Executive By-Law of the Anti-Money Laundering Act
Chapter one: Definitions
The following definitions shall apply for the purposes of the terms and phrases used herein:
|a.||Act/Law means the Anti-Money Laundering Act passed in 2007.|
|b.||Customer/Client means a customer and/or any person, whether the customer (his good self), his attorney or legal agent who applies to natural persons and legal entities to benefit from services, carry out deals, transfer funds and precious possessions (such as gold, jewels, antiques, valuable artistic works and the like).|
|c.||Initial Identification means the checking and entry of the particulars declared by the customer by producing his identification records and, if acted by the attorney or agent, entry of the attorney's or agent's particulars in addition to those of the customer.|
|d.||Full Identification means precise identification of the customer at the time of providing base services as referred to in paragraphs (d) and (f) of article 3 in the present by-law.|
|e.||Credit Institutions means banks (including Iranian banks and branches and subsidiaries of foreign banks based in the Islamic Republic of Iran) , non-bank credit institutions, credit cooperatives, interest-free loan funds (qardh al hasanah – a benevolent loan free from Riba–usury), leasing companies, investee companies, foreign exchange offices and other individuals and entities that act as intermediaries to exchange funds.|
|f.||Suspicious Transactions and Operations means the transactions and operations that persons, based on the availability of information and/or the reasonable grounds, suspect that such transactions and operations are carried out for the purpose of money laundering activities.|
|Note: Reasonable grounds mean the existence of the circumstances which shall make any reasonable person investigate the origin of property and depository or other related operations. Some of these suspicious transactions and operations include: financial transactions and operations related to the customer which shall go far beyond his anticipated level of activity; detection of forgery, false statement and/or false report by the customer before or after any deal is carried out including the time when the base services are provided as well; the transactions in which it is, in any manner, identified that the true interested party at least out of the fictitious transacting parties has been another person or other persons; the business transactions above the applicable designated threshold which are inconsistent with the customer's area of activity and his known business goals and targets; the transactions in which the legal domicile of the transacting party has been located in highly dangerous (in terms of money laundering) regions; the transactions above the designated threshold from which the customer has withdrawn before or during the course of transactions or has, after the conduct of transactions, nullified the agreement without any reasonable cause;the transactions which, based on the normal conduct of business defined by the competent authorities involved, are complex, unusual and without any apparent economic purposes.|
|g.||The Designated Threshold means conversion of the amount of one hundred and fifty million (150,000,000) rials cash or its equivalent into other foreign currencies and valuable commodities. The Council of Ministers (the Cabinet) may, where necessary, modify such threshold with a view to the country's economic conditions.|
|h.||Cash means any type of coins and banknotes and checks of various kinds whose transfers have not been documented and are untraceable such as ordinary bearer checks and other checks whose bearer is a party other than the first beneficiary (such as the endorsed checks by third parties, travelers' checks, Iran checks and the like).|
|i.||The Designated Persons (Authorities) means all natural persons and legal entities referred to in articles (5) and (6) of law including the Central Bank of Islamic Republic of Iran (CBI), banks, financial and credit institutions, Stock Exchange, insurance companies, central insurance corporation, interest-free loan funds (Ghardh al hasaneh– a benevolent loan free from Riba–usury), foundations and charities and municipalities as well as notaries, lawyers, auditors, accountants, judiciary official experts and legal inspectors.|
|j.||Designated Non-Financial Businesses and Professions means the persons (natural/legal) that engage in cash transactions with a high frequency and are prone to risks in terms of money laundering such as forward dealers in real estates and cars, jewelers, dealers in valuable cars and carpets and dealers in antiques and precious cultural products.|
|k.||Base Services means the services which are, as per the rules, considered to be pre-requisite and requisite for providing other services by the designated persons and, afterwards, the customer will apply to such authorities to benefit from frequent and continuous services such as opening accounts of any type with banks, obtaining trading codes on the stock exchange, obtaining business/economic codes, obtaining business cards and business licenses.|
|l.||Legal Entity's National Code means a unique number which is allocated to all legal entities subject to the decree no.H39271T/16169 of Apr. 18, 2009.|
|m.||Aliens' Specially Designated Number means a unique number which is allocated to all aliens associated with I.R.I. by the National Database for Aliens as per the decree no.H40266T/16173 of Apr. 18, 2009.|
|n.||Council means the Anti-Money Laundering Supreme Council.|
|o.||Secretariat means the secretariat of the Anti-Money Laundering Supreme Council as described in article (37).|
|p.||The Financial Intelligence Unit means a centralized and independent unit which is responsible to receive analyze and refer the reports of suspicious transactions to the appropriate authorities as described in article (38).|
Chapter two: Customer Identification and Verification
The credit institutions, insurance companies and the stock exchange company shall have to take action for the initial identification of the client (perform customer due diligence-CDD-as described in paragraphs (a) and (b) of article (3) and enter the relevant information in their database system at the time of providing all kinds of services and dealings in monetary and financial operations even less than the applicable designated threshold such as any type of receipt and payment, money order, drawing and payment of checks, granting loans/facilities, issuance of various plastic cards, issue of letters of guarantee (LGs), buying and selling foreign currencies, certificates of deposit (CDs) and participation certificates, accepting guarantee and guarantor's obligations in any manner including the signing of promissory notes, bills of exchange and letters of credit (LCs), securities purchase and sale.
Note: Payment of the governmental bills and payments made for municipal services less than the applicable designated threshold shall not require any identification process.
All designated persons shall have to make the initial identification of their customers at the time of performing any deals and operations as well as providing services above the applicable designated threshold and/or when suspicion is aroused in respect of money laundering activities in the following manner:
A- Initial identification of natural persons
the initial identification of a natural person shall take place on the basis of the national code and checking it with the original national card as a common practice as well as the zip (postal) code of the place of residence;
|1-||the initial identification of a natural person shall take place on the basis of the national code and checking it with the original national card as a common practice as well as the zip (postal) code of the place of residence;
Note: Where the designated persons are connected on line to the State Organization of Civil Status Registry for checking information via this channel, the receipt of photo-affixed birth of certificates or driving licenses or valid passports shall not meet any impediment.
|2-||with respect to the aliens, the valid passport of the respective country having the entry visa and residence permit or identity card and/or a valid work permit for aliens shall be regarded as identification records. Note:The fulfillment of all duties described in the executive by-law of the law requiring the allocation of national code and zip (postal) code for the Iranian citizens shall accordingly be mandatory.|
B- Initial identification of legal entities
|1-||the initial identification of a legal entity shall take place on the basis of the national code and zip (postal) code of the legal entity's domicile and checking it/them with the original(s) or attested copy of identity card (as stated in the by-law requiring the use of national code of legal entities).|
|2-||with respect to the foreign legal entity, the identification shall take place by receiving the records of valid business license in Iran and the special number for aliens obtained from the National Database for Aliens.|
|2-||with respect to the foreign legal entity, the identification shall take place by receiving the records of valid business license in Iran and the special number for aliens obtained from the National Database for Aliens.|
|3-||the initial identification of a natural person introduced by a legal entity shall take place in accordance with the standards prescribed for natural persons.|
|4-||the officers in charge of initial identification of customers shall, in the circumstances where any ambiguity exists as to the authenticity of the identification records delivered by customers, have to take action to lift ambiguity and verify customer's records through search in other databases and systems and/or make inquiries from the appropriate well-informed authorities. Nevertheless, the service provision shall be stopped until when the ambiguity has been clarified.|
C- Initial identification of non-banking issues
|1-||all persons who are in charge of providing services related to the safe deposit boxes and post boxes (mail boxes) in the country shall have to identify customers at the time of service provision.|
|2-||all persons who engage in accepting or handling deposits and providing postal services to customers shall have to identify customers in the circumstances where the value of deposits and postal parcels declared by customers is above the applicable designated threshold.|
|3-||all trades union/guilds which are, at the discretion of the Council, prone to be abused by money launderers shall have to take action for initial identification of customers in all transactions above the applicable designated threshold and make entries. Such entities shall also have to record the unique number of persons in the sales invoices.|
D- Full identification of natural persons
In addition to the initial identification (as stated in paragraph A of this article), the designated persons shall, at the time of providing the base services (specifically when opening the bank account), have to take action for the full identification of the customer and estimation of his anticipated level of activity as follows:
|1-||receiving a valid introduction letter signed by at least one of the recognized customers or the trusted persons or an introduction letter from one of the credit institutions licensed by the Central Bank of I.R.I. , governmental organizations and/or official professional entities and associations.|
|2-||obtaining information from the customer regarding his relationships with the designated persons involved and making inquiries from such persons to establish the authenticity of the information given by the customer.|
|3-||receiving the valid business license especially with regards to the designated non-financial businesses and professionals which are more prone to money laundering activities such as jewelers, dealers in precious metals/stones, real estate and car dealership agencies.|
|4-||obtaining the employment certificate from the natural persons who hold business licenses and/or the legal entities that hold national codes.|
|5-||obtaining information about the type and scope of the customer's activity to estimate the customer's anticipated level of return in his area of activity.|
E- Full identification of legal entities
|1-||obtaining information about the type, nature and scope of the customer's activity to estimate the anticipated level of activity.|
|2-||obtaining information about articles of association, articles of incorporation, major shareholders, type of activity, providers of financial resources for the legal entity, founders, directors/executives, inspectors, auditors and their domiciles.|
|3-||obtaining information about the company compliance ratings from the appropriate authorities (such as rating agencies, ranking by the Vice-President's Office for Planning and Strategic Supervision and/or professional entities).|
|Note: If the company has not been rated/ranked, the designated person shall have to directly take action through examining the audited financial statements by one of the members of the Association of Chartered Certified Accountants (ACCA) so as to assess and evaluate the client's anticipated level of activity. Where the legal entity is not obligated to appoint a member of the Association of Chartered Certified Accountants, the last valid financial statements of the company shall directly be examined.|
|4-||furnishing obligations by directors and holders of authorized signature signifying that they have submitted the last records and information about the legal entity and undertake to immediately report any change in the foregoing issues.|
|Note: The procedure for estimating the customer's anticipated level of activity by the designated persons shall be established as per the rules which shall be approved by the Council upon the recommendation of the designated person.|
The records stated in paragraphs (d) and (e) of article 3 shall have to be inquired from the appropriate databases and obtain assurance about the authenticity of the documents and information (including national number and national code and the like) so produced. The inquirer shall have to certify the time of receiving confirmation from the said databases along with his particulars in the said records.
In the event that the customer does not produce the records and documents referred to in the foregoing articles or suspicion exists as regards the money laundering activities or other related offences, the designated persons shall have to avoid providing services to them and shall report the matter to the finance intelligence unit.
Note: The designated persons may, in their in-house by-laws, accept other records and documents which will securely provide the foregoing information (especially the required information for assessing the customer's anticipated level of activity). The designated persons may, in their in-house by-laws, arrange the level of identification with respect to the type, nature and the customer's anticipated level of activity while ensuring that the required information is so obtained.
Providing the base services electronically and without the customer's full identification and performance of any type of electronically untraceable or unnamed financial transactions as well as granting any loans shall be forbidden.
