Iran

**FATF Blacklisting:** Iran is currently on the FATF's "Public Statement – High-Risk Jurisdictions Subject to a Call for Action," meaning it is subject to a call for countries to apply enhanced due diligence and, in the most serious cases, countermeasures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from Iran. This significantly impacts any international VASP's ability or willingness to operate in or with Iran.

**International Sanctions:** Iran is under extensive international sanctions (primarily from the US), which prohibit most financial transactions involving Iranian entities or individuals, further complicating VASP operations.

**Evolving Domestic Stance:** Iran's stance on cryptocurrencies has evolved from outright bans to allowing regulated mining and exploring the use of crypto for bypassing sanctions (e.g., import payments), while generally maintaining strict controls over public trading and use for domestic payments.

**Law on Combating Money Laundering (LCML):**

**Legislation Name:** "Law on Combating Money Laundering" (Qanun Mobaraze ba Pulshui), initially passed in 2008 and amended in 2019.

**Purpose:** This is the foundational AML law in Iran, establishing general obligations for reporting entities (which would include any authorized financial service providers, including VASPs if fully integrated into the financial system).

**Key Provisions:** Defines money laundering offenses, sets reporting obligations, establishes the Supreme Council for Combating Money Laundering and Financing of Terrorism, and outlines the role of the Financial Intelligence Unit (FIU).

**Law on Combating the Financing of Terrorism (LCFT):**

**Legislation Name:** "Law on Combating the Financing of Terrorism" (Qanun Mobaraze ba Taman-e Terrorizm), enacted in 2015 and amended in 2019.

**Purpose:** Addresses the financing of terrorism. Any VASP, if operating, would be subject to its provisions, especially regarding sanctions screening and suspicious transaction reporting.

**Central Bank of Iran (CBI) Regulations and Directives:**

The CBI is the primary regulator for financial services and has issued directives concerning virtual assets.

**Early Stance (2018):** The CBI initially banned all dealings in cryptocurrencies by banks and financial institutions, citing money laundering risks.

**Evolving Stance (2019-Present):** The CBI later allowed cryptocurrency mining as an industrial activity, requiring miners to obtain licenses and sell their mined crypto to the CBI for import financing. However, the use of cryptocurrencies for domestic payments is generally prohibited, and public trading platforms for major cryptocurrencies face significant restrictions or are not officially sanctioned in a broad retail sense.

**Applying Existing AML:** The CBI's stance implies that *any* entity authorized to deal with virtual assets (e.g., licensed miners selling to CBI, or potentially future regulated exchanges) would be subject to existing AML/CFT laws and CBI directives regarding KYC, transaction monitoring, and reporting.

National ID number (National Code for Iranians)

Verification through official documents (e.g., National ID card, passport).

Legal form (e.g., company, partnership)

Registered address and principal place of business

Details of directors, senior management, and beneficial owners (shareholders owning 25% or more, or controlling persons).

Verification through official corporate documents (e.g., certificate of incorporation, articles of association).

**Purpose and Nature of Business Relationship:**

Understanding the purpose for which the customer intends to use the VASP's services (e.g., mining, trading, remittance, specified payment).

Understanding the expected nature and volume of transactions.

Scrutinizing transactions throughout the course of the relationship to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Regularly updating customer information and risk assessment.

Required for high-risk customers, politically exposed persons (PEPs), and transactions identified as high-risk (e.g., large value transactions, complex structures, transactions from high-risk jurisdictions).

Includes measures like obtaining additional information on the customer and their source of funds/wealth, obtaining senior management approval for the relationship, and increased monitoring.

Especially critical for virtual assets, VASPs would need to establish the legitimate source of funds used to acquire virtual assets and the source of wealth of the customer.

Screening customers against domestic (if any specific to crypto) and international sanctions lists (though international sanctions might preclude VASP interaction altogether).

**Obligation to Report:** VASPs, if authorized, would be obligated to report any suspicious transactions or activities to the Financial Intelligence Unit (FIU). This includes transactions that are inconsistent with a customer's known legitimate activities, or those that suggest money laundering, terrorist financing, or proliferation financing.

**FIU:** The primary FIU in Iran is located within the **Secretariat of the High Council for Combating Money Laundering and Financing of Terrorism**, which is part of the Ministry of Economy and Financial Affairs.

**No Tipping-Off:** VASPs are prohibited from informing the customer or any third party that an STR has been filed.

**Transaction Records:** All transaction data, including dates, amounts, types of assets, sender/receiver information, and IP addresses.

**CDD Records:** All documents and data obtained during the CDD process (identification, verification, risk assessment).

**STRs:** Copies of all suspicious transaction reports filed.

**Duration:** Records are typically required to be kept for at least **five to ten years** after the business relationship has ended or the transaction has occurred.

**Central Bank of Iran (CBI):**

**Role:** The main financial regulator, responsible for licensing, supervision, and issuing specific directives regarding virtual assets and their interaction with the financial system.

