Iran International
Every transaction linked to Iran — no matter how small — must now be treated as high-risk under newly tightened regulations introduced by Canada last week, a move experts warn could fall hardest on ordinary Iranians.
The previous $10,000 reporting threshold has been eliminated in favor of a zero-dollar threshold for any financial transaction to or from Iran.
Ottawa tightened the rules after the international anti-money laundering body the Financial Action Task Force (FATF) again warned that Iran remains a high-risk jurisdiction for terrorism financing and sanctions evasion.
Canada says the new rules target funds that originate in Iran and may involve individuals, organizations or networks linked to the Islamic Republic using small transfers to evade sanctions or obscure the true source of money.
But because these transactions often resemble ordinary remittances, the government has argued, the measures now apply to anyone receiving money from Iran, even for legitimate reasons.
“There is a risk that the Islamic Republic of Iran may be facilitating sanctions evasion, which the Minister is of the opinion could have an adverse impact on the integrity of the Canadian financial system or the reputational risk to that system," Canada’s Finance Minister wrote in a statement.
Canada is home to one of the largest Iranian diaspora communities in the world — nearly 300,000 people — and many depend on incoming transfers from Iran, ranging from the sale of land or property and inheritance payments to financial support that parents send to their children studying at Canadian universities.
Remittances from professionals in Canada to loved ones in Iran are also widespread.
FINTRAC, or Financial Transactions and Reports Analysis Centre of Canada, is the independent federal agency reporting to the Ministry of Finance which is overseeing the rule change.
“With the changes, all businesses subject to the Act are required to report every financial transaction to or from Iran regardless of its amount,” a spokesperson for FINTRAC wrote to Iran International.
“Prior to this update," she added, "the Ministerial Directive only required banks, credit unions, foreign banks and money services businesses to report every financial transaction to or from Iran.”
'Uniquely challenging'
But experts warn that while the directive may make it harder for Islamic Republic-linked actors to move money, it may also create unintended consequences.
Investigative journalist Sam Cooper, one of Canada’s leading reporters on transnational crime, said Iran-linked transactions were particularly hard to detect.
“The regime and its proxies already operate through deep, global underground banking networks," said Cooper, author of Willful Blindness, a book on money laundering networks operating through Canada. "They work with transnational crime groups — from Hezbollah to Latin American cartels and their partners in places like Venezuela.”
Cooper added that tougher reporting rules often fall hardest on ordinary Iranians trying to send money through legitimate channels.
“They often hit ordinary Iranians who refuse to use those underground networks and end up locked out of legitimate banking instead. That can unintentionally strengthen Iranian, Chinese and Mexican criminal networks, which step in to provide ‘services’ that formal banks can no longer offer,” he said.
Canada shuttered its embassy and cut diplomatic ties with Iran in 2012 over what it called security concerns for its diplomats and Iran’s alleged support for terrorism and human-rights abuses.
The move is also being closely watched by those involved in shaping Canada’s sanctions policy. Brandon Silver, an international human rights lawyer has provided expert testimony before Parliament, welcomed the strengthened guidance which many in the sanctions community have long pushed for.
“This FINTRAC guidance on Iran is a reflection of the Islamic Republic’s culture of corruption and criminality,” Silver told Iran International.
“These funds are used to finance mass domestic repression and external aggression — whether it is the murder and maiming of Iranian women’s rights leaders, or the transnational repression targeting Canadians," he said, adding that he hoped other countries in the G7 grouping of wealthy democracies would impose their own curbs.