The designated persons shall, at the time of providing base services to the designated non-financial businesses and professions, have to obtain the required obligations from them regarding the enforcement of the anti-money laundering law and regulation whilst receiving the documents and records indicated in paragraphs (d) and (e). In case of the failure by the designated non-financial businesses and professions to furnish such obligations and/or negligence in the fulfillment of their obligations, the designated persons shall refuse to provide services to them.
The designated persons shall not have to restart the full identification process of the customers of the financial institutions in which the anti-money laundering regulations, are, at the discretion of the secretariat, being observed.
The designated persons shall have to exercise special care and control when opening and freezing the accounts for the politically exposed foreign persons.
The designated persons shall, when providing services, have to exercise continuous monitoring and further control over the persons who have been reported to them by the financial intelligence unit.
The designated persons shall, at the time of providing base services to customers, have to make them be bound to act as follows: to submit the information requested by the designated persons as specified herein and abide by anti-money laundering rules and regulations; not to permit other persons/parties to use base services and, if so, immediately report the matter to the designated persons. The legal arrangements (such as power of attorney or agency) shall not apply to this paragraph providing that the particulars of the attorney or agent and the process of his initial identification have been recorded and entered; Note: The foregoing obligations shall be clearly and precisely explained to the customer. Where the customer does not accept such obligations or does not fulfill his obligations, the providing of services to him/them shall be stopped.
The designated persons shall have to provide a proper space in all their available forms so as to put in one of the valid identity numbers (national number, national code and aliens' specially designated number as the case may be) and shall have to accurately and thoroughly receive and check such particulars.
The designated persons shall have to provide the required spaces in all softwares, banks and database systems in which the financial and monetary operations are entered so as to put in one of the valid numbers (national number, national code and aliens' specially designated number as the case may be) and shall also provide the opportunity for "search" on the basis of the said numbers/codes in software.
The designated persons shall have to send the particulars of the persons and locations recorded and entered in their database systems to the appropriate authorities every six months and shall control the accuracy of such particulars and receive the latest modifications and changes. If any definite and irremovable discrepancy is found in such particulars, the matters(s) shall be reported to the financial intelligence unit.
The designated persons shall, within six months after the notification of the present bylaw, have to perform the foregoing duties with respect to the former customers who used to benefit from the base services and, by the same token, are still carrying on their activities.
Note 1: That group of the former customers whose particulars are found to have discrepancies at the matching stage shall have to remove the discrepancies within three months. If such discrepancies are not removed, the units of anti-money laundering in each establishment shall have to report the matters to the financial intelligence unit.
Note 2: That group of the former customers whose average size of activities in a year is insignificant as per the rules approved by the Council shall be excluded from the application of this article.
As of the notification date of the present by-law, the designated persons shall have to send by post that batch of the documents and records which are determined by the Council to the customer's address. As of the said date, the designated persons shall have to use the postal (zip) code recorded in the national card with respect to the place of residence of natural persons and use the postal (zip) code of the domicile recorded in the national code with respect to the legal entities for sending the appropriate documents.
The designated persons providing base services shall have to continuously update the data relating to the full identification of customers, more specifically in the following circumstances:
|a-||when, based on the evidence and causes, there will be a probability that the customer's statement of account has undergone material changes;|
|b-||where the designated persons, based on the evidence and causes, sense a probability that the customer has been involved in money laundering operations and/or terrorist financing.|
Chapter three: Required Structure and Reporting Requirements
The designated persons and also the board of directors of trades union of the designated non-financial businesses and professions shall have to introduce a unit to be responsible for anti-money laundering activities to the secretariat subject to their organizational scope and expansion. The secretariat may, if need be, verify the qualifications of the said unit members.
Note 1: All designated persons shall, proportionate to the scope of their organizations, make the necessary arrangements in a manner to obtain the assurance required for the enforcement of the laws and regulations governing the anti-money laundering activities.
Note 2: At the time of certifying the qualifications of individuals, the secretariat shall, in addition to their professional competence, have also to establish their general and security competence by making inquiries from the appropriate authorities.
he functions of individuals or responsible units under article (18) are as follows:
|a-||to examine, investigate, prioritize and comment on the reports sent by the personnel of the appropriate authorities.|
|b-||to promptly send such reports in the specified formats to the financial intelligence unit without the customer's knowledge.|
|Note: The time-limit for the "promptness" indicated in this article shall be notified in separate directives subject to the status of the designated persons. This period, shall not, however, exceed four business days.|
|c-||to monitor the activities of the clients using the base services to identify the suspicious transactions.|
|d-||to prepare the necessary software to facilitate quick access to the required information in enforcing the laws and regulations and accordingly in the systemic identification of suspicious transactions.|
|e-||to devise the required mechanism to control the anti-money laundering processes (the process of collecting and analyzing information, recruitment of staff, training and the like) and assess and evaluate its compliance level in the appropriate establishments.|
|f-||to provide supplementary information required by the financial intelligence unit and other authorities which are competent in the fight against terrorism.|
|g-||to issue the required circulars as regards the execution of the law and regulations governing the anti-money laundering operations upon the agreement of the secretariat.|
|h-||to conduct inspection of the subordinate units to ensure the strict observance of laws and regulations.|
|i-||to prepare the statistics relating to the measures carried out by the appropriate establishment in the anti-money laundering and the outcomes thereof.|
|j-||to send the records of the persons stated in note (3) of article (4) of law to the appropriate authorities in coordination with the financial intelligence unit.|
|k-||to keep the records and reports of correspondence relating to the appropriate establishment concerning the issues of money laundering and terrorist financing.|
|l-||to draft the annual program for law enforcement by the designated persons and monthly control of the level of its compliance.|
The regulatory or supervisory authorities monitoring the designated persons (such as the Central Bank of I.R.I., Central Insurance Corporation of I.R.I., Securities and Exchange Organization, the State Inspectorate General Organization, the State Organization of Lands and Deeds Registration, Trades Union/Guilds, Organization of Endowment and Charity Affairs) shall, in their normal inspection tours, have to take account of the rules for combating money laundering and terrorist financing and comment on the compliance or non- compliance with such rules.
The secretariat shall have to examine the performance of the authorities referred to in article (20) once every six months and report the matter to the Council.
The designated persons shall, if requested by the financial intelligence unit, have to deliver a summary of information provided by users of base services in connection with the issue of anti-money laundering activities to the financial intelligence unit at the end of each month in the manner indicated by such unit.
Note: The summary of the foregoing information shall have to contain: the name, surname, national number and the date of providing base services in respect of natural person; the name and national code or economic code in respect of legal entities; the aliens' specially designated number in respect of aliens. Other necessary items shall be notified to the designated persons upon the Council's approval.
In order to speed up the reports investigation, the individual or the working group responsible for anti-money laundering operations shall be vested with overall authority and required accessibilities within the realm prescribed for each one of the designated persons so as to perform his/their assigned duties. The conduct of investigation and reporting to the appropriate authorities shall not be subject to the confirmation and approval of other authorities.
In order to speed up accessibility to the required information, upon the request made by the financial intelligence unit from the designated persons, one of the members of the anti-money laundering working group of the designated persons shall be based at the financial intelligence unit vested with the power of having accessibility to all information of the designated person so as to meet the initial needs of the financial intelligence unit. Under no circumstances the said individual shall have access to the information of the financial intelligence unit.
Chapter four: Compulsory Reports
All the staff working under the designated persons shall, in case of observing the suspicious transactions and operations (subject of paragraph (e) of article (1)) have to report the matter to the anti-money laundering units of each establishment without the client's knowledge. If such unit does not exist, the highest official of the designated persons shall bear the responsibility of receiving reports and taking appropriate measures. If the customer informed of such matter, the violator shall be treated in accordance with the prevalent rules.
The staff working under the designated persons shall have to enter all the transactions above the applicable designated threshold for which the customer pay in cash and report the matter along with the customer's explanations to the anti-money-laundering units in each establishment and, where such unit does not exist, to the highest official of the designated person. The anti-money laundering units in each establishment and/or the highest official of the designated person (where such unit does not exist) shall, at the end of each week, have to submit a summary of the said forms in the manner indicated by the financial intelligence unit and keep the originals in strict safeguards.
Note 1: Money remitters above the applicable designated threshold shall have to give the explanations required in the declared forms to the designated persons.
Note 2:In the case of cash transfer above the applicable designated threshold by using non-banking practices such as by post/mail, the staff of the designated persons shall have to report the matter to the anti-money-laundering units in each establishment. Where such unit does not exist, reports shall have to be addressed to the highest official of the designated person to adopt appropriate measures.
Note 3: The forms, amount and manner of receiving information from the customer, the manner and amount of initial information sent to the financial intelligence unit and the method of storing and retrieving information with each designated person shall be subject to the by-law which shall be approved by the Council.
The report on the suspicious transactions and accordingly the reports which the designated persons are bound to send shall imply no accusation whatsoever against individuals and the reporting of such transactions to the financial intelligence unit shall not be considered disclosure of personal secrets and, as a result, no charge whatsoever shall be leveled against the reporters when enforcing the present by-law.
Chapter five: The Affairs Concerning Foreign Exchanges
The purchase and sale of foreign currencies in any manner including the payment of local currency (rials) inside the country and receipt of foreign currency outside the country and vice versa shall be authorized only through the banking systems and licensed exchange offices pursuant to the laws and regulations in force. Failing to do so, the buying and selling of foreign currencies shall be deemed to be unauthorized and, in such case, the provisions of the Law on the Procedures of Imposing State Penalties Regarding the Commodity and Foreign Currency Smuggle approved in 1995 by the Expediency Council shall prevail.
The Central Bank of I.R.I. shall, at the end of each day, have to enter the detailed information concerning the purchase, sale and transfer of foreign currencies through the banking system and licensed exchange offices in the databank which has been organized for such purpose and further shall provide the opportunity of access to and search in it by the financial intelligence units.
All designated persons especially banks and exchange offices shall have to send reports containing the information under article 28 of the Central Bank of the I.R.I. Failure to send information, sending incomplete and false information, splitting up transactions into the amounts less than the applicable designated threshold shall be forbidden and the violator/or violators shall be treated as per the rules in force.
All designated persons shall, by adopting the necessary measurers, have to ensure that the anti-money laundering regulations are observed in branches and agencies outside the country.
The designated persons shall have to exercise the utmost caution in their transactions/exchanges with other countries and regions indicated by the Council.
Chapter six: Records-Keeping
All designated persons shall have to maintain the documentation relating to financial transactions and operations (whether active or non-active) and also the documents relating to customer's identification data when providing the base services in the physical form and/or in other lawful methods for at least five years after the end of transactions. The settlement board of the legal entities involved shall, in case of the winding-up, have also to keep the documents up to five years after the financial events.
Note 1: The records and documents in this article shall be filed and kept in a manner that the information included in such documents can be accessed at the request of the financial intelligence unit and other appropriate authorities within the period of the time appointed in article (19). The original documents and records, if requested by the financial intelligence unit and other appropriate authorities, shall have to be produced within one month at the latest. The designated person shall have the responsibility of search in and presentation of documents. Note 2: The foregoing documents shall, if need be, permit reconstruction of transactions. Note 3: This article shall not infringe other rules which have made the storing of documents compulsory for more than the specified period.
The designated persons shall have to organize their financial and administrative structures in a manner that all accounts and records of a person be coherent, recognizable and verifiable.
