DFSA warning over Iran-based clients

The Dubai Financial Services Authority (DFSA) yesterday warned companies based in the Dubai International Financial Centre (DIFC) to conduct risk assessment when dealing with banks and other clients domiciled in Iran.

It said that firms should "ensure that the due diligence processes for each correspondent bank domiciled in Iran has been completed consistent with the enhanced due diligence procedures.

The Security Council voted on June 9 for a fourth round of sanctions aimed at curbing Iran's nuclear programme, which the West fears could lead to nuclear weapons. The new UN sanctions target Iranian banks suspected of connections with nuclear or missile programmes. They also expand an arms embargo and call for a cargo inspection regime.

The authority also asked the registered firms to assess the respondent Iranian bank's business – correspondent banking, private banking, trade finance etc. – in order to properly understand its related risks. The assessment should take into account the amount of business the respondent Iranian bank handles for Iranian government entities.

It also warned them to see whether the respondent Iranian bank has adequate controls to detect and prevent sanctions evasion to avoid contributing to proliferation of sensitive nuclear activities.

It ask companies to treat all transactions with clients domiciled in Iran as high risk transactions and apply risk mitigation practices with respect to enhanced identification and moitoring of any financial transactions, particularly with the Central Bank of Iran, Bank Melli and Bank Saderat or any entity specifically listed by the UNSC Committee.

In another development, the DFSA entered into a Memorandum of Understanding (MoU) with the Office of the Superintendent of Financial Institutions of Canada (OSFI).

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