Central Securities Depository Of IRAN

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AN INTRODUCTION TO CSDI'S COMMITTEE OF ANTI-MONEY LAUNDERING AND COUNTERING FINANCING TERRORISM (AML/CFT)

In July 2019, CSDI's board of directors has approved with establishment of the Anti-Money Laundering and Countering Financing Terrorism (AML/CFT) Committee to proceed with the task of monitoring transactions' data in line with policies of the Securities and Exchanges Organization to combat money laundering and financing terrorism activities in all parts of the Iranian capital market.

Overview

In July 2019, CSDI's board of directors has approved with establishment of the Anti-Money Laundering and Countering Financing Terrorism (AML/CFT) Committee to proceed with the task of monitoring transactions' data in line with policies of the Securities and Exchanges Organization to combat money laundering and financing terrorism activities in all parts of the Iranian capital market.

Background and History

Iran's main regulatory body, which devises strategic policies and practical procedures to counter money-laundering and related crimes, is the High Council for Preventing and Countering Money Laundering and Financing Terrorism, and the main authority that oversees the enforcement of the related regulations in the country, is Financial Information Center based at the Ministry of Economic Affairs and Finance. 

CSDI's AML/CFT committee was set up according to the requirements of Article 18 of the Anti-Money Laundering Law Executive Regulation, and Article 14 of the Anti-Terrorism Financing executive Guidelines adopted by the Iranian government, that obligated all entities in public or private sectors to establish an anti-money laundering unit.

In accordance with stipulations of the afore-mentioned articles and Article 16 of the Capital Market Client Identification Guidelines as well as Article 10 of Executive Instructions on Money Laundering in Commercial Companies approved by the Iran's High Council on Money Laundering, the Securities and Exchange Organization of Iran's Anti-Money Laundering Secretariat was formed as a supervisory and regulatory body to issue instructions on countering money laundering and other related crimes, and Central Securities Depository of Iran, along with other main entities in the Iranian capital market, is required to set up their own anti-money laundering unit. 

CSDI for his part has incorporated all these regulations and directives in its registry platform namely the Comprehensive Information Gathering System (CIGS). Before the establishment of AML/CFT committee, there had been no centralized platform within the CSDI to conduct the tasks ahead of it as Iran's capital market sole provider of pre-trade and post-trade services to discover and report suspected AML/CFT cases, so the CSDI board of directors decided in early 2019 to establish the AML/CFT committee to proceed with the tasks in a more centralized manner.

Composition of AML/CFT Committee

CSDI's Anti-Money Laundering and Terrorist Financing Committee is comprised of five members as following:

·         The CEO,

·         Financial affairs Director,

·         Legal and Inspection Director,

·         Chief Operating Officer,

·         Liaison officer.

With due regard to coordination and consultations with the Board of Directors, the committee communicates regulations, manuals, and designed procedures on AML/CFT measures with related departments through representatives designated and appointed in all departments within CSDI to facilitate the cooperation. 

Responsibilities of AML/CFT Committee

CSDI's AML-CFT main objective is to coordinate measures in order to prevent and counter the use of the company's financial system for the purposes of money laundering and terrorist financing in the Iranian capital market. In addition, in the context of by-laws and regulations relayed by the SEO, the AML/CFT prepares all proposals in form of draft decisions to be taken by the CSDI Board of directors in relation to anti-money laundering and countering the financing of terrorism.

According to the directive for establishment of CSDI AML/CFT committee adopted by the board of directors, the committee is responsible for:

·         Enforcing AML measures,

·         Proposing Adopting standard monitoring methods and mechanisms to report suspicious transactions and inflow of assets with unknown origins,

·         Taking effective measures to block proceeds of any crime or infringement from entering the capital market,

·         Appraisal of reports on suspected cases received from CSDI's different departments,

·         Report suspected cases to higher/ judicial authorities in case they include data suspected of money laundering or financing terrorism.

In a nutshell, the AML/CFT Committee are tasked with the examination of reports received from CSDI's different departments and submit them to judicial authorities and in case they include data suspected of money laundering or financing terrorism they will be referred to related courts. 

AML/CFT Operational Criteria  

Among information required to be tracked and monitored in the capital market includes transactions data, personal information of trade parties, their history of market activity, etc. The committee is also required to update and upgrade methods according to latest technologies to authenticate the information.

AML/CFT Criteria Regularly Updated

Criteria set by CSDI for suspicious transactions are constantly being updated, and improved by both financial information center and accordingly by the SEO. New criteria and the updated list of suspected money launderers must be finalized and approved by the Financial Information Center at the Ministry of Economic Affairs and Finance or the SEO to be eligible to be added in the company's related database.

CSDI is working on launching a special intelligent mechanism to monitor data to put an end to manual monitoring currently being done at the Central Securities Depository of Iran to report suspected cases to the SEO AML/CFT Secretariat.

AML/CFT Committee Future Plans

In order to achieve a higher level of cooperation with the aforementioned secretariat based at the SEO, CSDI's AML/CFT Committee has numerous ongoing projects including deployment of high-tech tools to take its core tasks thoroughly by making use of smart platforms designed and developed exclusively for these purposes. Therefore, one of the most important plans ahead of the fledgling Committee will be to design and develop systems to monitor and supervise the implementation of above-mentioned regulations more closely, in collaboration with different CSDI departments, so that tracking and reporting suspicious cases can be conducted automatically and more intelligently.

Release Date: 2020-03-10