Chapter seven: Training
All designated persons shall, in collaboration with the secretariat, have to make the necessary arrangements to organize pre-employment training and on-the-job (OJT) training courses for their staff. The objectives of such courses shall be introduction to the law, by-law and relevant regulations; the modus of operandi of money launderers and, in particular, the latest intrigues of money launderers in using the services of the designated persons and the method of eliminating the criminal source of incomes. The staff of the designated persons shall be required to take such training courses so as to continue their employment in the appropriate positions. The records of these training courses shall have to be entered in the personnel files.
The anti-money laundering working groups with the designated persons shall, in coordination with the secretariat, have to follow the proper procedures to provide the course orientation and raise public awareness of customers as regards the benefits of law enforcement for people and general duties of customers in this respect and shall further send a report thereon to the secretariat.
Chapter eight: Other provisions
The secretariat is set up in the Ministry of Economic Affairs and Finance and shall be entrusted with the following functions:
|1-||to perform the office work relating to the holding of the Council's meetings, notification and follow-up of approvals;|
|2-||to have dynamic presence in international conferences and fora and explain the measures taken by the country towards combat against money laundering activities;|
|3-||to follow up and receive reports on the performance of the designated persons, monitor and inspect (in the form of periodic, random and ad hoc inspections) the designated persons to ensure that the approved regulations and by-laws in the scope of the responsibilities of the designated persons and of the designated non-financial businesses and professions have been enforced and prepare reports on the enforcement of relevant laws and regulations once every six months and send them to the Council.|
|4-||to assess and evaluate the annual ratings of the designated persons with regards to the level of compliance of the rules governing money laundering, and if approved by the Council, notify the results to the general public.|
|5-||to be accountable to the competent authorities, formulate policies, initiate a publicity campaign, support the secretariat's electronic database and hold public briefing sessions in association with the responsible authorities.|
|6-||to make coordination for organizing training courses inside and outside the country and compile and publish training materials.|
|8-||to prepare an annual program for the enforcement of the law and regulations thereof by the administrators/officers of the designated persons.|
|9-||to provide the material and spiritual support to the designated persons and relevant staff against whom complaints may be lodged or who may be insulted by customers in the performance of their assigned duties when enforcing the anti-money laundering rules.|
|10-||to update the appropriate by-laws and regulations through the lawful channels.|
|11-||to prepare the draft of the appropriate by-laws and comment on the proposed regulations by the designated persons.|
|12-||to publish the new methods and processes of money laundering practices and terrorist financing in the country and, if necessary, make recommendations for amendment of by-laws and regulations.|
The financial intelligence unit shall be set up in the Ministry of Economic Affairs and Finance to fulfill the functions set out below:
|1-||to gather, collect and obtain information on the suspicious transactions;|
|2-||to evaluate, examine and analyze the information in the reports and about suspicious transactions;|
|3-||to enter and classify the information in the mechanized systems;|
|4-||to report the particulars of the persons involved in money laundering activities and/or in terrorist financing to the designated persons to exercise more caution and/or terminate cooperation if requested by the appropriate authorities;|
|5-||to provide the analyzed information required by judicial authorities, officers and establishments in charges of fight against terrorism in the country if requested by the appropriate authorities;|
|6-||to prepare the required statistics from the measures carried out in the anti-money laundering process;|
|7-||to procure the required software and information systems;|
|8-||to provide security for the collected information;|
|9-||to exchange information with international organizations and institutions subject to the rules;|
|10-||to gather and obtain international experiences;|
|11-||to send reports with a high probability of accuracy or when their probability will be of great importance to the judicial authorities;|
|12-||to send reports with a high probability of accuracy or when their probability will be of great importance to the judicial authorities;|
|13-||to follow up the transmitted reports with the judicial authorities;|
|14-||to prepare the draft annual plan of the financial intelligence unit for the Council's approval;|
|15-||to send responses to the inquiries made by the designated persons as soon as reasonably practicable;|
|15-||to comment on the professional qualifications of the administrators of anti-money laundering units proposed by the directors of the designated competent authorities.|
Appointment and dismissal of the secretary shall take place upon the recommendation of the Minister of Economic Affairs and Finance, Council's approval and upon the ordinance given by the Minister of Economic Affairs and Finance. The financial intelligence unit shall perform its functions under the direction of the secretary. All posts at the secretariat, financial intelligence unit and affiliated units shall be considered as sensitive jobs and shall be consistent with the appropriate rules.
Upon the recommendation of the Council, the Vice-President for Management Development and Human Capital shall, within three months, have to notify the organizational structure and functions of the secretariat and other appropriate units, with a view to recruiting experienced staff for strict observance of the laws and a minimum increase in the administrative systems. All executive authorities shall have to cooperate with the Ministry of Economic Affairs and Finance for the recruitment of expert and experienced staff.
The Council shall have the authority to appoint a special working group so as to monitor the good performance of the functions and duties assigned to the secretariat and financial intelligence units and submit its inspection reports to the Council.
The Ministry of Economic Affairs and Finance shall have the responsibility for providing the requisite possibilities and the support required for the financial intelligence unit and the secretariat.
All designated persons shall, within three months after the notification of the present by-law, have to prepare the draft regulations required to implement this law and the present by-law and, in particular, the rules of procedure to identify the suspicious transactions and operations and send them to the secretariat. Such regulations and their possible modifications in future shall, within three months after the Council's approval, have to be notified to all the staff working under the designated persons and followed by the conduct of appropriate training courses for them.
Note: With respect to the designated non-financial businesses and professions, the Ministry of Commerce shall, upon the Council's request, take measures in cooperation with chambers of commerce and cooperative and trade unions.
One month after the notification of the present by-law, payment of cash to customers above the designated threshold per-day by the designated persons (especially credit institutions) shall be forbidden. The Central Bank of I.R.I. shall have to adopt necessary measures and introduce the appropriate mechanism to facilitate the performance of affairs.
All designated persons shall, when issuing licenses or extending the previous licenses for the designated non-financial businesses and professions in various sectors, have to obtain the appropriate obligations from applicants for the enforcement of the law and by-laws thereof governing anti-money laundering and terrorist financing and shall keep them in their files. Inclusion of such obligations in the articles of association of legal entities may accordingly be mandatory in the circumstances indicated by the Council.
Where necessary, the Council shall approve the standards and regulations required for the good performance of the existing by-law and shall notify it to the appropriate authorities, bodies, persons and guilds/trades union by the secretariat.
All designated persons shall have to provide the information requested by the financial intelligence unit regarding the anti-money laundering activities in a manner established by such unit to perform the assigned duties.
Article 48:In order to facilitate access to the customer's information and establish the authenticity of the records and information submitted by individuals, the Central Bank of I.R.I. shall have to operate the customer's database which contains the following information:
|a-||the information about the registration data and financial statements of customers (natural/legal);|
|b-||the information about accounts number and the loans/facilities granted to customers as well as maturity and past-due issues (subject of the rules for drafting the forms of granting bank loans and banking obligations by the Central Bank of I.R.I.);|
|c-||the information about dishonored checks;|
|d-||the information relating to customer's income tax return;|
|e-||the information about convictions and protested promissory notes of individuals/entities whose names have been entered in the database system;|
|f-||the information about civil status declared by customers.|
The Vice-President for Planning and Strategic Supervision shall have to provide the budget
required for enforcement of the present by-law up to the limit of ten billion
(10,000,000,000) rials for the first year out of the funds allotted in the Budget
Law and shall for subsequent years, allocate the amounts required for such purpose in the law bill of the State Budget.
The present by-law was approved by the President on Dec. 2, 2009.
The Securities Market Act of the Islamic Republic of Iran >Executive Bylaw
The definitions given for the terms and abbreviations used in Article 1 of the Securities Market Act of the Islamic Republic of Iran ratified in November 2005 will also apply to the terms and abbreviations used in the present bylaw. For the purposes of other terms and abbreviations used herein, definitions are provided as follows:
|1-||The Act means the Securities Market Act of the Islamic Republic of Iran enacted in 2005.|
|2-||Regulated Institutions and Organizations mean all institutions and organizations which are deemed to have received permits for their formation or activities from the Council or Organization in accordance with the rules of the Act, such as Exchanges, Over-the-Counter markets (OTCs), Associations, Derivative Markets, Commodities Exchanges, Central Securities Depository and Settlement Companies, Financial Institutions.|
Upon listing of the securities pursuant to article (30) of the Act, the transactions thereto in each exchange shall be conducted on the basis of the rules which have been approved by the Council.
Exchanges, Associations, OCTs and Central Securities Depository and Settlement Companies are considered self-regulatory organizations (SROs). The Council shall give designations for other self-regulatory organizations.
The Central Securities Depository and Settlement Companies, holding companies and portfolio managers are regarded as financial institutions. The Council shall give designations for other financial institutions as prescribed by paragraph (21), article (1) of the Act.
The regulated Institutions and organizations shall be subject to the provisions of the Act, rules of the present bylaw as well as the regulations set forth in the context of the legal powers delegated to the competent organs in the Securities Market.
The Council is an authority which has jurisdiction for designating and approving tradable securities of any kind, subject to paragraph (24), article (1) of the Act. The Organization shall preclude issuance and/or transaction of various papers which have not yet fallen under the category of tradable securities. The statutory requirements for this purpose shall be approved by the Council as proposed by the Organization board of directors.
The manner of setting, holding and running the Council’s meetings, decision-making process and communications of its approvals shall be specified in accordance with the directive issued by the Council
The Organization shall posses an emblem, seal and a special journal. Publication of such journal is mandatory in compliance with appropriate rules of law one year after the commencement date of the Organization’s activities by incorporating the following items:
|1-||The rules and regulations relating to the securities market by inserting approval date, the approving authority (authorities) and the date of their entry into force.|
|2-||The permits issued, revoked or suspended by the organ of the securities market along with other information which should be notified to the general public in accordance with the rules in force.|
|3-||The particulars of the securities registered with the Organization.|
|4-||Awards, verdicts or executive writs issued by the Organization, the Arbitration Board and/or final judgments passed by courts and other judicial bodies regarding the securities market unless when the board of directors will deem the disclosure of such awards and judgments to be contrary to the market expediency.|
|5-||Any modifications in the Articles of Association, headquarters’ address, name and location of branches and offices of the Organization.|
|6-||Other measures which, at the discretion of the Organization, will contribute to accomplishing the goals set by the Organization.|
Note: The Organization shall be required to operate a website within two years after commencement of its activities, containing at least the items stated in this article.
The issuers as well as the regulated institutions and organizations shall have to abide by the regulations stipulated by the Organization in respect of the information disclosure and securities promotion.
In order to maintain the independence and ensure the service quality of assessors, financial analysts and the Organization's trusted auditors who are providing professional services in the securities market, the Organization will submit the required rules and standards to the Council for approval.
Upon proposal of the Organization, the Council will approve the guidelines, rules and standards on banking transactions which are employed to facilitate the conduct of securities trading and funds settlement thereto. The Council’s approvals will be communicated to the Central Bank of the Islamic Republic of Iran and this bank will take measures for enforcement of the Council’s approvals within the context of the authorized banking privileges and regulations.
The Ministry of Communications and Information Technology shall have to provide the required technical and telecommunication infrastructures for the development of securities market.
