Regulatory Hurdles at the Forefront of Iran RegTech

EghtesadOnline: Legal experts, former bankers and CEOs of Iranian startups converged at Khatam University in Tehran on Wednesday to help devise solutions to overcome regulatory hurdles facing local tech firms.

News ID: ۷۴۸۳۰۰

31 August 2019

The event was dubbed Iran RegTech, short for regulatory technology, a new field that utilizes information technology to ease regulatory processes.

Among the speakers were Mohammad Jafar Nanakar, Iran IT Organization’s deputy, Valiollah Fatemi, former banker and director of Kuknos that minted Iran’s gold-backed cryptocurrency, Mohammad Farjood, the head of Tehran Municipality’s ICT Organization and Jhubin Alaghband, CEO of Iran e-commerce giant Snapp.

Shahab Javanmardi, CEO of FANAP—an ICT company affiliated to Bank Pasargad, Nima Namdari, deputy manager at e-commerce firm e-Farda, and Amir Hamooni, CEO of Iran Fara Bourse, outlined what RegTech is and how it can enhance regulatory processes, Financial Tribune reported.

RegTech emphasizes regulatory monitoring, reporting and compliance, and aims to enhance transparency, standardize regulatory processes and present clear interpretations of ambiguous regulations.

Heaps of Problems

Namdari said the inherent populism among Iranian politicians, plus a lack of a knowledge-driven regulatory approach in the country, has impaired the expansion of RegTech sector in Iran.

He believes that Iranian politicians prefer to push problems under the carpet or address them in sweeping ways that can promote their profile as strong decision-makers. Their approach has made RegTech’s expansion hard, if not impossible.

FANAP CEO Javanmardi said businesses and startups can and will benefit from RegTech.

“Cutting-edge technologies enable both businesses and regulators to become agile and adaptive. State interventionism and bloated bureaucracy in Iran have hampered the activities of startups and fintechs,” he added.

The well-known CEO called on state players to allow tech firms to participate in the regulatory process.

Raising the call for more transparency in business and governance, Javanmardi said, “For attaining sustainable development goals, transparency is pivotal,” which, he stressed, can be boosted by tapping into the potentials of RegTech.

Tehran Municipality’s Farjood spoke about the role RegTech can play in urban management.

“The potentials of RegTech should and will be tapped for boosting Tehran’s push toward becoming a smart city,” he added.

Farjood also discussed Tehran Municipality’s endeavors for transforming the Iranian capital into a smart city, including through the introduction of an open API platform that can help make regulatory producers more efficient.

Snapp’s Alaghband also discussed obstacles to expanding ride-hailing business in Iran. From establishing a system for running on-demand background checks on drivers to the company’s long-drawn fracas with municipalities over taxation and oversight, Snapp has faced an uphill battle toward growth.

Flawed Legal System

ITO’s deputy for legal affairs stressed that in addition to being flawed, Iran’s legal system is overly politicized and this has impaired legal procedures.

“Ineffective legal infrastructure has hindered Iranian startups’ growth. Iran’s legal system is a hodgepodge of common and civil law systems, which has impaired national development,” Nanakar said.

The system of jurisprudence is based on the doctrine of judicial precedent, the principle under which lower courts must follow the decisions of higher courts, rather than on statutory laws.

Civil law systems rely on written statutes and other legal codes that are constantly updated to establish legal procedures, punishments and what can and cannot be brought before a court.

According to Nanakar, RegTech, along with overhauling the legal system, can address major issues that businesses are struggling with.

“The Iranian state should open up and adopt an open data approach to governance and business,” he said.

Although all speakers at Iran RegTech listed unending impediments in making regulatory processes efficient, all of them remained upbeat that young talented Iranians will ultimately overcome all hurdles.