Iran now has about four months to pass legal measures through parliament to would address shortcomings vis-à-vis the Financial Action Task Force’s action plan for the country, but reformists are sure to face stiff competition from hardline groups.
The intergovernmental group that monitors anti-money laundering (AML) and combating terrorism financing (CFT) progress worldwide on Friday said Iran has been given another opportunity until October to complete its action plan by addressing nine deficiencies. But the FATF statement also suggested that this might be the last such deadline extended to Iran, so what happens in the next few months will be crucial for the future of Iran’s foreign ties, especially since the US is set to reimpose sanctions.
Two reformist experts in Iran have spoken on why Iran needs to fight off internal resistance and implement FATF requirements and take this very seriously.
Ahmad Hatami-Yazd, a senior monetary and banking expert, believes that gaining a better footing with the FATF will boost transparency in the Iranian economy and allow the banking and taxation regimes to have a clearer image, something that is “necessary for fighting the underground economy”.
As the veteran of the banking industry pointed out, two groups inside Iran are currently trying to derail the efforts of the government and parliament to better align with FATF standards. The first, he said, are those who believe that Iran will be forced to limit or cut its aid to the “resistance or liberating” movements such as Lebanon’s Hezbollah.
This view is wrong, he said, as many countries that are now members of this special financial task force persevere with their military and security activities, with some even supporting terrorist groups.
But more importantly, the second group includes those who don’t want Iran’s economy to become more transparent because they will face severe challenges in their embezzlements, bribes and tax evasions.
“This group is trying hard to lobby and marginalize regulations related to FATF to prevent its passage in the parliament,” Hatami-Yazd said, expressing hope that MPs would succeed in ratifying regulations to “nullify US efforts to sanction Iran’s monetary and banking regime”.
Mehdi Pazouki, a prominent academic, also believes that the ratification of FATF requirements by Iran would help prevent its complete isolation as it can boost the country’s financial dealings with countries that are unwilling to submit to US demands of cutting ties with Iran.
The Allameh Tabatabaei University professor said that under the circumstances where the US is trying to pressure Iran by creating economic hurdles, a lack of FATF adherence would only serve to increase risks for Iran and become a barrier in establishing constructive financial ties.
“We must not give in to these conditions and push toward the enemy independent countries that are not inclined to join forces with the US,” he said.
On the one hand, he argued, Iran is among countries that have fallen victim to terrorism over the years and so it wouldn’t be fair to be recognized as the culprit. On the other hand, letting this opportunity go to waste would mean succumbing to seclusion.
The academic also emphasized the need for supporting the production sector and increasing transparency.
“By establishing monetary discipline in the banking system, financial discipline in the budget and administrative discipline in the structure of government bureaucracy, we will be able to achieve these goals,” Pazouki said.
“We must do something about this so that Iran’s enemies would fail to achieve their goal of paralyzing the economy because they will certainly become victorious if the path undertaken by the previous administration is repeated.”
Now, it is up to the government and reformist MPs to quickly ratify the articles emphasized by FATF and fight off opposition by the corrupt and the ignorant.
Iran has been instructed to adequately criminalize terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; identify and freeze terrorist assets in line with the relevant United Nations Security Council resolutions; enforce a customer due diligence regime; ensure the full independence of the Financial Intelligence Unit, require the submission of reports for attempted suspicious transactions; and demonstrate how authorities are identifying and sanctioning unlicensed money/value transfer service providers.
The country also needs to ratify and implement the Palermo and TF conventions and clarify the capability to provide mutual legal assistance; make certain that financial institutions verify that wire transfers contain complete originator and beneficiary information; establish a broader range of penalties for violations of money laundering offense; and ensure adequate legislation and procedures to provide for confiscation of property of corresponding value.
