FinCEN issues alert on Iranian abuse of religious charity networks

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FinCEN alert on Iranian charity abuse

Highlights

FinCEN issued an alert urging financial institutions to report suspected Iranian regime abuse of religious charity networks, including diversion of khums tithes.
The alert details red flags such as large anonymous donations, support for Iranian proxies, evasion of regulatory requirements, and fund transfers lacking clear business purposes.
FinCEN emphasizes maintaining access to financial services for legitimate charities while directing banks to apply risk-based due diligence under Bank Secrecy Act guidelines.

Alert outlines risks and reporting expectations

As reported by the U.S. Department of the Treasury, the Financial Crimes Enforcement Network, FinCEN, issued an alert asking financial institutions to report potential Iranian regime abuse of religious charity networks, including the diversion of religious tithes known as khums.

Treasury Secretary Scott Bessent says the administration will not allow the Iranian regime to exploit religious institutions to enrich elites and finance terrorism. He says financial institutions can provide law enforcement with critical information by identifying and reporting suspected abuse.

FinCEN says the Iranian regime has been known to use ostensibly religious organizations in Iran and neighboring countries to enrich insiders, support repression of the Iranian people, and back terrorism abroad. It also says some organizations collect khums payments on behalf of prominent Iranian ayatollahs with ties to the regime and may move funds through informal channels such as hawalas and cash couriers.

Compliance focus for banks and charities

FinCEN’s alert lists several indicators that could signal illicit activity. These include charities or nonprofits that solicit donations without appearing to provide charitable services, organizations that openly support the Iranian regime or its proxies, and entities that receive large donations from unknown sources before sending significant transfers to other nonprofits.

The agency also points to activity suggesting attempts to evade reporting or recordkeeping requirements, as well as cases in which customers receive transfers from charities with no clear business relationship and then withdraw the funds in cash or send them onward. FinCEN says the red flags are intended to help institutions detect, prevent, and report suspicious conduct.

At the same time, FinCEN says legitimate charities should retain access to financial services and be able to move funds through transparent channels. It reminds banks to apply a risk-based approach to customer due diligence for charities and other nonprofit customers, in line with the joint fact sheet on Bank Secrecy Act due diligence requirements.

In our earlier coverage of the IMF’s warning on Middle East conflict risks, we highlighted forecasts for a 2026 regional contraction followed by an uneven rebound in 2027 as war-related disruptions pressure energy production, shipping routes, and trade. The report also stressed that buffer capacity is limited, leaving the region vulnerable to renewed shocks and volatility, and urged policymakers to prioritize price stability and fiscal resilience.

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