Directive on Iran-related Financial Transactions

Summary#

Directive on Financial Transactions Associated with the Islamic Republic of Iran is a notice from the Minister of Finance that directs certain people and businesses covered by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to treat any financial transaction to or from the Islamic Republic of Iran as high risk. The move follows a call from the Financial Action Task Force and came into force on the day it was published in the Canada Gazette (July 25, 2020).

What it does#

• Says every financial transaction originating from or going to the Islamic Republic of Iran, no matter the amount, must be treated as a high-risk transaction.
• Requires the persons and entities named in paragraphs 5(a), 5(b) and 5(h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to:
  • verify the identity of the person or entity requesting or benefiting from the transaction;
  • carry out customer due diligence, including checking the source of funds, purpose of the transaction, and, when appropriate, who really owns or controls the entity involved;
  • keep records of the transaction as required by the regulations; and
  • report all such transactions to the federal financial intelligence centre (the notice calls it “the Centre”).
• States the Directive takes effect when it is published in the Canada Gazette (publication date: July 25, 2020).

Who's affected#

• The Directive applies to the people and entities specifically listed in paragraphs 5(a), (b) and (h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
• The Gazette notice does not restate which businesses and professionals those paragraphs cover. To know whether a particular bank, firm, or other organization is covered, you would need to check the Act itself.

Why it matters#

• Financial transactions to or from Iran will face stricter checks and monitoring in Canada.
• That means more identity checks, extra documentation about where money came from and why it’s moving, record-keeping, and mandatory reporting to federal authorities.
• For people and businesses sending or receiving money linked to Iran, this can lead to longer processing times, increased scrutiny, or additional paperwork.
• The stated purpose is to protect the integrity of Canada’s financial system in response to international concerns about anti-money-laundering and terrorist-financing controls.