Placing Iran on the global anti-money laundering watchdog’s list will have mixed results on economic sectors, says the head of the Money and Capital Market Commission of the Iran Chamber of Commerce, Industries, Mines and Agriculture.
Acknowledging the destructive impact of Friday’s Financial Action Task Force decision, Mohsen Hajibaba said “the move will certainly affect foreign trade, money transfer, and particularly exports.”
“There is no doubt that the Iran’s inclusion in FATF’s blacklist will inflict significant loss on exporters,” he said, adding that the gravity of situation will emerge as time passes, ICCIMA website reported.
Hajibaba noted that the losses would be different across sectors. “For example, most of the petrochemicals are exported to developed countries, which makes petrochem exporters more vulnerable to the FATF measure compared to exports to neighbors like Iraq and Afghanistan”.
While exporters to neighbors can be paid in rial, there is no such arrangement with countries like China, Japan or UAE, the private sector official said.
The international watchdog on Friday put Iran on its blacklist after Tehran failed to comply with international anti-terrorism funding norms.
This came after Iran failed to meet the deadline set at FATF’s last meeting in October to fully comply with FATF standards. FATF had given Iran a final deadline to comply with international norms after which “it would urge all its members to apply countermeasures”.
“The FATF fully lifts the suspension of counter-measures and calls on its members and urges all jurisdictions to apply effective counter-measures,” the watchdog said in a statement published on its website Friday.
Political Gesture
In response to FATF’s decision, governor of the Central Bank of Iran, Abdolnasser Hemmati described the decision as a non-technical and political gesture that “won’t pose any problem to Iran’s foreign trade and currency rates”.
Hemmati assured the people that the CBI has been able to maintain ties with world’s financial and monetary systems, which he said are “out of FATF jurisdiction” and “immune to [US] sanctions”.
In the same vein, Iran’s Foreign Ministry spokesman, Abbas Mousavai, described the move politicized, saying the stigma of money-laundering and financing terrorism has nothing to do with Iran.
“Political or apolitical, this makes no difference to exporters,” said Hajibaba, regretting the fact that Iran’s absence in global export markets had offered more space to other countries and competitors.
“Among neighbors, we see Turkey taking advantage of Iran’s current conditions. This imposes additional cost on exporters trying to salvage export markets”.
Holding a relatively opposite view, Majidreza Hariri, chairman of Iran-China Joint Chamber of Commerce, said the decision won’t be significant in the short-term as “a big portion of Iran’s foreign trade is conducted via non-bank channels”.
However, it should be recalled that “this will have deep psychological effects. In short, companies that were previously willing to work with us may cut ties,” ILNA quoted him as saying.
On the effects of watchdog decision on Iran’s banking system, Mahmoud Safarzadeh, a senior financial official with Tejarat Bank said “the move won’t affect lenders performance as they currently have no foreign financial relations.”
Iran has already enacted amendments to counter-terrorist financing and anti-money laundering acts. Bills to ratify the Palermo (convention against transnational organized crime) and terrorist financing conventions have been passed by the Majlis but not yet endorsed by higher legislative bodies.
Two remaining bills failed to win approval of the Guardian Council - a watchdog that ensures laws are in line with the Constitution and Sharia - and were sent to the Expediency Council – the constitutional arbiter between the Majlis and the Guardians. The council has not decided on the bills more than a year after referral.
Opponents of compliance with FATF norms argue that joining the FATF will expose Iran’s key economic and financial data to hostile powers like the United States. Advocates dismiss this concern as unwarranted and unhelpful.
