The U.S. Financial Crimes Enforcement Network (FinCEN) issued an alert warning financial institutions about the Iranian regime's abuse of religious charities to enrich government elites and fund terrorism. According to FinCEN, Iran diverts religious donations, including khums payments collected from the global Shi'a community, through informal financial channels to support the regime's military and proxy forces.
The alert includes red flag indicators to help banks identify potentially illicit charitable activity. Suspicious signs include charities that solicit donations but provide no apparent services, charities that quickly transfer large donations to other organizations, and charities whose employees attempt to evade reporting or recordkeeping requirements. FinCEN also warned of customers who receive transfers from charities they have no business relationship with, then immediately withdraw funds in cash or send them onward.
Khums payments are traditional religious contributions collected on behalf of prominent Iranian ayatollahs with ties to the regime. Charities collecting these funds may use informal money transfer systems known as hawalas and cash couriers to send money to Iran or to Iran-linked actors, according to FinCEN. The financial watchdog noted that legitimate charities should have access to banking services and called on institutions to apply risk-based approaches when evaluating charity customers.