FATF Gives Iran Action Plan Four More Months

EghtesadOnline: The Financial Action Task Force decided once again to suspend its counter-measures against Iran and provide relief to the administration of President Hassan Rouhani, which has been strenuously working to enhance anti-money laundering and countering financing of terrorism measures in the face of opposition from hardline groups.

News ID: ۷۴۵۵۴۶

01 July 2018

The international group that monitors money laundering worldwide said on Friday that although it is "disappointed" with Iran’s failure to implement its action plan to address its significant AML/CFT deficiencies, "in view of the Iranian government’s continued efforts to finalize and pass amendments to its AML and CFT laws, FATF decided at its meeting this week to continue the suspension of counter-measures."

The inter-governmental body said in its final statement after its joint plenary session that ended in Paris on June 29 that it expects Iran to complete its action plan in full compliance with FATF standards by October 2018 or otherwise, FATF will "decide upon appropriate and necessary actions at that time".

The Iranian government has sent a four-point legislation to the parliament, which includes amending the country's AML/CFT law in accordance with FATF standards and also allows it to join the United Nations Convention Against Transnational Organized Crime (Palermo) and the International Convention for the Suppression of the Financing of Terrorism, according to Financial Tribune.

While the former was approved by lawmakers in January, the latter's vote was torpedoed earlier this month when opponents of the bill gathered enough votes to suspend the bill for two months until it becomes clear how Europe would protect Iran's interests after the US pullout from the Iran nuclear deal in May.

The bills, however, have to be finally approved by the Guardians Council-a Constitutional watchdog assembly–before becoming law.

Opponents of joining the financing of terrorism convention express concern that it would create hurdles for Iran's support for "liberation movements" such as the Lebanese Hezbollah, a longtime ally of Iran.

But supporters of the bill try to hammer home the message that by accepting FATF standards, Iran will only have to abide by its own definition of terrorism and that of the UN that gives Iran the upper-hand since it has suffered at the hands of terrorist groups such as the self-styled Islamic State terrorist group and Taliban.

In its Friday statement, the group reiterated that Iran should adequately criminalize terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism".

US President Donald Trump pulled out of the international nuclear deal with Iran—known as the Joint Comprehensive Plan of Action—on May 8 and said he would reimpose sanctions within 180 days, prompting several European companies to announce they would end business with Tehran before the Nov. 4 deadline.

The move, which Iran has decried as a gross violation of the pact by the US, has further put strains on the government to find new trade and investment partners to repair its battered economy and financial system.

A move by FATF to return Iran to its blacklist would greatly hamper those efforts.

As mentioned by the Paris-based body in June 2016, FATF welcomed Iran’s high-level political commitment to address its strategic AML/CFT deficiencies and its decision to seek technical assistance in the implementation of the Action Plan. As Iran provided that political commitment and took relevant steps, FATF decided in February 2018 to continue the suspension of counter-measures.

Fresh Momentum

The refusal by FATF to cave in to demands by a group of countries led by the US, Israel and Saudi Arabia to return Iran to its blacklist seems to have created a momentum in the country that places the government on a moral high ground.

Ahead of FATF's meeting, a group of senior Republican lawmakers in US Congress asked the US administration to lobby for adding Iran to the group's blacklist.

In the wake of the current outcome, Iran will bide its time and through political consensus, solve its problems vis-à-vis FATF, believes Fatemeh Mahjourian, an AML expert at Iran's central bank.

"Through its verdict, the body stood up to its reputation as an impartial body in the face of US pressure and the country considers this a success," Mahjourian told Financial Tribune, adding that this would ease the way for the administration to overcome domestic resistance, as it seeks to complete its action plan with FATF.

Hossein Gharibi, an expert on legal and international affairs, says that prior to the FATF decision, Iran was facing circumstances that required a delay in the approval of the government's four-point bill.

"The fact that lawmakers could not immediately pass legislation indicates the democratic nature of Iranian Parliament and after different countries followed up on the news, they voted in favor of Iran," the expert told Financial Tribune.