In order to establish the required coordination in the securities market and facilitate cooperation with other policy-making and supervisory boards subject of paragraph (12) of article (7) of the Act, all commissions, committees and councils, which have been formed or will be formed under special rules and regulations such as the Government’s Economic Commission, Economic Council and the like, shall be obliged to invite the Chairman of the Organization to attend their decision-making sessions without having the voting right in cases when they have set on their agenda items for decision-making on national securities, any investment or any change and revision in the securities market.
The rules governing the investments made by foreigners in the Exchange and the way they are to be monitored, subject of paragraph (14) of article (7) of the Act, shall be approved by the Council in compliance with the prevalent rules and regulations as proposed by the Organization.
Classification of confidential (classified) information and designation of the persons authorized to access such information shall be accomplished in accordance with the rules which have been approved by the Council as proposed by the Organization.
The procedures for listing the securities, and commodities as well as all regulatory rules and standards for the exchanges and financial institutions shall be approved by the Organization.
Note: The listing of the securities and commodities which have been issued or listed on the exchanges before the Act became effective, shall be authorized in accordance with the directive approved by the Organization.
In execution of article (35) of the Act, the board of directors of the exchanges shall have to investigate the disciplinary violations of brokers, broker/dealers, market makers, issuers and other members of the exchange in accordance with the provisions of the bylaw thereof and on the basis of the directive issued by the Organization. A copy of the verdicts given on the disciplinary infractions shall be communicated to the Organization within 3 days in the maximum after such verdicts have been passed.
In execution of paragraphs (3) and (11) of article (7) of the Act, the violations committed by the managing director and board members of the exchanges and organs of other self-regulatory organizations (SROs) in connection with the duties and functions undertaken and the powers vested in them shall be investigated by the Organization’s board of directors pursuant to the directive which has been adopted by the Council.
The provisions for the actions which will typically lead to a deceptive image of the transactions trend in the exchanges by creating false prices or deceiving people into trading securities shall have to be approved by the Council as proposed by the Organization.
The report referred to under Note (2) of article (46) of the Act, shall be presented in accordance with the directive which will be approved by the Organization. The By-Law
on the Broker's Licensing and Operations
(as a Legal Entity)
(Approved by the Stock Exchange Council on Dec. 7, 2004)
The terms used in the existing by-law are as follows:
Organization:means the Stock Exchange Organization.
Broker: means an entity (a company) which is licensed by the Organization and is engaged in the trading of listed securities and rendering other brokerage services, as the case may be, on behalf of persons and/or for its own account pursuant to the relevant rules and regulations.
Applicant: means the applicant of brokerage license.
Market-Making: means an activity which is conducted by the broker under the license issued by the Organization with the aim of reducing the securities price fluctuation range and providing the liquidity thereto.
Stock Exchange Guarantee Account: means a specific account which is opened to fulfill the obligations undertaken by "brokers" due to brokerage operations in support of investors.
Branch: means a unit of brokerage firm which from its location provides services to investors and is based in the city where the Organization has a trading floor. The broker's special floors are also deemed to be branches.
Agency: means a unit of brokerage firm which from its location provides services to investors and is based in the city where the Organization does not have any trading floor. The broker's special floors on which transactions are not carried out and the orders received from that city are sent to the branch are also considered to be "agency".
Membership Fee: means an amount which is received for brokers' business activities in the Stock Exchange as the Organization members. The amount of membership fee shall be set in the beginning of each year by the Organization board of directors.
Facilities and service charges: means handling charges which are paid to the Organization by brokers in return for the facilities and services provided by the Organization for trading in securities. Brokerage Services
The broker shall be authorized to perform the following operations:
|A-||Investment and brokerage services:
Note 1: To provide services under this article shall be specified in the separate by-laws and rules which shall be approved by the Council.
Note 2: To render each of the above-named services by the broker, in addition to the listed securities trading, shall be subject to obtaining a separate license from the Organization.
The broker shall, upon the Organization's approval, be entitled to set up the "branch" and the "agency" so as to engage in the business activities specified in article 2. The broker shall be responsible for the activities conducted by the "branch" and the "agency". The pertinent regulations shall be approved by the Organization's board of directors. Reporting Requirements
The broker shall have to present the following information to the Organization:
|a-||The company's reports and audited annual financial statements three months after the end of the fiscal year at the latest;|
|b-||A summary of annual statement of the brokerage activities confirmed by the trusted auditor of the Stock Exchange two months after the end of the fiscal year at the latest;|
|c-||Any change in the conditions declared to the Organization to obtain the license;|
|d-||Other documents and information requested by the Organization as well as all the reports stated in the approved by-laws within the framework of the relevant rules and regulations.|
Article 5:The broker shall have to retain the books and documents related to his transactions in a presentable manner covering at least for 3 years after the transaction to be submitted to the Organization.
Article 6:The Organization shall, whenever it deems advisable, be authorized to directly and/or through the trusted auditors of the Stock Exchange examine the broker's documentation for compliance of its performance with rules and regulations and also retention of the minimum requirements for brokerage license. The broker shall have to deliver the documents and information requested by the Organization.
Requirements for Licensing and Continuity of Broker's Operations
The applicant shall send his written application as per the specified forms along with the required documents prescribed by the Organization's board of directors, addressing to the secretary general of the Organization.
The applicant shall have a board of directors comprising at least 5 members. The education level of the board members shall be bachelor's degree or higher. At least two board members shall have received their education in the fields of finance, accounting, economics, business administration and management. The applicant's board members shall have at least 5 years of work experience in public administration or 7 years of work experience in companies and financial, investment and credit institutions and/or in auditing and investment services institutes. The broker's board members shall have good reputation and professional ethics in their own experiential fields and shall not have any effective criminal records.
Note: The broker shall, in addition to the managing director, have at least an executive board member.
If none of the board members holds a certificate of "market capital senior management", it shall be essential that the managing director be appointed from outside the board members and from among the holders of such certificate.
Note: Until when the conditions are satisfied to enforce the provisions of this article and until the end of 1384 (March 21, 2006), the Organization's board of directors may, along with starting the business activities of the brokers whose introduced managing director does not hold the certificate, agree with the introduction of at least one representative to this Organization, being qualified in accordance with article 12 of the Stock Exchange Establishment Act.
The minimum required capital for obtaining the brokerage license shall be amounting to 5 billion rials.
Note: The minimum required capital for the brokers that are not operating in the Province of Tehran shall be amounting to one billion rials.
The applicant for brokerage activities in the Province of Tehran shall have to simultaneously open two branches in other provinces across the country.
The transactions volume and the broker's entire obligation deriving from its transactions shall be proportional to the broker's paid-in capital pursuant to the relevant by-laws.
The broker's entire obligation for settlement at any time shall not exceed the amount which has been provided through the "Stock Exchange Guarantee Account".
In order to make a compensation for the loss which might be rendered to the transacting parties on the ground of the broker's operations, it (the broker) shall have to deposit its share value in the "Stock Exchange Guarantee Account" in addition to furnishing the security prescribed in article 13 of the Stock Exchange Establishment Act with the Central Bank of the Islamic Republic of Iran.
Note: The Organization shall, within a maximum period of 3 months after the approval of the rules herein, have to put the "Stock Exchange Guarantee Fund" into operation upon drafting the enforcement regulations.
The Stock Exchange board members' shall, upon examination, give hidden votes on the acceptance or rejection of the application and the resolutions taken by the board of directors shall be valid by attaining the majority votes of the two-thirds of the members who are present at the meeting.
After the qualifications of the applicant, chairman of the board and/or the managing director have been endorsed by the Central Bank, the brokerage license shall be issued by the Stock Exchange board of directors and thereafter, the processing of the brokerage firm registration shall take place.
Note: The Central Bank's endorsement shall be announced within the period of one month at the latest by this Bank.
The resolutions made by the Stock Exchange board of directors concerning the acceptance or rejection of the application for brokerage shall be notified to the applicant by the Organization's secretary general. If the application is rejected, the applicant may lodge his complaint with the Stock Exchange Council within a period of one month. The Stock Exchange Council shall investigate the matter and announce its verdict. The Council's verdict shall be final and absolute. The applicant shall not be entitled to submit a new application for brokerage before the lapse of one full year from the date of final rejection of his previous application.
Each applicant whose membership has been approved by the board of directors shall, within a period of 14 days as of the announcement date of acceptance, have to pay in full an amount as admission fee which is determined by the board of directors. The funds received as admission fees shall not be refundable.
All the broker's employees who are working with the trading system to handle transactions shall hold at least certificates in "Basic Principles of Brokerage".
The broker shall have to provide the proper office space as well as the required equipment and software at the discretion of the Organization.
The broker shall have to annually pay the Organization certain amounts under the title of "Membership Fee" and "Service and Facilities Fee" which are set by the board of directors.
Any natural person or legal entity who is a board member of one of the private joint stock companies, shall not be entitled to be a shareholder in any of the other public or private joint-stock brokerage firms.
Any natural person or legal entity who holds over 10% shares in a public joint stock brokerage firm shall not be entitled to possess more than one percent of shares in other public joint-stock brokerage firms.
The applicant shall, within a period of 4 months after obtaining his license, have to commence his operations. Failure to do this shall lead to cancellation of his license.
Note 1: Where the natural persons receiving certificates in "Basic Principles of Brokerage", ""Capital Market Analysis" and "Capital Market Senior Management" do not have records of full-time business activities, for one regular year and/or for two non-regular years with a brokerage firm, their certificates shall be revoked and downgraded to the level of the last previous certificates.
Note 2: The broker shall be obligated to abide by all the relevant circulars, rules and regulations.
License Suspension and Cancellation
In the event that, on the basis of the Organization's report, the broker forfeits any of the primary requirements for licensing, the Organization's board of directors shall set a deadline for one month at the latest for achieving the given requirements. Where the requirements are not achieved, the Organization's board of directors shall, on the basis of their legal powers, take any decision deemed advisable.
The broker is not authorized to halt his operations without receiving the approval of the Organization. Failing this, the violator shall be treated in accordance with the relevant by-laws.
In case of the broker's application for license cancellation, the Organization shall, within a period of 14 working days, examine such application and until when the Organization makes its decision, the broker's trading symbol shall stay halted. If the Organization approves of the license cancellation, the broker shall be required to settle its debts and fulfill its obligations as practically as possible. >
Note: The Organization shall have to inform the case of license cancellation to the market in a manner deems proper and shall exercise the necessary control over settlement and performance of the broker's obligations towards its customers.
The brokers who, prior to the approval of the existing by-laws has received the brokerage license from the Organization, shall, within a period of 6 months after the approval of the existing by-laws, conform the conditions of his capital with the provisions of article 10 of these rules.Note: Establishing the qualifications of broker's employees, subject of this article and assessing their credentials with new certificates shall be entrusted to the Organization.
The enforcement rules of the existing by-laws shall be approved by the Organization's board of directors.