**High Council for Combating Money Laundering and Financing of Terrorism:**

**Role:** The main policy-making body for AML/CFT in Iran, providing strategic direction and overseeing the implementation of the LCML and LCFT. Its secretariat houses the FIU.

**URL:** Information is typically integrated with the Ministry of Economy and Financial Affairs.

**Ministry of Economy and Financial Affairs:**

**Role:** Broader oversight of financial policy and the umbrella ministry under which the High Council and FIU operate.

**No General Retail VASP Market:** There is no established, government-sanctioned, retail-facing VASP market (like open crypto exchanges) for the general public in Iran due to the general ban on crypto for payments and significant restrictions on trading.

**Focus on Licensed Mining:** The primary regulated VASP-related activity is licensed cryptocurrency mining, where mined crypto must be sold to the CBI or authorized entities for specific purposes (like import financing). These licensed entities would be subject to strict AML/CFT checks by the CBI.

**International Isolation:** Due to FATF blacklisting and international sanctions, it is virtually impossible for any reputable international VASP to legally offer services to Iranian citizens or entities, regardless of Iran's domestic regulations. Doing so would expose them to severe regulatory and reputational risks.

**Central Bank of Iran (CBI):** The primary regulator for financial and monetary affairs, including cryptocurrencies. Its stance has largely been to ban banks and financial institutions from dealing in cryptocurrencies and to restrict their use for domestic payments. The CBI is also involved in developing a national digital currency (CBDC).

**Ministry of Industry, Mines, and Trade (MIMT):** Responsible for licensing and regulating cryptocurrency mining operations.

**Securities and Exchange Organization (SEO):** Traditionally regulates securities in Iran under the Securities Market Law of the Islamic Republic of Iran (2005). However, its direct role in classifying *private cryptocurrency tokens* as securities for public offerings is minimal, largely because such offerings are not openly permitted or have been discouraged by the CBI.

**National Cyberspace Center (NCC) / Economic Council / Parliament:** These bodies are involved in drafting and approving broader legislation concerning digital assets and cyberspace, which may eventually include more detailed provisions for crypto classification.

**Traditional Securities Law:** Iran's Securities Market Law of 2005 defines "securities" generally to include shares, bonds, mutual fund units, and other instruments that grant ownership rights, debt claims, or partnership interests.

**Lack of Specific Crypto Guidance:** The challenge with private crypto tokens is that they haven't been explicitly brought under this existing framework for public offerings. The regulatory emphasis has been on banning or heavily restricting their use rather than establishing a formal classification process for investor protection in a public market context.

**Implicit Interpretation (Hypothetical):** If a private token were to be issued seeking public investment with an expectation of profit derived from the efforts of others (similar to the Howey test's criteria), it would likely face significant scrutiny and potential prohibition under existing financial regulations, rather than being formally classified and regulated as a security by the SEO. The primary concern would be capital flight, AML, and monetary stability, as opposed to investor protection in a nascent token market.

**No specific private crypto tokens are formally recognized and regulated as securities for public offering in Iran.**

**National Digital Currency (CBDC):** The CBI has been developing a national digital currency, often referred to as "Paymon" or the "Digital Rial." This is a central bank-issued currency, not a public investment security, intended for domestic payments and interbank settlements.

**Mining as a Regulated Activity:** The tokens acquired through licensed mining operations (e.g., Bitcoin, Ethereum) are treated as commodities or assets that can be used for specific purposes (like paying for imports), but the act of mining itself is a licensed industrial activity, and the tokens are not classified as securities by the MIMT in this context.

**Tokens for International Trade:** In 2022, a law was passed allowing the use of cryptocurrencies for import payments. These tokens are treated as a means of exchange for international trade, not as domestic securities.

**There are no formalized registration or exemption requirements for private crypto token issuers seeking to conduct public offerings in Iran.** This is because such activities are generally not permitted or are severely restricted.

Any entity attempting to launch an Initial Coin Offering (ICO) or similar token sale to the Iranian public would likely face regulatory challenges, including potential bans or legal action from the CBI, given the restrictions on cryptocurrency activities by financial institutions and the general public.

The focus of Iranian authorities is on preventing unauthorized financial activities and capital flight, not on providing a framework for public token offerings.

**No formal rules exist for the secondary trading of private crypto tokens *as securities*.**

**General Cryptocurrency Trading:** While a full ban on individuals owning or trading cryptocurrencies is difficult to enforce, the CBI has repeatedly warned against their use and banned financial institutions from dealing with them.

**Exchanges:** Many local crypto exchanges operate in a legal grey area, requiring users to comply with AML/KYC norms, often to avoid outright shutdowns. However, these are typically platforms for exchanging general cryptocurrencies (like Bitcoin for Rial), not regulated securities trading platforms for tokenized assets.

