Finding breaches are difficult because often the breaches are in omnibus accounts. Also global trade cannot stop for complex business areas, like re-insurance of trans-ocean ships.

Because of the human nature of business, financial crimes will occur in some form or another. Professionals Certified Anti-Money Laundering Specialists greatly reduce the efficacy of criminal activities.

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.
He tweets @MoneyCompliance