Transactions Bylaw for the Tehran Stock Exchange Company
Definitions as used in the existing bylaw are as follows:
|1-||"Organization" means the Securities and Exchange Organization. "Exchange" means Tehran Stock Exchange Company, which is a public-joint stock entity.|
|2-||"Transactions/Deals" mean buying and selling securities that have been listed on the Exchange. Any transaction shall become finalized when it is approved by the "Exchange".|
|3-||"Exchange Board" means a board used for introduction of classified information on securities such as the main board and secondary board, the state participation certificates (musharaka sukuk) board and corporate participation certificates (musharaka sukuk) board.|
|4-||"Offer" means the readiness expressed by the seller's broker to sell securities.|
|5-||"Bid" means the readiness expressed by the buyer's broker to buy securities.|
|6-||"Customer/Client" means a person who applies to buy (or sell) securities. "The customer" may act as legal representative of the buyer or the seller.|
|7-||"Order" means the request for buying and selling securities which is made by the customer to the broker to do so.|
|8-||"Offer Price" means a rate for any unit of securities that is entered in the trading system by the broker.|
|9-||"Open Price" means a rate which is to be determined by the broker on behalf of the "customer".|
|10-||"Limit Price" means a rate the maximum and minimum of which is announced to the broker by the "client".|
|11-||"Fixed Price" means a fixed rate announced by the "customer" to the broker to do the trading.|
|12-||"Common Trading Basis Point" means the minimum size of securities in each transaction which is determined by the Exchange.|
|13-||"Uncommon Trading Basis Point" means the size of securities being lower than "the common trading basis point".|
|14-||"Opening Price" means the price announced on the Exchange board for each security at the opening of the official trading session.|
|15-||"Closing Price" means the price of each security calculated at the end of each official trading session and announced by the Exchange.|
|16-||"Base Volume" means the number of securities of the same type which is to be traded daily so that the total percentage of spread during the day can serve as a base to determine the price for the following day.|
|17-||"Free Floating Share" of a company means a portion of the company's shares whereby the holders are ready to offer for sale and do not intend to involve themselves in managing the company by retaining such portion of shares.|
|18-||"Price limit" means the lowest to the highest price by which the price range may fluctuate during one or more official trading sessions in the Stock Exchange.|
|19-||"Closing the Symbol" means a halt in trading securities of every description during a certain period as prescribed by the relevant rules.|
|20-||"Volume Limit" means the maximum number of securities entered in each trading symbol in the course of any order. This number is a proper multiplier of "the Common Trading Basis Point".|
|21-||"Depository" means the operations during which the securities entered in the trading system qualify for tradability.|
|22-||"Settlement and Clearing" means the final stage of a transaction during which the securities ownership is transferred to the buyer and the funds so earned are paid to the seller.|
|23-||"Trading Symbol" means an ID which has been exclusively defined for each security in the trading system. Such code may appear in the form of characters, numbers or a combination of both.|
|24-||"Trading Code" means the customer's ID to transact in a security on the trading system. Such ID may appear in the form of characters, numbers or a combination of both.|
|25-||"Collective Trading Code" means an ID which has been defined in the trading system for each brokerage house for entry of collective purchase or sale orders. Such ID may appear in the form of characters, numbers or a combination of both.|
|26-||"Trading System" means a computer system through which the receipt of purchase and sale orders, matching of orders and finally conduct of transactions are achieved.|
|27-||"Trading Post/Station" means the broker's trading terminal which is associated with the Stock Exchange trading system. Each "Trading Post" is identified by a code called "Trading Post Code". Each broker's trading posts are defined under separate codes.|
|28-||"Block Deals" mean the transactions in which the rules for volume limit and price limits do not apply.|
|29-||"Preferential Deal" means the transfer of the shares in the state corporations to the employees of departments which are designed to enforce the privatization plans at a specified price.|
|30-||"Transactions by Foreign Persons" mean the securities traded by foreign persons who engage in securities transactions, as the case may, upon obtaining the required licenses from the competent authorities.|
|31-||"Bilateral Transactions" mean the transactions in which the broker simultaneously acts both for the buyer and the seller.|
|32-||"Cluster Deals" mean the purchase and sale of a set of securities carried out as a package deal.|
|33-||"Rotational Deals" mean the transactions in which, upon completion of a business cycle in a trading session, the ownership status of trading parties shall not change.|
|34-||"Conditional Deals" mean the transactions for which conditions have been laid down in agreement with the Exchange rules for the conduct and/or settlement method of such transactions.|
|35-||"Transactions with Relatives" mean the securities traded with the spouse(s) and the first class relatives (Blood-relations of the first class as defined in the Civil Code).|
|36-||"Credit Deals" mean the transactions for which a certain percentage of the deal price has been funded by a bank and/or a financial or credit institution.|
|37-||"Restructured Deals" mean the transfer of securities by the parent company to subsidiaries/affiliates with the aim of restructuring.|
|38-||"Bulk Deals/Transactions" mean the transactions in which the number of traded shares exceeds a certain percentage of the total shares of a company or the volume of trades during a fixed period and/or the total market transactions volume during a specified time-limit.|
|39-||"Collective purchase" means the buying of securities with a specific code by the broker and allocating them to customers.|
|40-||"Collective Sale" means the sale of aggregated securities of a number of customers with the broker's specific code.|
|41-||"Involuntary Transfer" means the transfer of securities which is effected upon the death of security holder to his legal inheritors.|
|42-||"Lawful Transfer" means the transfer of securities to another party which is effected pursuant to special rules and/or by virtue of a competent court ruling.|
|43-||"Index" means an indicator that demonstrates the price or return spreads in one security or in a set of securities during a specified period of time.|
|44-||"Dual Listing" means the listing of securities on another exchange, in addition to having been listed on the Exchange.|
|45-||"Market Maker" means a broker/dealer who trades in securities by obtaining the necessary permit under the obligation of increasing the liquidity and regulating the offer and bid for certain securities as well as limiting the price range movement.|
|46-||"Initial Offering" means the first offer of a company's securities upon listing them on the Exchange.|
|47-||"Introducing Broker" means a broker who, in the process of securities listing, acts as an advisor and expert for initial offering of such securities.|
|48-||"Underwriting Broker" means a broker who has made coordination to provide funds to buy a portion of securities which has remained unsold in the course of the initial offering of securities.|
|49-||"Auction" means a mechanism for securities trading on the basis of adjusting customers' sale and purchase orders according to the price and time priority.|
|50-||"Official Trading Session" means certain continuous hours of a trading session during which securities are transacted. The Exchange is authorized to hold more than one official trading session during 24 hours.|
Note: Other definitions and terms which may be required to be used in respect of computer website or implementation of new software as the business circumstances demand, shall be established and announced by the Exchange board of directors.
The business days and hours for securities trading on the Exchange, excluding the official holidays, shall be determined and announced by the Exchange board of directors.
Note: Changes in trading days and hours shall be made public at least 15 days before they take effect.
Unless the present bylaw otherwise provides, the transactions on Exchange shall be conducted through the auction. The brokers shall enter their buying and selling offers in the trading system with respect to the orders placed by buyers and sellers, number of securities and their prices.
Article 4:The transactions on the Exchange shall be executed with respect to the priority given for the price and the time that orders were entered in the trading system. The details of the transactions shall be described in the regulations governing the transactions/executions.
The scope and method of brokers' operations in securities trading shall be subject to the regulations governing the transactions.
The Exchange board of directors shall, upon detection of uncommon fluctuations in the offering or trading prices of securities in each session, be authorized to prevent the execution of transaction. The pertinent procedures shall be provided in the "regulations governing the halt of transactions". The Exchange board of directors may delegate the powers under this article to the managing director.
Note: In the case that the buyer's or the seller's broker raises an objection against the decision taken under this article to preclude the execution of transaction, he/it shall be required to submit his/its objection, while stating the arguments and evidence, to the SEO for further inquiries. Such objection shall have to be decided on within 48 hours.
The terms and method of initial offering of securities shall be subject to "the regulations on the initial offering of securities".
The types of securities trading, terms of trade (buying and selling), the amount of information to be released at the time of trading, processing of purchase and sale orders and other conditions so required shall be provided in the "regulations governing the transactions execution". The funds settlement and securities clearing and the conditions for out-of-the clearing house settlement shall be fulfilled as per the "regulations on the depository, settlement and clearing system".
The transactions on the Exchange shall be conducted via auction and under competitive conditions. Where it is impossible to transact in a security through the auction, such transactions may take place outside the official trading session as per the Exchange's approval.
In the cases that a broker acts as "introducing broker" or "underwriting broker" for particular securities, a certain priority will be given to him/its as per the "regulations on the initial offering of securities".
The proceeds earned from the stocks traded on the Exchange along with the power of attorney for sale of shares and the originals of shares shall have to be exchanged within 72 hours at the latest from the date of transaction between the buyer's and the seller's brokers. The seller's broker shall have to perform the formalities relating to the transfer of traded shares within 72 hours (three trading sessions) from the date of transaction and deliver such shares to the buyer. If there are some reasons or there is another agreement as to the delivery of shares at the expiry of the given deadlines, the case shall be reported to the Exchange managing director in writing by the end of the related official trading session at the latest. In any event, the deal so effected shall be regarded as final and absolute. The hours for settlement and/or the time-limit for shares transfer shall be established as per the "regulations on depository, settlement and clearing system".