**Licensed Platforms:** The government has indicated a desire to license exchanges, primarily to control the flow of capital and ensure AML compliance, rather than regulating a securities market for tokens.

**Unauthorized Crypto Exchange Operations:** Several arrests have been made, and exchanges have been shut down for operating without proper authorization or for facilitating illegal activities (like capital flight or prohibited domestic payments).

**Use of Crypto for Domestic Payments:** Individuals and businesses attempting to use cryptocurrencies for everyday transactions within Iran have faced warnings and potential legal action, as this goes against the CBI's prohibition on crypto as legal tender.

**Unlicensed Mining Operations:** Authorities frequently crack down on unlicensed crypto mining farms, especially those illegally using subsidized electricity.

**Capital Flight:** Any significant movement of capital out of the country via cryptocurrencies is a major concern and subject to stringent enforcement.

**2018:** The CBI officially banned Iranian banks and financial institutions from dealing in cryptocurrencies, citing money laundering and financing of terrorism concerns.

**Ongoing (2020-Present):** Numerous reports of police raids on illegal crypto mining operations, resulting in confiscation of equipment and arrests.

**Ongoing:** Warnings issued by the CBI and law enforcement against illegal cryptocurrency exchanges and platforms that do not adhere to AML/KYC regulations or facilitate prohibited activities. The judiciary has often highlighted the risks associated with investing in unregulated crypto schemes.

**Central Bank of Iran (CBI) Statements/Circulars:**

The CBI's stance on prohibiting banks from dealing with cryptocurrencies was formalized in a circular in **April 2018**. While a direct English-language URL to the official circular is difficult to obtain, it has been widely reported by reputable news agencies.

*General CBI website (Farsi):* https://www.cbi.ir/ - Navigate to "News" or "Circulars" for updates, which would need translation.

**Ministry of Industry, Mines, and Trade (MIMT) Regulations on Mining:**

The MIMT issued regulations in **2019 and subsequent amendments** for licensing cryptocurrency mining farms, treating it as an industrial activity. These regulations detail energy tariffs, licensing procedures, and export requirements for mined crypto.

*General MIMT website (Farsi):* https://www.mimt.gov.ir/ - Specific regulations on crypto mining are usually found in their "Laws and Regulations" section, requiring translation.

**Law on Using Cryptocurrencies for Import Payments:**

Approved in **2022**, allowing registered importers to use cryptocurrencies to pay for imports. This was a significant shift, but it specifically targets international trade, not domestic securities offerings.

*Often reported by Iranian English news outlets like Tehran Times or Mehr News Agency.*

**Securities Market Law of the Islamic Republic of Iran (2005):**

This is the fundamental law governing securities in Iran. While it doesn't mention crypto, it's the basis for what *would* constitute a security if tokens were brought under the SEO's purview.

*Often referenced in legal analyses; official English translations are scarce.*

**Draft Comprehensive Digital Currency Regulation / Law on the Organization of Cyberspace:**

Various drafts have been under discussion by different governmental bodies (Parliament, Economic Council, National Cyberspace Center) for several years. These drafts are expected to provide a more holistic framework for digital assets, including potential classifications, but are still *in progress* and subject to change.

*News reports often provide updates on these drafts; direct official URLs are not usually public until final approval.*

**Whether Adopted:** **No, the FATF Travel Rule has not been adopted in Iran.** Iran remains on the FATF's list of High-Risk Jurisdictions due to its failure to enact the Palermo and TF Conventions and other fundamental deficiencies. Implementing a specific measure like the Travel Rule is not on the agenda when the foundational AML/CFT framework is not in place.

**Effective Date:** **Not applicable.** Since the rule has not been adopted, there is no effective date.

**Threshold Amounts:** **Not applicable.** Without adoption, there are no defined threshold amounts for the Travel Rule.

**Which VASPs are Covered:** **Not applicable.** There is no regulatory framework in Iran that mandates VASPs to comply with the FATF Travel Rule. Domestic regulations regarding virtual assets are primarily focused on controlling their use within the country and have not incorporated international AML/CFT standards to this extent.

**Technical Implementation Requirements:** **Not applicable.** No technical implementation requirements exist for the Travel Rule in Iran.

**For Iran (at the international level):** The primary "penalty" for Iran's non-compliance with FATF recommendations (including the implicit non-implementation of the Travel Rule) is its continued presence on the FATF blacklist. This results in severe economic sanctions from the international community, financial isolation, difficulty accessing global financial systems, and increased scrutiny and due diligence requirements for any entity attempting to transact with Iranian entities. International financial institutions are strongly discouraged from engaging in transactions with Iran.

**FATF Public Statement on High-Risk Jurisdictions Subject to a Call for Action (February 2020, still current):** The FATF stated that "Given Iran’s failure to enact the Palermo and TF Conventions in line with the FATF Standards, the FATF suspended its call for members and urged all members to apply counter-measures and enhanced due diligence in February 2020. Iran will remain on the FATF statement on High-Risk Jurisdictions Subject to a Call for Action until the full Action Plan has been completed."

