Restrictions on financial transactions involving Iran
From 1 March 2012, transactions of $20,000 or more between Australia and Iran are prohibited without prior authorisation from the Department of Foreign Affairs and Trade. This is irrespective of whether the transaction is carried out through electronic funds transfer, transfer under other remittance arrangements, or through a bill of exchange, promissory note or letter of credit.
Two kinds of authorisation are available:
- an authorisation to exempt a particular transaction, or a series of transactions, from the prohibition (Transaction Authorisation); or
- an authorisation to exempt a particular person from the prohibition (Personal Exemption).
Applications for Transaction Authorisations must be made on the Online Sanctions Administration System (OSAS)
A personal exemption must be applied for by the person or entity seeking to be exempted. An application for a personal exemption must be made in writing to:
Department of Foreign Affairs and Trade
c/o Director, Sanctions and Transnational Crime
RG Casey Building
BARTON ACT 0221
Authorisation not required in some instances
This prohibition (and thus, the need for prior authorisation) does not apply:
- where one of the parties to the transaction is the Commonwealth, a State or Territory; or
- the transaction relates to the Iranian Embassy in Canberra or a member of the diplomatic staff of the Embassy; or
- the transaction relates to the head or member of staff of a consular post operated by Iran in Australia or an external territory.
Financial Action Task Force (FATF) counter-measures
Since 25 February 2009, the Financial Action Task Force has called for the application of effective counter-measures against the money laundering and financing of terrorism risks emanating from Iran.
In its Public Statement of 16 February 2012, the FATF expressed itself as "particularly and exceptionally concerned about Iran's failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system". In addition to renewing its call for counter-measures, the FATF reaffirmed its call on all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions.
Legal basis for the restrictions
The authority for Australia to impose countermeasures in relation to another country derives from Part 9 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), which provides for the imposition of countermeasures to regulate or prohibit the entering into of transactions with residents (including companies) of prescribed foreign countries.
Australia's counter-measures in relation to Iran are included in a new Anti-Money Laundering and Counter – Terrorism Financing (Iran Countermeasures) Regulation 2014 (the Regulation), which commenced from 1 April 2014. The Regulation is made under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
Under the Regulation, section 6 declares Iran to be a prescribed foreign country for the purposes of the AML/CTF Act. Section 7 then prohibits the provision of certain financial services in relation to a transaction where a party to the transaction is an individual who is physically present in Iran or a corporation incorporated in Iran; and the value of the money or property involved in the transaction is $20,000 or more.
Section 8 authorises the Secretary of the Department of Foreign Affairs and Trade to exempt a transaction from section 7 if the Secretary considers it appropriate to do so having regard to the objects of the AML/CFT Act and the nature of the transaction itself. Section 8 describes 5 categories of transaction that are exempted:
- a transaction necessary for the provision of a basic expense, such as foodstuffs, rent or mortgage, medicines or medical treatment, taxes, insurance premiums, public utility charges or reasonable professional fees;
- a transaction that is legally required because it is necessary to satisfy a judicial, administrative or arbitral lien or judgment that was made before 1 March 2012;
- a transaction that is contractually required under a contract, agreement or obligation made before 1 March 2012;
- a significant trade transaction that, if not completed, would have an adverse effect on Australian's trade relationship with Iran or the viability of an Australian business;
- a humanitarian transaction related to the provision of aid or humanitarian services.
The Secretary has 28 days after the application is made to make a decision under Section 8; if he or she fails to do make a decision, the transaction is taken to have been exempted from section 7. The Secretary is able to extend this period to 56 days by written notice to the applicant given within 28 days of the application being made.
Section 9 authorises the Secretary to exempt a person from section 7 if the Secretary considers it appropriate to do so having regard to the objects of the AML/CTF Act.