Article 11 (Bis 1):
All bulk transactions for which the seller is prepared to conduct as conditional deals shall solely be effected with the approval of the managing director. The Exchange shall provide the necessary facilities by the brokers for shares transfer in compliance with the following circumstances:
|1-||The seller's broker shall have to receive the seller's conditions in conformity with the Exchange prevailing rules and subject to the transactions regulations and reflect them to the Exchange.|
|2-||The seller's broker shall, after the competition winner has been known, have to deliver to the Exchange the document of the off-clearing settlement of non-cash portion which has been signed by both parties (buyer and seller) following the satisfaction of the conditions declared by the buyer for transaction. The transaction shall take effect when the buyer has paid the cash portion and delivered the off-clearing settlement document in accordance with the rules in force. The time-limit for delivery of the off-clearing settlement document and finality of transaction shall be nine business days at the latest after the competition winner has been known. If a company shares are offered for bulk deals by the Privatization Organization, the extension of the time-limit for settlement of cash portion and delivery of the off-clearing settlement document from 9 business days to 30 business days shall be possible upon the SEO's recommendation and approval of the Minister of Economic Affairs and Finance as the chairman of the Securities and Exchange High Council. The time-limit shall expire the last business hour of day nine or day 30. The business hours shall run from 8 a.m. to 3 p.m. during the Ramadan (fasting month) and from 8 a.m. to 4 p.m. during other months of the year.|
|3-||The buyer shall via his broker have to settle the cash portion of the transaction through the clearing house not later than the expiry of the time-limits specified in paragraph 2.|
|4-||If the cash portion is not deposited by the buyer's broker into in the account of the Central Depository Company on the specified date subject to the conditions laid down in the offering advice, the transaction shall be deemed not to have been effected and the shares in question shall remain in the buyer's ownership. In such a case, the Central Depository Company shall deduct all handling fees due out of the three percent credited by the buyer and the remainder shall be credited to the account of the seller's broker as guarantee against the buyer's non-fulfillment of his obligations for payment to the seller.|
|Note- the funds surplus to the three percent deposited by the buyer shall be paid back to his broker.|
|5-||As soon as the shares offering advice is entered, the shares in question shall be transferred to the special code reserved to carry out the bulk deals and the seller and the seller's broker shall not be allowed to retrain from offering shares without the Exchange's approval.|
|6-||If the buyer wins the competition as per the rules and performs the conditions laid down in the offering advice to finalize the deal, the seller shall have to sign the off-clearing settlement document and deliver it to his broker. Failing to do so, the seller shall, in addition to the handling fees of the deal, have to pay the competition winner who has deposited funds or delivered the letter of guarantee pursuant to the relevant by-law, two percent of damages per month, being equivalent to the amount deposited or to the value of banking letter of guarantee for the period that the deposited funds have remained in the account of the Central Depository Company or a valid letter of guarantee has been in the possession of that company. The shares transfer from the special code to the seller's ownership code shall be subject to the payment of the damages specified in this paragraph.|
|7-||The seller shall be entitled to receive up to five (5%) percent of the cash portion at most outside the time-limits specified in paragraph 2 of this article. In such a case, the said portion shall be considered non-cash and when the off-clearing settlement document is simultaneously delivered, that same portion shall also be deemed to have been settled off-clearing and the deal shall become finalized. If the buyer and the seller do not agree in the said manner, the cash portion shall be settled through the clearing house as provided in paragraph 3 of this article.|
|8-||If the off-clearing settlement document has not been signed by the buyer or the seller or has not been delivered to the Exchange, the deal shall not be deemed to have been realized and the disputes between the parties hereto shall be resolved in accordance with the provision of article 36 of the Securities Market Act of I.R.I. The defaulting party shall have to reimburse the transaction handing fees to the beneficiary concerned in addition to payment of the damages caused to the counterparty. The calculation of the payable damages shall be based on the provisions of paragraph 4 or paragraph 6 of this article.|
|9-||If for any reason whatsoever the transaction has not been realized, the cash portion deposited by the buyer (other than 3% of the base price for entry into competition) shall be refunded to the buyer's broker.|
Article 11 (Bis 2):
The buyer's broker may, upon the approval of the Exchange managing director, use a maximum deadline of three-business days to make and present the final list of buyers in order to achieve a large-scale distribution of securities
The funds earned from trades in participation certificates (musharaka sukuk) shall have to be paid within 24 hours at the latest from the date of transaction. If such funds are not paid within 24 hours, the seller's broker shall be entitled to make a request for cancellation of the deal or receipt of late payment for each day of delay. In any case, the buyer's broker shall not be entitled to make a request for cancellation of the trade and shall have to indemnify the seller's broker for the loss so sustained. The provisions of clearing and settlement of participation certificates shall be set forth in the "regulations on depository, settlement and clearing system".
For the method of documentation relating to tradings and delivering them to the Exchange and the manner of account settlement, the "regulations governing the transactions execution" and "the regulations on depository, settlement and clearing system" shall apply.
The orders placed for sale or purchase of the Central Bank or governmental participation certificates (musharaka sukuk) shall be tradable on the Exchange regardless of the restrictions imposed in the bylaws and directives issued by the Exchange.
The transactions which involve or are involuntary, lawful, foreign persons, collective, cluster, conditional, relatives, credit, restructured and preferential shall be executed under the "regulations governing the transactions execution" and "the regulations on depository, settlement and clearing system".
The brokers shall have to refrain from conducting rotational transactions. If, by a negligent omission, they transact such deals and thereafter realize the nature of their business, they shall have to report the case forthwith to the Exchange managing director. The provisions shall be specified in the "regulations governing the transactions execution".
Under the circumstances that the purchase made by brokers or the finality of a deal raises some doubts or suspicion, the vote given by the Exchange managing director or his representative in this respect shall be final and binding.
The bulk deals shall be executed as per the "regulations governing the bulk transactions".
The procedures for depositing securities as collateral shall be specified in the "regulations governing the securities collateralization".
"The Exchange" shall have to comply with the monetary and banking laws as well as the decrees of the CBI and the Money and Credit Council on the "credit transactions" and shall further have to notify the laws, decrees and the approvals of "the Council", "the SEO" and the Exchange board of directors to brokers.
The acceptance of negligent omissions by brokers in regard to the transactions is permissible to the extent which has been prescribed in the "regulations governing the halt of transactions".
The brokers shall, in execution of the customers' orders, have to use the forms designed by the "Exchange" for acceptance of the sale and purchase orders placed by customers. The orders placed with the broker by telephone, fax and/or electronically shall be executed in the manner stipulated in the "regulations governing the transactions execution".
The method of continuing the uncompleted securities transactions on the next trading session shall be specified in the "regulations governing the transactions execution".
The opening and closing of the trading symbols and issuance of a license to halt the symbol shall be handled as per the "regulations on the symbols halting".
"The Exchange" shall have to duly provide the market with required information including the opening price and closing price, index and size of free floating shares for market analysis and execution of fair transactions based on offers and bids.
The method of transacting in various securities including shares and stocks, rights of issue, participation certificates (musharaka sukuk), shares portfolio and securities of every description listed on the Exchange shall be specified in the "regulations governing the transactions execution".
The fees received by brokers from each trading party are calculated as follows: in shares trading, each of the parties shall pay a fee of 0.4% of trade value to the broker that has executed the deal on behalf of them; in participation certificates trading, each of the parties shall pay a fee of 0.75 in thousand of the bonds price to the broker concerned.
Note: The minimum transaction fee comes up to Rls.15, 000. The maximum fee for brokers in a transaction is Rls.100, 000, 000. In the participation certificates trading, the minimum fee for brokers adds up to Rls.20, 000 and its maximum is Rls.30, 000, 000.
In order to accomplish the projects for the Exchange network expansion, the SEO shall receive the amount of 0.3% of the value of traded shares out of which 0.15% is paid by the buyer and 0.15% by the seller, and shall deposit it directly in a bank account in the name of the Organization of Exchange Brokers. Such funds shall exclusively be spent on the Exchange expansion projects and plans with the Exchange High Council's approval. Any intervention in the cash balance in the said bank account by the Organization shall be prohibited without the Exchange High Council's approval. The percentage so stated shall not be received from the deals executed on the participation certificates. With respect to other instruments traded on the Exchange, the matter, in any area, shall be reflected in the relevant Securities Bylaw.
Note: The maximum fee under this article is Rls.500, 000, 000 in each trade which is received from each transacting party.
The brokers shall have their in-coming orders books registered as provided in the pertinent regulations and according to the forms prescribed by the SEO. The brokers shall be responsible for protection of written and electronic order forms and shall ensure that orders have been appropriately executed.
The brokers shall, at the end of each business day, have to deposit all the funds they receive from their clients in a special current account that they open with a bank under the name of "current account for brokerage transactions". Such funds must be recorded in a special form prepared by the SEO, stating that they are to be allotted for sale and purchase of a certain number of shares and participation certificates owned by the seller or the buyer (stating the name and particulars of the seller or the buyer). Under no circumstances shall the brokers be authorized to retain the customers' funds for a period outside the time-limit specified in the regulations and/or never shall use such funds to transact any business deal for the benefits of other customers and/or for their own brokerage firms. The provisions thereto shall be set forth in the "regulations governing the custody of the customers' funds".
The brokers and their agents who are engaged in shares trading may purchase shares at the board price for themselves and their dependants up to the limits specified hereunder:
|a-||the natural persons and agents of legal entities who are acting as board members, managing directors and employees of brokerage firms, totaling up to the limit of Rls. 250 million (at purchase price);|
|b-||the brokerage firms up to the limit of one hundred percent (100%) of the registered and paid-up capital and/or seventy percent (70%) of the special value of shareholders' equity of the brokerage firms, whichever is lower.|
Note: The brokers constitute the managing directors and board members of brokerage firms and their agents constitute the holders of professional certificates being active in the Exchange.
With respect to shares transfer to the directors and personnel of the related departments, the transfer shall be effected pursuant to the approval on the "transfer of shares to the personnel of the listed companies on the Exchange".
The transactions settlement handled out-of-the-clearing house and the Exchange settlement system are only restricted to the items which shall be set forth in the "regulations on depository, settlement and clearing system".
The brokers shall have to comply with and enforce the provisions of the existing by-laws and in case of non-compliance, they shall be liable to the rules related thereto.
The executive regulations of this bylaw shall be valid and enforceable after they have been approved by the SEO's board of directors and duly communicated.
Remark: Articles 27 and 28 shall remain in force until the new fees are approved.
Appendix (Adopted on Sept. 21, 2004 by the Exchange High Council)
It is agreed to carry out certain transactions outside the normal working hours as follows:
|1-||The shares which, in accordance with the contracts made between the State Organs (like the Iranian National Industries Organization) and natural persons and legal entities are required to be transferred subject to an award on the back of the decree issued by the President or the Council of Ministers and upon the presidential assent, are to be traded at the agreed price.|
|2-||The shares which, in accordance with the rules of law, are transferred to pay the Government debts to the Social Security Organization, Retirement Organization and the like, are to be traded at the stated price or at the price announced on the Stock Exchange Board.|
|3-||The shares which are associated with the investments approved by the Foreign Investment Organization and the approval of which has permitted foreign investors to buy shares at the price stated in that Organization's approval.|
The Bylaw Governing Foreign Investment in the Exchanges and OTC Markets
Upon the recommendation No. 22159 of the Ministry of Economic Affairs and Finance on April 11. 2010, and by virtue of the paragraph 3 of article 4 of the Securities Market act of I.R.I ratified in 2005, the Council of Ministers approved "The Bylaw Governing Foreign Investment in the Exchanges and OTC Markets" on April 18. 2010. as drafted below:
the following definitions shall apply for the purposes of the terms and phrases used herein:
|1-||Securities Market Act means the Securities Market Act of I.R.I ratified in 2005.|
|2-||Council means the Securities and Exchange High Council.|
|3-||Exchange means the Stock Exchange as licensed by the Council.|
|4-||OTC Market means the OTC market which has been licensed by the Council.|
|5-||Organization means the Securities and Exchange Organization subject of article 5 of the Securities Market Act.|
|6-||Foreigner/ Foreign Entity: each of the following persons is considered to be a foreigner/ foreign entity:
|7-||Applicant means a foreigner or an Iranian individual in possession of foreign-originated capital who has submitted his application to the Organization to obtain a trading license subject to article 4 of the present bylaw.|
|8-||Trading License means a license which, as per the rules herein, is granted by the Organization to the applicant so as to buy, sell or trade in securities on every exchange or OTC market.|
|9-||Foreign investor means a foreigner/foreign entity that has obtained a trading license from the Organization.|
|10-||Strategic foreign investor means a foreign investor who intends to possess over ten percent (10%) of a company's shares listed on the exchange or on the OTC market or that, upon possession of the shares of a company listed on the Exchange or on the OTC market, fills a seat on that company's board of directors.|
|11-||Transferable Fund means a sum in Rial (local currency) which shall be calculated and announced subject to Note (I) of article 10.|
|12-||Capital Gain means the differential between the securities sale price and the securities purchase price.|
the foreigners/ foreign entities shall, in compliance with the present bylaw and after the receipt of the trading license, be authorized to trade in securities market or on the exchange or OTC market within the range indicated in the trading license. Other rules governing the transactional activities of foreigners on the exchange or on the OTC market shall be subject to the same laws and regulations which are applicable to the Iranian nationals.
the foreign investor shall be permitted to invest in the exchange or in the OTC market up to the thresholds designated in the Law of Promotion and Protection of Foreign Investment passed in 2002 unless the Council imposes some restrictions in certain cases.
the foreigners/ foreign entities shall have to submit the required information and documents to the Organization along with an application based on the forms prescribed by the Organization so as to obtain a license for trading in securities on every exchange or OTC market.