**URL:** https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/call-for-action-february-2020.html (This is the last comprehensive update regarding Iran's status on the blacklist, which remains unchanged).

**For Domestic Entities in Iran (related to crypto activities):** While not directly linked to the Travel Rule, Iran has implemented domestic regulations concerning virtual assets, primarily focused on control and preventing their use for illicit purposes or circumventing sanctions.

For example, in 2018, the Central Bank of Iran (CBI) initially banned the use of cryptocurrencies by banks and financial institutions, though this stance has evolved somewhat, especially concerning crypto mining for electricity export. The use of cryptocurrencies for payments within the country remains largely prohibited.

**Specific Legislation/Guidance (Domestic):** Finding direct, current, and publicly accessible English translations of specific Iranian legislation on virtual assets with URLs can be challenging due to language barriers and the nature of Iranian legal publications. However, news reports and analyses often cite:

**Central Bank of Iran (CBI) Directives:** The CBI has issued various directives over the years, often reported by state media or financial news outlets, that govern the use and holding of cryptocurrencies by financial institutions and the public. These directives typically aim to prevent capital flight and maintain monetary control.

**Governmental Decrees:** The Iranian government has also issued decrees, particularly concerning the licensing of cryptocurrency mining operations.

**General Penalties:** Any individual or entity engaging in unauthorized cryptocurrency activities (e.g., using crypto for payments, operating an unlicensed exchange, or engaging in money laundering using crypto) would be subject to penalties under existing Iranian laws related to financial crimes, foreign exchange regulations, and unlicensed financial activities. These penalties could include fines, imprisonment, and asset confiscation. However, these are *domestic penalties for domestic illicit activities* and not specific penalties for non-compliance with the international FATF Travel Rule.

**Controlling the flow of capital and preventing money laundering/terrorist financing.**

**Utilizing cryptocurrencies (specifically mined ones) for import payments to circumvent sanctions.**

**Prohibiting or heavily restricting the domestic use and trading of cryptocurrencies by individuals and unlicensed entities.**

**No explicit license requirements for third-party digital asset custody services exist.** This is primarily because such services are generally not permitted or recognized within a regulated framework for individual or institutional clients.

The Central Bank of Iran (CBI) has historically taken a prohibitive stance on cryptocurrency activities that could lead to capital flight or undermine the national currency. While mining has been licensed for specific purposes (see "Pending Legislation" below), this doesn't extend to general custody services.

Financial institutions (banks, credit institutions) in Iran are generally prohibited from dealing in cryptocurrencies, which would include offering custody services.

**Non-existent.** As there are no recognized licensed custodians, there are no rules mandating the segregation of client assets from proprietary assets.

**Non-existent.** Without a regulatory framework for custody services, there are no requirements for insurance or bonding.

**No specific regulatory mandates.** While any entity holding significant amounts of cryptocurrency (e.g., licensed miners before selling to the CBI or authorized banks) would likely use best practices like cold storage for security, this is not a regulatory mandate for a "custody service."

**No definition of "qualified custodian"** exists within Iranian law or regulation concerning digital assets.

**Central Bank of Iran (CBI) Stance:** The CBI has generally prohibited banks and financial institutions from dealing in cryptocurrencies.

**Reference (Indirect):** Reports often cite CBI directives. For example, a 2018 directive banned banks and financial institutions from crypto activities, which was later somewhat softened for mining but not for general trading or services.

*Example News Report referencing CBI stance:* "Iran Allows Banks, Exchange Bureaus to Pay for Imports With Crypto," Reuters (August 2022) - While this mentions banks *paying* with crypto, it's specific to imports and doesn't imply general crypto services. https://www.reuters.com/markets/currencies/iran-allows-banks-exchange-bureaus-pay-imports-with-crypto-2022-08-28/

**FATF Grey List:** Iran remains on the FATF's "High-Risk Jurisdictions Subject to a Call for Action" list. This significantly hinders any attempt to integrate with the global financial system and makes it extremely difficult for any entity in Iran to offer internationally compliant crypto financial services, including custody.

**Reference:** Financial Action Task Force (FATF) list of High-Risk Jurisdictions.

**Legalization of Crypto for Imports:** In 2022, Iran officially approved the use of cryptocurrencies for international trade payments, specifically imports. This framework allows miners to sell their crypto directly to the CBI or authorized banks to facilitate import payments. While this involves entities holding and managing crypto, it is a very specific use case for state-approved transactions, not general third-party custody.

**Reference (News):** "Iran approves using cryptocurrency for imports," Mehr News Agency (August 2022).

**Reference (News):** "Iran makes first official import using cryptocurrency," Tasnim News Agency (August 2022).

**Mining Regulations:** Iran has licensed cryptocurrency mining operations, with specific requirements for registration, energy consumption, and often mandates for selling mined crypto to the government or authorized channels. This is the most regulated aspect of the crypto industry in Iran.

