The government in a statement on Wednesday called for removing obstacles to joining regulations mandated by the Financial Action Task Force.
In a meeting in Tehran, the Cabinet urged the top legislative bodies to ratify the two remaining bills demanded by the global anti-money laundering body based in Paris.
“The government strongly believes that obstacles to passing the two bills should be removed in order to deprive the hostile powers of excuses,” the Cabinet statement published on CabinetOffice.ir said.
This was the first official response of the government to a decision by the FATF last Friday to put Iran on its blacklist after the highest legislative body refused to approve the two remaining bills.
FATF had asked Iran to pass four bills as part of the “Action Plan” to escape the watchdog’s blacklist. Tehran managed to approve and enact amendments to counter-terrorist financing and anti-money laundering rules.
But the government has thus far failed to receive the nod from the main legislative bodies about the Palermo (convention against transnational organized crime) and terrorist financing conventions (CFT), despite the fact that the key bills have been passed by the government and parliament.
The two remaining bills were not approved by the Guardian Council - a watchdog that ensures laws are in line with the Islamic Republic Constitution and Sharia - and were sent to the Expediency Council - constitutional arbiter between the Majlis and the Guardian Council – for the final decision.
The bills are in limbo more than a year after referral to the top arbiter.
The statement went on to say “the government will double its efforts to demonstrate a lawful, disciplined and anti-terrorism image of Iran,” recalling that “providing fodder for the enemy’s excuses merely helps them realize their anti-Iran plots”.
The international anti-money laundering watchdog announced Friday that it “fully lifts the suspension of counter-measures [against Iran] and calls on its members and urges all jurisdictions to apply effective counter-measures”.
The watchdog, however, implied that the door is open for Iran to join FATF norms.
According to FATF, Iran will remain on its statement on [High Risk Jurisdictions Subject to a Call for Action] until the full Action Plan has been completed. If Iran ratifies the Palermo and CFT bills, in line with the FATF norms, the FATF will decide on the next steps, including whether to suspend countermeasures.
Kourosh Ahmadi, a former Iranian diplomat, said apart from ratifying Palermo and CFT bills, Iran has to implement five more recommendations, which “are mainly technical and legal issues to which Iranian authorities have no objection”.
Political Motves
The Cabinet criticized the FATF decision as being “politically motivated" and spurred by Tehran’s enemies. “Iran's anti-terrorism policy is based on the peaceful and justice-seeking nature of the Islamic Republic of Iran, and is being implemented in all areas, including the fight against financing terrorism.”
This was echoed by other authorities, including the Governor of the Central Bank of Iran, Abdolnasser Hemmati. He censured the decision as a non-technical and political gesture that “won’t pose any problem to Iran’s foreign trade and currency rates”.
In the same vein, the Foreign Ministry spokesman, Abbas Mousavai, described the FATF move politicized, saying the stigma of money-laundering and financing terrorism has nothing to do with Iran.
Hemmati discounted the impact of the FATF decision on Iran’s economy, reassuring the people that the CBI has been able to maintain working relations with the world’s financial and monetary systems, which he said are “out of FATF jurisdiction” and “immune to [US] sanctions”.
Echoing the same view, the US-based think tank, Atlantic Council argued that the FATF decision is unlikely to have drastic effects on an economy that has already been hit by various restrictions.
“The impact of the FATF’s action will most certainly be a little more than symbolic,” the think tank said in an opinion piece published on its website Tuesday. Following are excerpts of the write-up:
Although the FATF had removed Iran from the so-called “counter-measures” list shortly after the nuclear deal was implemented in 2016, Iran remained on the group’s blacklist—indicating a need for enhanced due diligence by financial institutions.
Major global banks are often unwilling to take on extra risk and cost of conducting enhanced due diligence and will choose to de-risk, i.e. stop transacting with such counterparties.
Moreover, in the years that Tehran had been under strict international sanctions prior to the nuclear agreement, the international financial markets concentrated even more around the US dollar. It is extremely difficult to conduct cross-border transactions on any scale without having to tap dollar markets to facilitate currency conversion.
Even before President Donald Trump’s withdrawal from the nuclear deal, US primary sanctions that remained after the deal were a major hurdle to Iran’s international trade.
Trump’s withdrawal from the deal, of course, made things worse for Iran.
Instead of an impartial tone following the nuclear deal, senior US diplomats now traverse the world threatening banks and companies over the seemingly non-sanctionable trade with Iran. The new US sanctions with its chilling tone, had severely constrained Iran’s already limited access to global financial markets even before the Feb 21 decision.
Accordingly, global banks are unlikely to do anything new in response to FATF’s call for counter-measures. There is little left to do for foreign banks that already had avoided transactions with Iran.
