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International Watchdog To Review Iran's Status On Anti-Terror, Money Laundering Laws

FILE Photo - The first FATF Plenary meeting under the US Presidency in Paris. October 19, 2018.
FILE Photo - The first FATF Plenary meeting under the US Presidency in Paris. October 19, 2018.

A Financial Action Task Force (FATF) meeting which has started in Paris is expected to review the situation of Iran's commitment to international regulations against money laundering and financing terrorism also called the AML/CFT.

The FATF meeting attended by over 800 delegates from 205 countries will continue until Friday February 21. International organizations such as the UN, International Monetary Fund and World Bank are also represented at the meeting.

In a public statement issued in October 2019, the FATF gave Iran four months "for the sixth and last time" to ratify the bills relating to the campaign against money laundering and funding terrorism.

Out of the four bills required by the FATF, Iran has already accepted two, but the other two bills have been going back and forth between the Iranian Parliament, the constitutional watchdog Guardian Council and the Expediency Council that arbitrates between the Parliament and the Guardian Council.

During the past months, Iranian hardliners have been pushing to reject the two remaining bills, namely Palermo (the international convention against funding transnational organized crimes) and CFT (The convention against financing terrorism).

The Rouhani administration in Iran has been advocating the FATF bills and the parliament (Majles) has cooperated with the administration by approving the bills. However, bills approved by the Majles need to be double-checked by the hardliner dominated Guardian Council. Over the past year, the Expediency Council has been holding the bills after differences broke out between the Majles and the Guardian Council.

Iranian hardliners have said repeatedly that the FATF commitments will prevent Iran to send money to its regional allies such as the Lebanese Hezballah and Palestinian HAMAS, who are designated as international terrorist groups by the United States and some other countries.

According to the FATF, "in November 2017, Iran established a cash declaration regime. In August 2018, Iran has enacted amendments to its Counter-Terrorist Financing Act and in January 2019, Iran has also enacted amendments to its Anti-Money Laundering Act."

However, "in October 2019, the FATF noted that there are still items not completed and Iran should fully address: (1) adequately criminalizing terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; (2) identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; (3) ensuring an adequate and enforceable customer due diligence regime; (4) clarifying that the submission of STRs for attempted TF-related transactions are covered under Iran’s legal framework; (5) demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; (6) ratifying and implementing the Palermo and TF Conventions and clarifying the capability to provide mutual legal assistance; and (7) ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information."

The FATF which had earlier suspended its counter-measures against Iran, warned in October that "If before February 2020, Iran does not enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, then the FATF will fully lift the suspension of counter-measures and call on its members and urge all jurisdictions to apply effective counter-measures," in line with the Financial Action Task Force's recommendation.

During the past months, while Rouhani and his cabinet ministers have been urging for the final ratification of the FATF bills, the bills' opponents said that the commitments will reveal Iran's secrets.

The administration warned hardliners that without these bills, Iran may not be able to conduct financial transactions with its allies such as Russia and China. The administration also warned Iran’s currency might fall if the bills are not ratified. During recent days, the U.S. dollar jumped again reaching 143,000 rials, crossing Iranian central bank's "red line" of 140,000 rials.

Rouhani warned on Sunday that his administration was no longer able to have these bills ratified.

The hardliners, who were earlier willing to ratify the bills on the condition that Iran enforces its own definition of terrorism, have further hardened their position after the targeted killing of Qods Force Commander Qassem Soleimani on 3 January.

On 8 January, hardliner daily newspaper Vatan-e Emrouz wrote that "With the terrorist act of U.S. government in killing Martyr Lieutenant General Qassem Soleimani, and the double standards of the FATF the risks involved in accepting its regulations have become clearer for Iran."

The daily charged that FATF should use countermeasures against the United States for "assassinating" Soleimani. According to the paper, "One should note that basically the FATF's definition of terrorism is far from reality and it is a tool that has been created under imperialism. Experience proves this. Nevertheless, one can regard this institution's reaction to the assassination of Martyr Soleimani as a test for the definition of terrorism."