**Reference (News):** "Iran's Central Bank, Industry Ministry to Regulate Crypto Mining," Financial Tribune (December 2020).

**National Digital Currency (CBDC):** The CBI has been working on a national digital currency (digital rial). This initiative is about central bank-issued digital currency, not private digital assets or third-party custody.

**Central Bank of Iran (CBI):** The main financial regulator, responsible for monetary and banking policies.

**Money and Credit Council (MCC):** A high-level policy-making body under the CBI, which has issued critical directives regarding virtual assets.

**Cabinet of Ministers:** Has issued resolutions governing the use of cryptocurrencies, especially for trade.

**Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Supreme Council:** Relevant for AML compliance, although Iran remains on the FATF's "black list" for failing to address strategic deficiencies in its AML/CFT regime.

**Ministry of Industry, Mine and Trade:** Involved in licensing cryptocurrency mining operations.

**Retail Trading:** Direct retail trading of cryptocurrencies for the general public on independent, regulated exchanges remains ambiguous and highly restricted. While some local platforms operate, their legal status for direct fiat-to-crypto and crypto-to-fiat transactions is precarious and not clearly licensed by a comprehensive framework similar to other jurisdictions.

**State-Sanctioned Trading:** The primary regulatory focus for exchanges is related to **facilitating import payments**.

In **August 2022**, Iran announced it had made its first official import order using cryptocurrency. This followed a **2020 Cabinet resolution** that authorized the CBI to develop a mechanism for using cryptocurrencies for import payments.

Under this framework, **licensed miners** (see below) are allowed to sell their mined cryptocurrencies directly to the CBI or other approved entities to finance imports.

Only CBI-approved banks and licensed money exchangers are permitted to use cryptocurrencies for import and export settlements.

**Key Requirement:** Any entity facilitating such transactions would need explicit authorization/licensing from the CBI and likely other government bodies, aligning strictly with national economic policy.

There is no separate, explicit licensing regime for independent cryptocurrency custody providers.

Custody functions, if they exist, would be an integral part of any CBI-approved entity permitted to handle cryptocurrencies for import/export purposes. These entities would be subject to the same stringent controls and would not be offering general custodial services to the public.

Similarly, there is no independent licensing framework for general cryptocurrency payment processors.

The use of cryptocurrencies as a means of payment within Iran for goods and services is generally **prohibited** for the public.

The only authorized use of cryptocurrencies as a "payment" mechanism is for **international trade settlement**, specifically for imports, as facilitated by CBI-approved financial institutions and licensed miners. Any entity involved in this would fall under the existing financial regulations and require specific CBI authorization.

This is the most regulated and encouraged virtual asset activity in Iran due to its energy surpluses and the ability to generate hard currency for import financing.

**Required License:** Mining farms must obtain a license from the **Ministry of Industry, Mine and Trade**. They must also register with the CBI.

Miners must comply with specific electricity tariffs.

They are obliged to sell their mined cryptocurrencies directly to the CBI or other authorized financial institutions to finance imports.

Failure to obtain a license or comply with regulations can result in heavy fines, equipment confiscation, and electricity disconnections.

**Capital Requirements:** Substantial, though often less critical than strategic alignment.

**AML/KYC Requirements:** Extremely stringent under Iranian law, despite international concerns about Iran's overall AML/CFT regime (due to FATF blacklisting). Any licensed entity would be expected to implement robust customer identification, transaction monitoring, and suspicious activity reporting *within the Iranian legal framework*.

**Local Presence:** Absolutely mandatory. Full operational presence in Iran is a prerequisite.

**Alignment with National Interests:** A critical, unwritten requirement. The activity must directly serve the state's economic goals (e.g., import financing, sanctions circumvention).

**Security and Data Localization:** Strict requirements for cybersecurity, data storage, and potentially data localization within Iran.

**Reporting:** Extensive and frequent reporting to the CBI and other relevant authorities.

**Opaque and Centralized:** Involving multiple government ministries and agencies.

**Lengthy and Complex:** Requiring extensive documentation and background checks.

**Politically Sensitive:** Success often hinges on demonstrating how the proposed activity serves Iran's national economic and strategic interests.

**Direct Application:** Likely to the CBI for financial aspects, and the Ministry of Industry, Mine and Trade for mining.

**CBI & Money and Credit Council (MCC) Resolution on Virtual Currencies (2018/2019):** This initial directive banned the use of cryptocurrencies as legal tender and for payments within Iran but allowed mining under specific conditions.

*Reference:* Often cited in news articles, e.g., Reuters, Financial Times. Direct CBI link usually in Farsi.

**CBI Official Website (Farsi):** https://www.cbi.ir/ - Navigating this for specific decrees requires Farsi proficiency.

**Cabinet of Ministers Resolution on Crypto Mining for Import Financing (2020):** This authorized the CBI and Ministry of Industry, Mine and Trade to issue regulations for miners to sell their output to finance imports.

