The Central Bank of Iran Sunday issued new instructions obliging banks to monitor the transactions of customers based on their “level of activity”.
The instructions, seen on the CBI website, require banks to determine the potential of banking activity of each customer and register the information on a centralized data base.
Data will be analyzed by supervisory bodies to determine if the transactions are within the announced levels or beyond the ceilings set for “expected banking activity” for each customer.
Based on the potential level of activity, customers are categorized into two groups: natural entities who are jobless and legal entities that are financially inactive.
Accordingly, customer banking activity must not exceed acceptable levels set by the CBI based on the predetermined scope of activity otherwise they would be subject to money laundering probes.
For example, the maximum banking transactions for a retired Iranian is set at 20 billion rials in one year. Those under the cover of welfare organizations such as the Imam Khomeini Relief Foundation and the State Welfare Organization of Iran cannot have financial deals over 10 billion rials and an unemployed person who is not on pension can conduct transactions not more than 5 billion rials.
The rules, however, exempt unemployed customers who may have a regular stream of income from other sources, such as those who receive rent (from homes and commercial areas given on lease) or those who make a living from interest on their savings and deposits in a bank.
In addition, after banks ascertain that a customer is commercially inactive or unemployed, they refuse to offer them some banking services, namely granting payment instruments such as online payment gateways and point-of-sale terminals. They also are not allowed to open commercial accounts or receive other financial assistance.
Non-active legal institutions are also subject to such restrictions apparently in line with measures to curb money laundering using sham companies.
The CBI said the new restrictions are drawn from broader AML rules approved by the former government in October 2019. In line with the rules, the regulator in last November curbed the scope of banking activity of minors and the disabled.
As per the instructions, banks and credit institutions cannot grant any type of payment instrument, loans, open current accounts or sell foreign currency to the disabled.
Restricting banking activities of natural entities who are jobless and inactive legal entities are in the next phase of new restrictions. The CBI said in the next step it will look into the banking operations of jobless natural entities and active legal institutions.
Concerted AML Efforts
In 2020 the CBI announced rules to improve control over banks and their performance. It said the measures, among other things, are to ensure anti-money laundering laws are uphled, curb tax evasion and curtail speculation in the financial markets, namely forex and gold.
Driven by money laundering concerns, the regulator last year barred banks and credit institutions from processing payment requests of customers lacking complete ID information stored in their special data center(s).
Prior to that the CBI set a daily cap for bank transactions for adults. The rule came into effect in 2020 and transactions via inter-bank systems were limited to one billion rials per person per day. Last October it restricted daily transactions for clients under 18 years to a maximum 150 million rials.
As for other measures, the CBI compartmentalized individual and business accounts. It required individual customers to show documentary evidence for transactions above two billion rials at one bank in one day.
In addition, individual customers should state the reason for their transactions over the threshold when filling out bank forms. They also must “provide documents to show that the transaction is for a valid business reason, concluding a contract or other acceptable purposes.”
The regulator also set a daily cap of 1 billion rials on transactions via point-of-sale devices and limited the use of POS overseas.
