An international group that monitors money laundering worldwide decided on Friday to keep Iran on its blacklist of high-risk countries but welcomed Iranian promises to improve and called for a one-year suspension of some restrictions on Tehran.
At a meeting of its 37 members in South Korea, the Financial Action Task Force also moved to keep North Korea on its blacklist and urged countries to be on guard against Pyongyang’s attempts to bypass sanctions to finance illicit weapons programs.
“The FATF welcomes Iran’s adoption of, and high-level political commitment to, an Action Plan to address its strategic (anti-money laundering and anti-terror financing) deficiencies,” the task force said in a statement.
“The FATF therefore has suspended counter-measures for 12 months in order to monitor Iran’s progress in implementing the Action Plan.”
The statement said that if Iran fails to improve its record as promised, the FATF’s call for vigorous counter-measures will be reinstated. If there is improvement, the task force will consider further positive steps.
The decision confirmed a Reuters story from earlier this week.
Iran has lobbied to get off the blacklist and is likely to treat the FATF announcement as a major victory. Tehran has complained it is not getting economic benefits promised it during last year’s negotiations on a nuclear deal with six major powers.
As a result of that agreement, many international sanctions against Iran were lifted. The United States, however, still has sanctions in place that prohibit trade with Iran in dollars and Iranian access to New York’s financial system. Banks remain wary of getting into trouble with US authorities.
“Practically speaking the FATF decision changes little since global financial institutions will continue to voluntarily implement strict counter-measures given their serious concerns over Iran’s illicit financial conduct,” said sanctions expert Mark Dubowitz of the Foundation for Defense of Democracies.
The FATF reiterated its appeal to countries around the world to “continue to advise their financial institutions to apply enhanced due diligence to (Iranian) business relationships and transactions.”
Benefits
Getting off the FATF blacklist, which also lists North Korea, would remove a major hurdle Iran faces in dealing with outside banks and other financial institutions. Iranian and western officials have said that is why Tehran has been pushing hard to come off the list or at least to have the current FATF warning about it softened.
One Iranian official said prior to the meeting there had been multiple meetings between senior Iranian and European officials in recent months “to help Iran get off the blacklist.” He said the head of Iran’s central bank had discussed the FATF issue with US officials during a recent visit to the United States.
“We are very optimistic,” he said.
Iran has said criticism of its AML standards is unfair and contributes to the reluctance of major western banks and financial institutions to do business with it, despite encouragement from US President Barack Obama’s administration. Many large banks are disinclined to deal with Iran for fear of violating remaining US sanctions.
Since January, Iran has secured banking links only with smaller financial institutions.
Business Concerns
Businesses are also wary about wading into Iranian waters until after the US presidential election in November.
“If (Donald) Trump becomes the next president, then he says he’ll tear up the Iran deal,” a European official said. “Hesitancy on the part of business is understandable.”
The US has sought to assure international companies that doing legitimate business with Tehran is acceptable. Last month US Secretary of State John Kerry told a meeting of bank executives in London that European banks should not fear punishment from the United States for resuming legitimate trade with Iran.
A European banking source, who was familiar with that meeting, said Kerry was told, “You may want the European banks to do business in Iran, but you do not let the US banks do so. The message to the politicians is that most banks still see too many risks.”