*Reference:* Reported by numerous news outlets.

**Official Iranian Government Portal (Farsi):** https://www.irangov.ir/ - Decrees are published here but are in Farsi.

**Ministry of Industry, Mine and Trade:** Responsible for issuing mining licenses.

**FATF Statement on Iran:** Crucial context for any financial activity involving Iran. Iran is on the FATF's "High-Risk Jurisdictions Subject to a Call for Action" list.

Search for "Iran" in their "High-Risk Jurisdictions" section.

**Sanctioned individuals or entities:** Any person or organization listed on relevant sanctions lists.

**Prohibited jurisdictions:** Transactions directly involving Iran.

**Prohibited activities:** Certain types of trade, financing, or services involving Iran.

**Iranian Transactions and Sanctions Regulations (ITSR), 31 CFR Part 560:** These regulations implement various Executive Orders imposing sanctions on Iran. They generally prohibit U.S. persons from engaging in virtually any transaction with Iran, its government, or persons ordinarily resident in Iran.

**Legal Reference:** 31 CFR Part 560 (Available via ECFR: https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-560)

**Executive Orders (EOs):** Numerous EOs underpin the Iran sanctions program, including:

**EO 13599 (2012):** Blocking Property of the Government of Iran and Iranian Financial Institutions.

**EO 13876 (2019):** Imposing Sanctions with Respect to Iran.

**OFAC Sanctions Program - Iran:** Provides an overview of current EOs and regulations.

**Legal Reference:** OFAC Iran Sanctions Program: https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/iran-sanctions

OFAC has explicitly clarified that its sanctions programs apply to transactions involving virtual currency just as they do to traditional fiat currency.

**Legal Reference:** OFAC's "A Framework for OFAC Compliance Commitments" (2019), Appendix A (FAQs on Virtual Currency): https://home.treasury.gov/system/files/126/sanc_compliance_framework_factsheet.pdf (See Virtual Currency-Related Sanctions Risks)

**Legal Reference:** OFAC Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments (2020), which reiterates that virtual currency companies must comply with OFAC regulations: https://home.treasury.gov/system/files/126/ofac_ransomware_advisory_10012020_1.pdf

**SDN List:** VASPs must screen all their customers, counterparties, and relevant transaction parties against OFAC's Specially Designated Nationals and Blocked Persons (SDN) List. This includes individuals, entities, and sometimes their associated virtual currency addresses.

**Legal Reference:** OFAC SDN List: https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-list-search

**50 Percent Rule:** VASPs must also block property and interests in property of entities that are owned 50 percent or more, directly or indirectly, by one or more blocked persons, even if those entities are not explicitly listed on the SDN List.

**Legal Reference:** OFAC 50 Percent Rule: https://home.treasury.gov/policy-issues/financial-sanctions/consolidated-sanctions-list/the-50-percent-rule

All transactions involving Iran are generally prohibited for U.S. persons. For non-U.S. VASPs, secondary sanctions can apply if they engage in significant transactions with the Government of Iran or designated entities (e.g., related to the IRGC, oil, or financial institutions).

**Council Regulations:** The core legal instruments for EU sanctions are Council Regulations, which are directly applicable in all EU Member States. Key regulations include:

**Council Regulation (EU) No 267/2012:** Concerning restrictive measures against Iran and repealing Regulation (EU) No 961/2010 (Nuclear proliferation).

**Council Decision (CFSP) 2011/235/CFSP:** Concerning restrictive measures directed against certain persons and entities in view of the situation in Iran (Human rights).

**Council Regulation (EU) 2023/1529:** Concerning restrictive measures against Iran (Terrorism financing and support).

**Legal Reference:** EEAS - Iran Sanctions Map: https://www.sanctionsmap.eu/#/main (Filter for Iran)

**Legal Reference:** EUR-Lex (official journal for EU legislation): https://eur-lex.europa.eu/ (Search for relevant Council Regulations and Decisions)

While explicit regulations on "crypto sanctions" against Iran are rare, the EU's asset freeze and financial transfer restrictions extend to virtual assets under the general definition of "funds" or "economic resources."

The EU's recent MiCA (Markets in Crypto-Assets) regulation includes provisions for AML/CFT and compliance with sanctions, making it clear VASPs must adhere to existing sanctions regimes.

**EU Consolidated Financial Sanctions List:** VASPs operating in the EU must screen against the EU's consolidated list of persons, groups, and entities subject to financial sanctions.

**Legal Reference:** EU Financial Sanctions Database: https://sanctions.plana.info/ (This is a public database by the EU Commission)

**National Lists:** Member States may also maintain their own lists in addition to the EU list.

EU persons (citizens, entities incorporated in an EU Member State, or persons operating in the EU) are prohibited from making funds or economic resources available, directly or indirectly, to designated Iranian individuals or entities.