Note 1: the Iranian nationals shall, by submitting the documents, information and application forms specified in this article to the Organization, be entitled to obtain a trading license so as to benefit from the facilities and privileges stipulated in article 10 of these rules for investing such portion of their foreign-originated capital on the exchange or on the OTC market.
Note 2: the applicant shall have to report any change in the information submitted to the Organization.
Note 3: the documents and records referred to in this article shall be submitted either in Persian (Farsi) or in English and shall be certified or attested by the competent authorities in the manner prescribed by the Organization.
the Organization shall, within seven business days after the receipt of the complete information and documents under article 4, have to issue the trading license and deliver it to the applicant or his agent.
the person that obtains a trading license shall, upon the Organization's instructions, have to submit the required information, documents and records to the Organization, exchange or OTC market or other authorities. If such person does not submit the relevant information or documents to the designated authorities in a timely manner, the Organization shall have the authority to suspend or revoke the foreign investor's license as regards the securities purchase. In such case, the foreign investor shall, during the period of suspension or after revocation of the purchase license, be entitled to sell only the securities he has purchased in his name.
the restrictions imposed on the possession of shares by the non-strategic foreign investors on every exchange or OTC market are set forth as follows:
|1-||The number of shares owned by the total foreign investors shall not exceed twenty (20%) percent of the total shares number of the companies listed on the exchange or on the OTC market or twenty percent (20%) of the shares number of any company listed on the exchange or on the OTC market.|
|2-||The number of shares owned by each foreign investor in any company listed on the exchange or on the OTC market shall not exceed ten percent (10%) of the shares number of such company.|
Note 1: the exchange or OTC market shall, by disseminating information, have to provide the means and tools required for implementation of this article.
Note 2: if the Organization, upon due consideration, affirms that the threshold in paragraph 2 of this article has been breached owing to the act of the non-strategic foreign investor, the foreign investor shall be regarded as a strategic investor.
Note 3: the restrictions imposed on the possession of shares in banks, institutions and monetary intermediaries under article 5 of the law amending certain articles of the Fourth Economic, Social and Cultural Development Plan of I.R.I and implementation of the overall policies prescribed under article 44 of the Constitution approved in 2008 shall also apply to the present bylaw.
the strategic foreign investor shall not be allowed to sell the shares he has purchased for a period of two years without the Organization's permission. The sale of such shares shall be affected in compliance with the regulations governing the bulk trade of shares on the exchange or on the OTC market.
Note 1: If, owing to the capital increase in the related company, the ownership percentage of the strategic foreign investor declines in a manner that he is excluded from the applicability of paragraph 10 of article 1, the regulations of non-strategic foreign investor shall apply to him.
Note 2: the sale of preemption rights shall be excluded from the restrictions set down in this article.
trading in shares of the companies listed on the exchange or on the OTC market by a financial institution deemed to be a foreign entity shall not be subject to the restrictions laid down in the present bylaw and shall be subject to the same restrictions imposed on Iranian financial institutions provided that:
|1-||Such financial institution has been licensed by the Organization for its establishment or business activity in accordance with the provisions of the Securities Market Act and regulations thereof.|
|2-||The given transactions shall, at the discretion of the Organization, be carried out in line with provision of specialized services by that financial institution such as pledge to purchase shares.|
the foreign or Iranian nationals/entities shall, by obtaining the trading license, be authorized to open accounts in Rials and in foreign exchanges, transfer foreign currencies to Iran and convert them into Rials and vice versa in the Iranian banks for their banking and investing operations. Transfer of the original capital, capital gains and cash dividends received by the persons/ entities holding trading licenses overseas (outside Iran) shall be authorized in compliance with the national foreign exchange rules and other relevant standards and regulations. The Central Bank (CBI) of I.R.I shall have to deliver the foreign exchange equivalent of the transferable funds as described in Note 1 of this article to the foreign investor or the Iranian investor holding licenses at the official exchange rate in the national banking system in case of a single currency rate or otherwise, at the market exchange rate. Under particular circumstances and at the discretion exercised by the Central Bank of I.R.I., such funds shall be payable in equal installments at a four-month interval during the course of one year. The necessary guidelines for implementation of this article shall, within three months as of the approval date of the present bylaw, be approved by the Ministry of Economic Affairs and Finance and the Central Bank of I.R.I.
Note 1- the transferable funds shall, at the request of the foreign investor/ or Iranian investor holding trading licenses, be calculated by the Organization and announced to the Central Bank. The guidelines relating to the manner of establishing the foreign-originated capital and the manner of calculating the transferable funds shall, upon the recommendation of the Organization, be approved by the Council.
Note 2- any ban on the transfer of foreign currencies from the country which has been introduced or shall be introduced in the regulations shall not apply to the transferable funds.
Note 3- in the event that an Iranian individual has the foreign-originated funding or a foreign investor has obtained a license for foreign investment under the Law of Promotion and Protection of Foreign Investment, he shall, in addition to the facilities envisaged in this article, benefit from the privileges and facilities provided in such law including the facilities specified for the transfer of his capital inside or outside the country.
the following issues shall not apply to articles 7 and 8 of the present bylaw and the rules so required shall be approved by the Council in conformity with paragraphs 13, 14 and 15 of article 4 of the Securities Market Act.
|1-||the shares of Iranian issuers listed on the exchange or on the OTC market which have simultaneously been listed on the exchange or on the OTC market of another country.|
|2-||that portion of the shares of Iranian issuers listed on the exchange or on the OTC market which shall be allotted in any manner for transaction by foreigners/ foreign entities in another country.|
|3-||the securities issued by the foreign issuer listed on the Iranian exchange or on the OTC market|
|4-||that portion of the shares of Iranian issuers listed on the exchange or on the OTC market which are traded in foreign currencies.|
the possession of other securities such as musharaka sukuk by the foreign investor shall be subject to the thresholds designated by the Council.
the procedural guidelines of the present bylaw shall be approved by the Council whereby all or parts of the functions and powers of the Organization may be delegated to exchanges, OTC markets, associations, central securities depository and settlement companies and brokers. In so doing, the Organization shall have to oversee and supervise the performance of such persons (natural/ entity).
as of the communication date of the present bylaw, the procedural guidelines of paragraph C of article 15 of the Law of the Fourth Economic, Social and Cultural Development Plan of I.R.I. approved in 2005, subject of the decree No. h33070T/15619 dated June 6, 2005, would be abrogated.
The By-Law for Customer Identification and Verification (CDD) In the Capital Market
In order to combat the money laundering (AML) activity and counter the financing of terrorism (CFT) and also to prepare the grounds required for implementation of paragraph A of article 7 of the Anti-Money Laundering Act (ratified on January 22, 2008 by the Parliament (Islamic Consultative Assembly) and chapter two of the executive By-Law of the Anti-Money Laundering Act subject of the directive No. K43182 T/181434 dated Dec. 5, 2009 approved by the ministers of the working group members charged with adopting the by-laws relevant to Anti-Money Laundering Act, the existing instrument entitled “the By-Law for Customer Identification and Verification in the Capital Market” is notified with the provisions set out below:
In addition to the definitions provided in article 1 of the Securities Market Act of I.R.I ratified in November 2005 by the Parliament (Islamic Consultative Assembly), the terms and phrases used herein shall apply for the following purposes:
|1-1-||Act means the Anti-Money Laundering (AML) Act passed on January 22, 2008.|
|1-2-||By-Law means the executive by-law of the Anti-Money Laundering Act approved on December 5, 2009 and the subsequent amendments thereof.|
|1-3-||Organization means the Securities and Exchange Organization (SEO).|
|1-4-||Council means the Anti-Money Laundering Supreme Council.|
|1-5-||Secretariat means the secretariat of the Anti-Money Laundering Supreme Council.|
|1-6-||Financial Intelligence Unit (FIU) means a centralized and independent unit which has responsibility to receive, analyze and refer the reports on suspicious transactions to the appropriate authorities (as described in article 38 of the by-law).|
|1-7-||The SEO’s Anti-Money Laundering Unit means a unit based at the SEO’s premises which, as a unit charged with combat against money-laundering, shall be entrusted with the functions set out in articles 18 and 19 of the by-law.|
|1-8-||Regulated institutions/entities means exchanges, OTC markets, associations, Central Securities Depository and Settlement Company and financial institutions as defined in the Securities Market Act that have been duly licensed by the Securities and Exchange High Council or by the SEO and their operations are regulated by the Organization.|
|Note - The securities issuers that are required to provide any type of services to their customers in connection with the securities fall into the category of the regulated/controlled entities/institutions.|
|1-9-||Base services means the services which are, as per the rules, considered to be pre-requisite and requisite for providing other services in the capital market and whereby such service provision to customers will encourage them to contact the capital market to benefit from the frequent and continuous trend of services. Obtaining of the trading code shall be deemed as base service in the capital market.|
|1-10-||Trading code means a unique identifier that each person is obligated to obtain so as to use it for the entry of securities ownership, financial transactions or the commodity traded in the capital market.|
|1-11-||Customer’s information file means the information and data which are collected or completed by the regulated entities about the customer at the time of his verification and identification process and in the course of his activity.|
|1-11-||Customer/Client means a natural or legal person that applies to one of the regulated entities so as to benefit from the services rendered by such entity.|
|1-12-||Customer’s/Client’s identification/ (CDD) means the verification and confirmation of the customer’s identity on the strength of the information and evidence as well as independent, authentic and reliable data. The customer’s identification process shall fall into two the categories of “initial identification” and “full identification”.
|1-14-||KYC’s identity system (know your customer-KYC’s system) means a system at the Ministry of Economic Affairs and Finance which shall facilitate the reply to the inquires made by the regulated institutions on the identification proof of different persons and their addresses via the connection to the appropriate databases (such as those of the State Organization for Personal Status Registration, State Organization for Real Estates and Deeds Registration, Post Company, Tax Affairs Organization).|
|1-15-||Credit Institutions means banks (including Iranian banks as well as branches and agencies of foreign banks based in the I.R.I.), non-banking credit institutions, credit cooperatives and interest-free loan funds (Gharzolhassaneh (a benevolent loan free from usury or Riba), which have been licensed by the Central Bank of I.R.I. to perform their operations.|
Financial and commodity transactions in the capital market shall be dependent on having a trading code by the customer. Each customer must only have one unique trading code.
Prior to the base service provision, it shall be necessary to take measures for the full identification of the customer.
The customer’s identification and verification process shall fall into the two categories of “initial identification” and “full identification” in respect of the type of service requested by him/it.
Initial Identification: the regulated institutions shall have to take measures for the customer’s initial identification– as described in the present by-law – when providing services to him/it and shall enter the relevant information in the databases and in the customer’s information file.
In addition to the customer’s initial identification, the regulated institutions shall have to take action for his/its full identification when providing the base services to him/its.
Documentation of the customer’s zip/postal code during the course of initial identification shall be performed by the matching of the postal code declared by the customer with the postal code printed on the back of the national card. To achieve this goal, it shall deem necessary that, if possible, the postal code indicated by the customer be matched with the information available in the country’s postal code database via the KYC’s system.
