Financial institutions based in the U.S have been reminded by the Financial Crimes Enforcement Network (FinCEN) that they have a part to play in economic sanctions.
The regulators are wary of the fact that Iran is using cryptocurrencies to bypass economic sanctions imposed on them in August by the U.S. For this reason, banks and money service businesses like crypto exchanges have been called on to track and possibly cancel transactions from Iran.
In an advisory document published by FinCEN on Friday, the body pointed out that since 2013, bitcoin transactions carried out in Iran yearly amounts to at least $3.8 million. This use of virtual currencies was referred to as “illicit” by FinCEN since they can be done with “little notice or footprint.”
“While the use of virtual currency in Iran is comparatively small, virtual currency is an emerging payment system that may provide potential avenues for individuals and entities to evade sanctions,” the advisory said.
Even though the Iran government has maintained a tough stance on cryptocurrencies, this does not mean that citizens are not using them for cross-border transactional purposes. Peer to peer exchanges or foreign crypto exchanges found on the Internet can still be used to trade crypto in Iran.
For this reason, the body has called on U.S crypto exchange “institutions to consider reviewing blockchain ledgers for activity that may originate or terminate in Iran.”
Unsurprisingly, U.S based crypto exchanges will have to comply with the new directive issued by FinCEN since are registered as financial institutions under the Bank Secrecy Act. Part of their obligation includes setting up “appropriate systems to comply with all relevant sanctions requirements.”
Launching a CBDC to Bypass U.S Sanctions
As Coinfomania reported in August, Iran has been stepping up plans to launch its own Central Bank Backed Digital Currency (CBDC).
Saeed Mahdiyoun, an official of Iran’s National Cyberspace Centre, said then that “plans to create a national digital currency is earnestly being pursued in the recent meetings of the High Council for Cyberspace.”
If Iran were to release a CBDC, then such currency would facilitate the transfer of money (to and from) anywhere in the world. It will really render the U.S sanctions on Iran as ineffective.