Outgoing president, Hassan Rouhani, on Tuesday again called on top legislative bodies not to further delay finalization of the two remaining bills demand by the Financial Action Task Force, the global anti-money laundering watchdog.
Rouhani said non-compliance with FATF norms has cut off Iranian banks’ ties with international monetary institutions and created unwanted problems in accessing forex income.
“When there is no banking interaction with the world the result is lack of investment and capital. Mega economic projects cannot be implemented when there is no [foreign] investment,” he was quoted as saying by IRNA.
In February 2020, the FATF lifted the suspension of counter-measures on Iran and called on its members and all jurisdictions to apply effective counter-measures against Tehran.
FATF has asked Iran to pass four bills to get out of its blacklist. The Rouhani administration has approved and enacted amendments to the counter-terrorist financing and anti-money laundering rules.
But the government failed to get approval from the top legislative bodies for the two remaining bills, namely Palermo (convention against transnational organized crime) and terrorist financing conventions (CFT), despite the fact that the key bills were passed both by the government and parliament.
Observers say failure to comply with FATF norms has compounded the impact of the US economic blockade.
Rouhani said the FATF blacklist and categorizing Iran as a “high-risk country” has discouraged foreign investment and in particular undermined banks’ role in investment.
“Normally banks are involved in big investment projects. Funds are made available either by domestic and foreign lenders or sovereign wealth funds,” he said.
Known officially as the National Development Fund of Iran (NDFI), the sovereign fund holds a portion of oil and gas export, which Rouhani said “does not have money” due to sanctions against oil export.
Mounting Criticism
The president was responding to mounting criticism by his political opponents regarding his administration’s economic performance. Attacks on the government have increased in recent days because of the worsening water and electricity shortages that have gripped the country making a bad socioeconomic situation worse and leading to angry protests in several cities.
Rouhani recalled that major energy projects were approved during his tenure worth $4.5 billion. However, securing foreign investment was impossible due to sanctions unleashed by former US president Donald Trump.
According to the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment into Iran declined almost 10% in 2020 compared to the year before,
The UN agency put Iran’s FDI inflow at $1.34 billion in 2020, which was down 11% compared to $1.508 billion in 2019.
Iran had seen FDI inflows of $3.37 billion and $5.01 billion in 2016 and 2017 after the landmark 2015 nuclear deal that eased some US and international sanctions.
However, the flow fell to $2.37 billion in 2018, mostly under the influence of the Trump administration's unilateral withdrawal from the historic 2015 nuclear agreement.