The regulated institutions shall have to match the information and data obtained from customers with the contents of the valid identification records and to gain assurance about their accuracy.
|a-||The only valid identification documents used to identify natural persons shall be national cards.|
|b-||The valid identification documents for legal persons include:
Note 1– With respect to the incapacited persons, it will also be necessary to receive an official deed indicating the attestation of guardianship or trusteeship in addition to the foregoing evidence and records.
Note 2– When an attorney or a legal agent is involved in the identification process, it shall be necessary to receive affirmative documents and evidence accordingly.
Note 3– It shall be necessary to maintain the attested copies of the documents stated in this article in the customer’s information file records.
If a customer fails to produce the identification records and evidence stated in the foregoing articles, the regulated institutions shall have to avoid providing services to him/it and shall report the matter to the SEO’s anti-money laundering unit.
The regulated institutions shall have to inform all the former customers to complete the documentation required for their identification and assessment of their activity level. Where they fail to produce the records and evidence within a period of three months, the service provision to them shall be ceased until when such requirement has been met.
Providing of the base services electronically and without the customer’s full identification and performance of any type of electronically untraceable or unnamed financial transactions shall be forbidden.
The regulated institutions shall, when providing base services to customers, have to make them be bound to act as follows:
|a-||to submit the information requested by the regulated institutions as specified in the existing instrument and comply with the anti-money laundering rules and regulations;|
|b-||not to permit other entities/persons to use base services and, if so, promptly report the matter to the regulated institutions. The legal representation shall not apply to this paragraph providing that the particulars of the attorney or agent and the process of his initial identification have been recorded and entered.|
Note – The foregoing obligations shall be clearly and precisely explained to the customer. Where the customer does not undertake such obligations or does not fulfill his/its obligations, the providing of services to him/it shall be stopped.
The standards and criteria required to identify the applicants for licensing, establishing and operating the financial institutions and self-regulatory organizations (SROs) as well as obtaining license for securities issuance in the capital market shall be subject to the rules, directives and circulars approved by the SEO. In any event, the customer identification criteria as specified in the existing regulations shall also be enforceable.
The regulated institutions shall have to provide proper spaces in all their applicable forms so as to put in one of the unique identifiers (national number, national code as the case may be) and the zip/postal code for addresses and shall have to accurately and thoroughly receive and check such particulars.
The regulated institutions shall have to provide the required spaces in all softwares, systems and databases in which the financial operations are entered so as to put in one of the unique identifiers (national number, national code as the case may be) and the zip/postal code and shall also provide the opportunity for a search on the basis of the said numbers/codes in software.
In the event that the regulated institutions have not matched the particulars of the persons and entities previously entered in their databases with those entered in the respective databases (through direct contact with the databases concerned and/or through indirect contact to KYC’s interface), it should be necessary to transmit the foregoing particulars to the said databases not later than six months after communication of the existing regulations so as to control the accuracy of such particulars.
The regulated institutions shall have to update the information previously matched with the respective databases once every three months. If it is proved that the natural person has died during this period or the legal entity has been dissolved but the occurrence has not been reflected to the regulated institutions, it should be necessary that his/its trades be immediately blocked and that the matter be reported to the SEO’s anti-money laundering unit.
The regulated institutions shall have to create a unit or introduce an agent aimed at establishing contacts with the SEO’s anti-money laundering unit so as to receive and send reports, examine inquiries and other money-laundering-related matters as provided in article 19 of the by-law and the requirements set out in the existing regulations.
In order to perform the documentation of the information and data provided by customers, it should be required to have the copies of authentic documents certified by the staff concerned at the regulated institutions and be kept in customer’s records after verification of such information with the appropriate databases or authorities and upon gaining assurance about the veracity of the information so produced.
Providing of services to customers shall be deemed to be the confirmation of performing the customer identification measures (customer due diligence (CDD)) by the regulated institutions which shall also bear the liability of any shortcomings and weaknesses within the framework of the existing provisions.
The regulated institutions shall have to block all trading codes without a national number or code within a maximum period of three months as of the communication date of the existing rules. As soon as the national identifier or code is indicated, the said code shall be deblocked.
Note – When it is impossible to issue national identity number (NID) by the State Organization of Real Estates and Deeds Registration, it shall be possible to continue providing services to the customers without NID after their names and particulars have been transmitted to the financial intelligence (FIU) unit for its confirmation.
In order to exercise an effective control over the risks from the customer’s inadequate identification, it should be required to monitor his transactions being appropriate to the allocated categories.
The board of directors, senior management and/or the corresponding executives at the regulated institutions shall have to ensure the existence of effective customer due diligence measures and their performance through reasonable procedures. Such measures shall have to provide the possibility of effective managerial supervision over systems, controls, separation of functions and employee training. The ultimate responsibility for the decisions taken in this respect shall remain with the board of directors or its corresponding bodies.
The regulated institutions shall have to reevaluate the information and data concerning the customer’s activity once every six months in accordance with the criteria and standards set forth by the SEO. Accordingly, upon the customer’s request and/or when material changes are made in the customer status, the regulated institutions shall have to perform full identification of the customer for the second time.
It shall be forbidden to provide services to the following persons. Where services were provided in the following circumstances prior to notification of the existing rules, the regulated institutions shall have to discontinue service provision to them: when the customer refuses to submit the information, data and records described in the existing regulation; when the client’s agent does not have any records and legal documents as the proof of his agency; when the regulated institutions directly and through the component authorities prove that the information and evidence submitted by the client are not true; the persons/entities that have been banned from carrying out transactions upon the order issued by the competence authorities; the Iranian persons having no national code or national identifier/number.
Note – When it is impossible to issue national identifier/number by the State Organization of Real Estates and Deeds Registration, it shall be possible to continue providing services to the customers without NID after their names and particulars have been transmitted to the financial intelligence (FIU) unit for its confirmation.
The regulated institutions shall have to continually update the data and information concerning the full identification of customers, specifically in the following circumstances:
|a-||when, based on the evidence and causes, there will be a probability that the client’s statement of account has undergone material changes;|
|b-||when the regulated institutions, based on the evidence and causes, sense a probability that the client has been involved in money laundering operations and/or terrorist financing;|
|c-||when, for any reason, there exists an ambiguity in the veracity of the previously obtained identification data.|
The customers shall have to inform the regulated institutions of any change made in the information referred to in article 4 of the existing regulation as soon as possible. The regulated institutions shall have to obtain assurance about the accuracy of the information so produced prior to updating the given changes.
Note – The criteria and standards for ongoing supervision shall be set out and communicated upon the SEO’s recommendation and with the approval of the secretariat with a view to the type of customer (natural and legal), nature and subject-matter of the services and operations relating to securities and commodity in the capital market.
In the event that the regulated institutions become suspicious of the beneficial owner of the transactions carried out by the identified customers, they shall have to report the particulars of such customers and of the prospective beneficiary to the SEO’s anti-money laundering unit as the operations/transactions which suspect of money laundering.
The regulated institutions shall, upon the SEO’s approval, have to adopt effective procedures to identify customers pursuant to the rules in force and shall exercise regular monitoring along with a review if deemed necessary.
The regulated institutions shall, if requested by the financial intelligence unit, have to deliver a summary of the information provided by users of base services in connection with the issue of anti-money laundering activities to the financial intelligence unit at the end of each month in the manner arranged by such unit.
Note – The summary of the foregoing information shall have to contain: the name, surname, national number and the date of providing base services with respect to natural persons; the name and national identifier/number or economic code with respect to legal persons as well as the specially designated number with respect to aliens. Other necessary items shall be communicated to the designated persons upon the council’s approval.
The regulated entities shall have to organize continuing training courses on the procedures of customer identification and verification for their staff members. Such training courses shall at least include the following topics and shall be designed in a manner that the staff may gain adequate and rational knowledge about the necessity, significance and the method of performing the policies and procedures of customer identification and verification:
|a-||the policies relating to the reception of new customers and required documents;|
|b-||the method of collection data and information concerning the customer previous records;|
|c-||the method of performing policies relating to customer full identification;|
|d-||the method of receiving documents and updating them;|
|e-||the procedure of effective measures if inconsistencies are found in the customer identification data and records.|
The regulated institutions shall have to document the procedures used for customer identification as per the rules herein and shall notify such procedures to their staff and then shall reliably obtain assurance of their implementation.
The regulated institutions shall have to make categories of their customers (natural and legal persons) with a view to the risk that will more likely exist on their part and on the grounds of factors such as social and occupational status, financial standing, type and nature of professional activity, customer record, original country, relevant accounts or other effective measures based on the procedure set out by the SEO.
The categories stated in article 31 shall have such an arrangement that the receipt of information and data from the customers be performed on the basis of the category allocated to them. In this way, it shall be sufficient to receive the necessary information from the customers that run the minimum risk of money-laundering operations within the regulatory framework of the existing rules.
Note – As regards the customers that fall within the categories exposed to higher risk for money laundering operations, the information shall have to be received at a more extensive level and updated at shorter periods. The range of receiving information and the time periods for updating such information shall be in accordance with the requirements set out by the SEO.
The regulated institutions shall have to retain the customer information pursuant to the guidelines for retention and destruction of records in capital market in the area of anti-money laundering activities and shall also have to take necessary measures to prevent the disclosure and unauthorized use of such information. The responsibility for the said information disclosure shall obviously rest with the regulated institutions and the parties that disclose information shall be prosecuted under the law.
In order to update the information, the regulated institutions shall have to oblige the customer under contractual obligations or the relevant forms to inform the registrar (the State Organization of Civil status Registration and the like) any change in the information it/he has submitted along with relevant evidence as practically as possible.
It is necessary to take measures to perform the identification process of former customers as soon as possible in the following manner:
|1-||that group of the former customers whose identification data are found to have inconsistencies at the matching stage shall have to remove the same within three months. If such inconsistencies are not rectified, the regulated institutions shall have to report the items to the SEO’s anti-money laundering unit. The SEO’s anti-money laundering unit shall accordingly have to transmit such report to the financial intelligence unit (FIU) as promptly as possible;|
|2-||that group of the former customers whose average size of activities in a year is insignificant as per the rules approved by the Council shall be excluded from the application of this article.|
In the event that the regulated institutions, owing to certain reasons such as lack of cooperation on the part of the customer, cannot obtain the necessary information for his/its identification process or when the customer submits untrue information, the regulated institutions shall have to avoid providing services to the customer and, if possible, to inform the matter to him/it.
The SEO’s anti-money laundering unit shall oversee the implementation of the existing regulations. For this purpose, the regulated institutions shall have to deliver the SEO’s anti-money laundering unit the information requested by this unit in the performance of the provisions herein.
The existing regulation shall be binding on the branches and agencies of the regulated institutions and shall also apply to the regulated entities located in the free trade-industrial areas as well as in special economic zones.
The existing regulation would become effective one month after it has been communicated by the SEO. During such period, the regulated institutions shall, while informing the customers, have to provide the facilities required for implementation of this regulation in a manner that its implementation may not disrupt the customer’s affairs as far as possible. The existing regulation comprising 39 articles and 18 notes was approved on 11 October, 2011 at the 10th session of the Anti-money Laundering Supreme Council and would become effective as of the communication date.