FATF Extends Suspension of Iran Countermeasures - Update

The highly-consequential verdict of the Financial Action Task Force was issued in favor of Iran–albeit not to the country's expectations–as the global standard-setting body for anti-money laundering and combating the financing of terrorism extended the suspension of countermeasures against the Islamic Republic on Friday.

The intergovernmental organization recognized "Iran's demonstration of its political commitment and the relevant steps it has taken in line with its Action Plan" and indefinitely extended its suspension of countermeasures for Tehran to address its shortcomings, FATF's website reported.

While Iran now has been given a reprieve in the face of strong lobbying by adversarial nations, the decision was not exactly cause for celebration given Iranian officials' hope of a full removal from the blacklist of violating countries.

 "Iran will remain on the FATF Public Statement until the full Action Plan has been completed," the body said in its concluding statement on Iran.  

As the FATF ruled in its plenary week in Valencia, Spain, it will continue to engage with Iran and closely monitor its progress, as it urged the country to fully address its AML/CFT deficiencies, particularly those related to terrorist financing.

Last June, the organization had welcomed Iran's high-level political commitment to address its strategic AML/CFT measures and its decision to seek technical assistance in the implementation of the Action Plan, giving it a one-year suspension of active countermeasures.

The decision prompted responses from a number of Iranian officials, who saw it as an opportunity for the country's banking system and a gateway for it to eventually exit the blacklist altogether.

"With this decision, European states and countries playing a major role in the world economy guaranteed the possibility of developing banking and financial ties with Iran, which is one of the main goals of the nuclear accord," Hamid Baeidinejad, Iran's ambassador to London, was quoted as saying by IBENA.

Baeidinejad emphasized that the decision was made under circumstances where "a number of US hardliners had asked president Donald Trump to prevent this outcome by any means possible".

On June 19, two former US senators who are now top-level officials with the United Against Nuclear Iran–a non-partisan, non-profit advocacy organization in the US–wrote an opinion piece for the Wall Street Journal, exhorting the FATF to not only call on its members to reinstate sanctions against Iran, but also "implement more stringent resolutions".

According to Baeidinejad, the decision means that the US was forced to accept an international ruling that will help remove banking and financial limitations against Iran.

Boon to Banking Ties

Seyyed Hossein Salimi, a member of the board of representatives of the Iran Chamber of Commerce, Industries, Mines and Agriculture, said the Iranian banking system has implemented 30-40% of the regulations demanded by the taskforce and that is why the suspension of restrictions was extended.

"Adhering to regulations devised at the global level is time-consuming," Salimi was also quoted as saying by the official news website of ICCIMA.

He noted that Iranian lenders were cut off from the world as a result of years of sanctions and did not manage to adapt themselves to the regulations in such a short period.

Salimi referred to the extension of countermeasure suspension as an "opportunity that has been given to Iran to pave the way for establishing ties with international banks".

If Iranian lenders had not taken steps in the past one year, the ICCIMA member added, the extension would certainly have not taken place "and the Iranian banking system would have been isolated".

Massoumeh Aqa-Pouralishahi, a member of Majlis Economic Commission, said that even though Iran should have been taken off the blacklist, the suspensions are "an economic opportunity" to move toward that goal.

Noting that Iran can now improve its banking ties and has a better chance of attracting foreign finance, she added that a constructive cooperation between the Supreme National Security Council, Ministry of Economic Affairs and Finance, the Central Bank of Iran and MEC can prepare the grounds for Iran to quit the blacklist.

During the FATF plenary meeting of 21-23 June, Managing Director of the International Monetary Fund Christine Lagarde and two Spanish ministers were keynote speakers and work on combating terrorism financing and improving transparency, as well as beneficial ownership, were the main issues discussed.

FATF members also discussed the mutual evaluation reports of Denmark and Ireland, issued a statement on Brazil's progress in addressing its deficiencies, recognized AML/CFT improvements in Afghanistan and Lao PDR, and made proposals to strengthen FATF's institutional basis, governance and capacity.

They also addressed the case of North Korea, advising all jurisdictions to "take measures to close branches, subsidiaries and representative offices of DPRK banks within their territories and terminate correspondent relationships with DPRK banks".