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Financial Transparency Bills 'Contradict Constitution' - Watchdog Official

Mohsen Reazaei speaking on December 17, 2018.

The secretary of a powerful watchdog body in Iran has said that financial transparency bills proposed by President Hassan Rouhani's administration are somewhat against the Islamic Republic's constitution and long-term general policies.

Mohsen Rezaei, the secretary of Expedience Discernment Council (EDC), said December 17 in Tehran that three out of four Palermo Bills go against the country's constitution and long-term high policies, but did not specify the points of contradiction

Meanwhile, an MP believes that the EDC has killed the spirit of the bills.

Rouhani's proposals collectively known as the "Palermo Bills" in Iran, if adopted, would pave the way for the country to meet FATF requirements -- as well as those of the United Nations Convention Against Transnational Organized Crime (UNTOC), Combatting the Financing of Terrorism (CFT), and the United Nations Office of Drugs and Crimes -- in the hope of reducing international pressure on Iran’s deteriorating economy.

Originally proposed in November 2017, the bills have met with staunch resistance from hardliners, including Supreme Leader Ayatollah Ali Khamenei, who says the agreements were “cooked up” by foreign enemies.

Rezaei is a former senior IRGC commander and a trusted person of the Supreme leader.

The fate of the bills, already passed by parliament and amended according to the Guardian Council (GC) demands, are currently in the hands of EDC which has the final say.

Based on the Islamic Republic Constitution, all bills and parliamentary motions passed in Majles (parliament) should be endorsed by the GC. If the GC demanded amendments in the draft laws, parliament might obey or refer the disputed bills and motions to the EDC for arbitration. Then, the decision of EDC would be final.

While the fate of the Palermo Bills is not yet decided, several mid-ranking clergies, who are appointed by the Islamic Supreme Leader Ayatollah Ali Khamenei as the Friday Prayer Leaders across Iran, have openly attacked the bills, describing them as "against national interests".

In the meantime, a pro-reform MP, Mohammad Javad Fathi believes that the EDC has amended the Palermo Bills in a way that it has killed the spirit of President Rouhani's proposals.

The amendments make combatting money laundering practically impossible, Fathi has lamented, adding that the amended version might not meet FATF's demands and expectations.

Financial Action Task Force (FATF) has given Tehran until February to either endorse UNTOC or be added to its blacklist of countries refusing to cooperate in the fight against money laundering and financing terrorism. The International Monetary Fund is urging Tehran to endorse the bills.

Moreover, the International Monetary Fund (IMF) has also urged Tehran to endorse the bills, implicitly warning that, if not, it will meet more hurdles in its global banking transactions.

President Rouhani has also personally defended his plan to join international anti-money laundering conventions such as FATF.

“Without cooperation with foreign banks, the cost of living would be 20 percent higher. Passing FATF bills mean costs would decrease 20 percent,” Rouhani said on December 10 at a meeting with officials from the Roads and Urban Development Ministry, reported official news agency IRNA.

“It is not acceptable that some organizations come up with rhetoric (against passing such bills) without telling people the consequences of not doing so,” he added.

“Is it possible to not work with foreign banks today?” Rouhani asked, adding that some people are creating propaganda against the issue and saying signing the convention would lead to a weakening of Islam. “If they understood Islam, they wouldn’t say that,” he added.

The opponents are mainly Friday Prayer leaders, Islamic Revolutionary Guards Corps commanders, and other conservative allies of Khamenei’s. They argue that passing the bills will threaten Iran’s security, whereas analysts say the real fear in circles loyal to the Supreme Leader is that adhering to rules for financial transparency would prevent Tehran from funding the Lebanese Hezbollah and Palestinian Hamas militant groups.

While the heated debate over the bills is still going on, the Chairman of the National Security and Foreign Policy Commission of the Iranian Parliament, Heshmatollah Falahatpisheh has insisted the probability of approving FATF related and money laundering bills is high.

The senior MP went on to say that he was present at the EDC's Saturday session which was dedicated to reviewing the bills, adding that the council is following the bills "seriously".

Iran and North Korea are the only countries on the FATF blacklist, but the Paris-based organization has suspended countermeasures against Tehran while it works on reforms.