**UNSCR 2231 (2015):** Endorsed the JCPOA and lifted many previous nuclear-related sanctions, but maintained some restrictions related to ballistic missiles and conventional arms transfers (some of which have since expired or been subject to US snapback claims).

**Legal Reference:** UNSCR 2231 (2015): https://undocs.org/S/RES/2231(2015))

**Terrorism Sanctions:** Iran is also subject to UN sanctions if any of its entities or individuals are designated under the UN's global terrorism sanctions regimes (e.g., related to ISIL (Da'esh) and Al-Qaida, or others). These designations are separate from Iran-specific nuclear sanctions.

**Legal Reference:** UN Security Council Sanctions Committees (e.g., Al-Qaida Sanctions Committee): https://www.un.org/securitycouncil/sanctions/information

Any financial transaction with an entity or individual designated on a UN sanctions list (e.g., for terrorism) involving virtual assets would be a violation of UN sanctions, which are binding on all UN Member States.

**UN Consolidated Sanctions List:** VASPs must screen against the UN Security Council Consolidated List, which includes individuals and entities subject to various UN sanctions regimes.

**Legal Reference:** UN Security Council Consolidated Sanctions List: https://www.un.org/securitycouncil/content/un-sc-consolidated-list

**Know Your Customer (KYC) and Customer Due Diligence (CDD):**

Identify and verify the identity of customers and beneficial owners.

Assess the risk profile of customers, including their geographic location and any links to sanctioned jurisdictions like Iran.

**Automated Screening:** Implement systems to screen all new and existing customers, as well as transaction counterparties, against all relevant national, EU, UN, and OFAC sanctions lists (SDN, EU CFSP, UN Consolidated List).

**Continuous Monitoring:** Regularly re-screen customers and monitor transactions for potential sanctions breaches.

Implement technical controls (e.g., IP address blocking) to prevent access to services from Iran or from entities known to operate within Iran.

Be aware of VPN usage and other methods used to circumvent geo-restrictions.

Monitor transaction patterns for unusual activity, large transfers to/from high-risk jurisdictions, or attempts to obfuscate beneficial ownership.

Look for direct or indirect connections to Iranian IP addresses or known Iranian entities.

**Blocking:** Immediately freeze/block any virtual assets or accounts belonging to sanctioned individuals or entities. Do not process transactions.

**Reporting:** Report blocked property and suspicious transactions (SARs/STRs) to the relevant authorities (e.g., OFAC for U.S. persons, national FIUs for EU VASPs).

**FATF Recommendations:** The Financial Action Task Force (FATF) recommends that VASPs implement measures to prevent the misuse of virtual assets for proliferation financing (PF) and terrorism financing (TF), which includes adherence to targeted financial sanctions.

**Legal Reference:** FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (2021): https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/Virtual-Assets-RBA-2021.pdf (See Recommendation 6 on targeted financial sanctions related to proliferation and terrorism).

**FATF Recommendation 15 (New Technologies):** Requires countries and VASPs to identify and assess risks, and apply AML/CFT measures to virtual assets.

**Civil Penalties:** Can range from thousands to millions of dollars per violation, depending on the severity and number of transactions. OFAC often calculates penalties based on the value of the transaction.

**Example:** OFAC has imposed significant fines on crypto companies for violations, including Bittrex ($24 million), BitGo ($99,828), and Kraken ($362,158) for allowing customers in sanctioned jurisdictions (including Iran) to transact.

**Legal Reference:** OFAC Recent Enforcement Actions: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions

**Criminal Penalties:** For willful violations, individuals can face substantial fines and imprisonment (up to 20 years), and corporations can face fines in the millions.

Penalties for sanctions violations are determined by individual EU Member States. They typically include significant fines, asset freezes, and imprisonment for individuals found guilty of violating sanctions laws.

Beyond financial and criminal penalties, non-compliance can lead to severe reputational damage, loss of trust, and potential blacklisting from traditional financial services.

**OFAC SDN List:** Includes numerous individuals and entities based in Iran or acting on behalf of the Iranian government, IRGC, or other designated organizations. These designations apply to all forms of assets, including virtual currencies.

**Specific Crypto Designations (General):** While not Iran-specific, OFAC *has* designated virtual currency addresses and entities involved in sanctions evasion (e.g., for North Korea) or other illicit activities. If Iranian actors were found to be using these designated addresses, transactions with them would also be prohibited.

**Legal Reference:** OFAC's List of Digital Currency Addresses: https://home.treasury.gov/policy-issues/financial-sanctions/special-designated-nationals-and-blocked-persons-list-sdn-human-readable-list#add (Scroll down to "List of Digital Currency Addresses")

**EU Consolidated Financial Sanctions List:** Lists Iranian individuals and entities subject to asset freezes and financial restrictions.

**UN Consolidated Sanctions List:** Lists entities and individuals sanctioned by the UN, which would include any Iranian entities designated under terrorism or other applicable regimes.

