Economy, Business And Markets

Banking System Employs AML, CFT Measures

Iranian lenders have the ability to employ all the available measures to combat money laundering and financing of terrorism.  (Photo: Vahid Sabet)Iranian lenders have the ability to employ all the available measures to combat money laundering and financing of terrorism.  (Photo: Vahid Sabet)

Iranian banks are now able to employ all anti-money laundering (AML) measures and the framework for combating the financing of terrorism (CFT), according to the deputy governor for foreign exchange affairs at the Central Bank of Iran.

"In order for our banks to conform to international standards more than ever, Iranian banks have so far been outfitted with all the software, hardware and other instruments related to money laundering regulations, combating financing of terrorism and gathering better information on the clients," Gholamali Kamyab was also quoted as saying by

Actively opposing money laundering and terrorism financing is the bedrock of the intergovernmental Financial Action Task Force and the membership of Iran in the organization has been one of the hot-button topics of the current year that ends on March 20. 

In June, the international group that monitors money laundering worldwide decided 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.

"FATF welcomes Iran's adoption of, and high-level political commitment to, an action plan to address its strategic 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."

Kamyab pointed to the upgrade in Iran's rating in the country risk classification of the Participants to the Arrangement on Officially Supported Export Credits by the Organization for Economic Cooperation and Development, calling it a sign that economic conditions are improving in the country.

The organization updated its risk classification in last June and improved Iran’s ranking by one notch, moving it from seven to six.

"It is predicted that the rating would further improve in the foreseeable future," he said.

Kamyab's comments echo those of Deputy Economy Minister Mohammad Khazaei who in early February had said "evidence shows that the risk classification of Iran will improve to five and subsequently to four in the next fiscal year".

Pointing to Iran's nuclear accord with world powers implemented in January 2016, the official said the removal of international sanctions has created a positive momentum for foreign companies to return to the country.

"CBI's duty is to strengthen and make flexible the banking system for all kinds of changes," he said, adding that the central bank assures its business partners about investment in Iran and the return of that investment, according to Iran’s Foreign Investment Promotion and Protection Act. 

Based on FIPPA, foreign investors can transfer capital and machinery to Iran and have the protection of the government by giving compensation, for example, in case the investment is nationalized or expropriated. The provision also guarantees non-discrimination of investments and investors. 

Economic Stability 

The CBI official noted that the central bank has embarked on implementing reforms to improve the country's financial stability, the effectiveness of monetary policy and the efficiency of lending in the banking sector.

According to Kamyab, these reforms include amending the balance sheets of banks, removing credit limitations, reducing non-performing loans and expanding the oversight regime of CBI.

Referring to measures undertaken by CBI in the past three years to increase stability in the macroeconomic landscape of the country, the deputy governor for foreign exchange affairs said the bank is working hand-in-hand with President Hassan Rouhani's administration to achieve better economic growth by implementing transparent and disciplined monetary and fiscal policies and taming the inflation.

Kamyab reminded that in October 2012, the inflation rate stood at a whopping 45.1%, which was brought down to single digits. 

"A declining inflation rate has helped stabilize the foreign exchange market," he said.

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