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Zarif Criticizes FATF For Demanding Increased Scrutiny Of Iranian Financial Institutions


IRAN -- Iranian Foreign Minister Mohammad Javad Zarif speaks at a conference that Iran is hosting on unilateralism and international law at the Allameh Tabataba'i University in the capital Tehran, October 21, 2019

Iranian Foreign Minister Javad Zarif has criticized the international watchdog Financial Action Task Force (FATF) for calling upon members to require an increased supervisory examination of Iran-based branches and subsidiaries of financial institutions, calling the move "a political decision."

"The FATF's decision is absolutely political, and we are totally against it,” Iranian state TV (IRIB) quoted Zarif as saying on October 21. “However, for the sake of our own political interests, we have taken all measures to combat money laundering and financing of terrorism."

Referring to the discord among Iranian officials and legislative assemblies that has stopped the fulfilment of FATF's requirement, Zarif said he hoped that "a converging of ideas inside Iran would strip the administration's opponents and those who are against Iran's interests of their excuses" for not joining international conventions against money laundering and financing terrorism.

The FATF has conditioned taking Iran out of its blacklist on the ratification of four bills. In August 2018, Iran enacted amendments to its Counter-Terrorist Financing Act and in January 2019 amended its Anti-Money Laundering Act.

But the so-called Palermo bill (International Convention Against Transnational Organized Crimes) approved by the UN General Assembly in 2000, and the CFT (Convention Against Funding Terrorism) have passed the Iranian Parliament but are not yet in force.

The two bills have been passed by parliament, but the constitutional watchdog Guardian Council has not ratified them. The parliament sent the bills to the Expediency Council for arbitration, but the council has not been able to issue a final verdict on the case.

The FATF warned on October 18 that countermeasures against Tehran will return if Iran fails to start implementing the International Convention Against Transnational Organized Crimes by February 2020.

While acknowledging the progress that Iran has made, including with the passage of the Anti-Money Laundering Act, "The FATF decided at its meeting this week to continue the suspension of countermeasures, with the exception of the FATF calling upon members and urging all jurisdictions to require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran, in line with the February 2019 Public Statement," the FATF statement said.

If the countermeasures return, Iran will officially remain on the FATF blacklist next to countries such as North Korea as a high-risk country for those seeking to do business with Tehran.

This is the fourth time the FATF has suspended its countermeasures to give Iran yet another opportunity to comply with the international regulations.

The FATF noted in June that there are still items on Iran's action plan that have not been completed and called on Iran to fully address them. These include, among other items: criminalizing terrorist financing, including by removing the exemption for designated groups; identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; ensuring an adequate and enforceable customer due diligence regime; ratifying and implementing the Palermo and FT conventions; and ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information.

Foreign Ministry spokesman Abbas Mousavi told a news conference in Tehran on October 21 that the "FATF issued the new deadline for Iran's compliance thanks to efforts made by our friends at the session on Friday."

Last year, several hard-liner figures close to Supreme Leader Ayatollah Ali Khamenei opined that joining the FATF and compliance with the International Convention Against Transnational Organized Crimes will make it impossible for Tehran to lend financial support to groups such as the Lebanese Hizballah and Hamas.

However, Mousavi said these individuals were "ill-informed."

Some members of the Iranian Parliament have maintained that the body can declare the final ratification of the Palermo and CFT bills as the Expediency Council has failed to pass a judgement on the matter during the last year.

But critics in Tehran say the entire episode of the FATF bills has undermined the authority of the parliament as Iran's elected legislative body while the non-elected Guardian Council and Expediency Discernment Council can stop key ratifications.

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