**Tavanir (Iran Electricity Generation, Transmission and Distribution Company):** The primary entity responsible for identifying and disconnecting illegal mining operations.

**Law Enforcement Force (LEF):** Conducts raids and arrests.

**Ministry of Energy:** Sets policies and oversees Tavanir.

**Entities Targeted:** Unlicensed cryptocurrency mining farms, both large-scale industrial operations and smaller home-based setups.

Illicit cryptocurrency mining without a license.

Electricity theft or misuse of subsidized electricity.

Operating energy-intensive equipment without authorization.

**Confiscation of equipment:** Thousands of mining rigs (ASICs) have been confiscated, valued at millions of dollars collectively. For example, in June 2021, Tavanir announced the confiscation of 7,000 illicit mining machines.

**Fines:** Imposed based on the amount of electricity consumed and potential damages. Specific individual amounts are rarely disclosed but can be substantial.

**Disconnection from Power Grid:** Mandatory for detected illegal operations.

**Arrests and Imprisonment:** Individuals operating these farms often face arrest, fines, and potential prison sentences. Reports frequently mention dozens or hundreds of arrests during major campaigns.

**Dates:** This has been an ongoing, continuous campaign, with intensified periods coinciding with peak electricity demand (e.g., hot summers, cold winters).

**June 2021:** Tavanir announced the shutdown of 6,914 illegal mining farms and confiscation of 200,000 mining devices since March 2021.

**December 2022 - January 2023:** Renewed crackdowns amid severe winter energy shortages.

**Summer 2023:** Continued confiscations and arrests were reported to combat energy drain.

Tens of thousands of illegal mining machines seized.

Temporary relief on the power grid during crackdowns, though the problem tends to resurface due to economic incentives.

Increased regulatory pressure for licensed mining operations to adhere strictly to rules and pay commercial electricity rates.

**June 2021 (7,000 mining machines):**

Reuters: Iran confiscates 7,000 illegal crypto mining machines as power cuts worsen

**Ongoing Crackdown & 200,000 devices (from March 2021):**

Bloomberg: Iran’s Power Chief Says 200,000 Crypto Devices Seized

Tehran Times (via IRNA): Over 117,000 unauthorized cryptocurrency mining devices seized in Iran (Reports on ongoing seizures into 2023)

**Regulator Name:** Central Bank of Iran (CBI)

Unlicensed cryptocurrency exchanges operating within Iran.

Individuals engaging in unauthorized buying/selling of cryptocurrencies.

Banks and credit institutions attempting to deal in cryptocurrencies without explicit CBI approval.

Operating a cryptocurrency exchange without a valid license from the CBI or other designated authority.

Facilitating foreign exchange transactions using cryptocurrency without authorization.

Money laundering and financing of terrorism (often cited as underlying risks of unauthorized activities).

Violation of foreign exchange regulations.

**Warnings and service disruptions:** Unlicensed platforms face the risk of being blocked or shut down.

**Financial penalties:** While specific amounts against individual exchanges are not widely reported, non-compliance can lead to severe fines and legal action under existing banking and anti-money laundering laws.

**Confiscation of funds:** Possible if illicit transactions are proven.

**Dates:** Ongoing, with key regulatory pronouncements and reiterations.

**April 2021:** CBI reiterates its ban on domestic crypto trading by banks and financial institutions, though it later clarified the use of mined crypto for import payments.

**Late 2022 - Early 2023:** Continued warnings against unauthorized platforms amidst increasing public interest in crypto.

Creates a highly restricted environment for crypto trading in Iran, pushing much of the activity underground or to international platforms (which can be risky for users).

Forces exchanges to seek specific licenses, if available, or cease operations.

The CBI aims to control capital outflow and prevent the use of crypto for purposes contrary to national economic policy.

**April 2021 (CBI reiterates ban on crypto trading by banks):**

Al Jazeera: Iran bans cryptocurrency trading by banks, financial institutions

**General CBI Stance and Regulations (often reported by Iranian media):**

Financial Tribune (English-language Iranian newspaper): CBI Urges Public to Avoid Unlicensed Crypto Exchange (Reports in late 2023 on continued warnings)

**Iran's Evolving Crypto Laws (broader context):**

Atlantic Council: Iran's shifting stance on cryptocurrency and blockchain (Provides context on regulatory shifts, including CBI's role)

**Transparency:** Iranian authorities are not highly transparent with detailed enforcement statistics, particularly concerning specific financial penalties or individual company actions.

**Focus on Mining:** The overwhelming majority of detailed enforcement reports from Iran concern illegal cryptocurrency mining, largely due to its visible and immediate impact on the national power grid.

**Sanctions:** Iran's use of crypto for sanctions evasion is a significant international concern, but internal enforcement actions generally target domestic illicit activities, not necessarily the use of crypto for *state-sanctioned* international transactions.