Non-Compliance With FATF Rules Harming Iran’s Int’l Financial Ties

EghtesadOnline: Not complying with standards of the Financial Action Task Force, the international anti-money laundering watchdog, has further undermined Iran’s access to international banking and financial services, the government spokesman said.

News ID: ۷۵۱۳۴۸

28 October 2020

Addressing reporters in Tehran Tuesday, Ali Rabiei said the country’s financial sector is facing numerous challenges over the non-compliance.

He said the problems were predictable and the government had repeatedly warned about the dire consequences of being thrust on the FATF blacklist.

Last February, the FATF lifted the suspension of counter-measures against Iran and called on its members and all jurisdictions to apply effective counter-measures against the country.

At its October plenary session last week, the global anti-money laundering watchdog said Iran along with North Korea remains on the FATF’s list of “high-risk jurisdictions”.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system,” the FATF statement said.

“This has created difficulties in our economic and financial relations with the outside world, even with friendly countries, like China and Russia,” Rabiei was quoted by IRNA as saying.

After FATF put Iran on the blacklist, Rabiei added, banks across the globe tightened restrictions in offering financial services to Iranians.

“The HSBC bank recently refused to open accounts for Iranians,” he noted, recalling the litany of problems created for Iranians as a result of the FATF penalties.

“In addition, some banks in Germany have increased the risks of financial deals with Iranians and demanded closure of their accounts”.

Trumpian Acrimony

Iran’s inclusion in the FATF blacklist coincided with tough economic sanctions imposed by the United States, which Rabiei said, “is in the interest of the Trump administration”.

He said, "The US has imposed pressure on Iranians and tries to escape responsibility by blaming Tehran for refusing to accept FATF standards.”

However, he noted that the government will “resist the US attempts” to cover up its systemic tyrannical tactics to hurt Iran’s economy.

Rabiei described the US “maximum pressure” as the prime factor undermining Iran’s financial industry, saying that the FATF blacklist has made a bad situation worse.

FATF has asked Iran to pass four bills as part of the “Action Plan” to get out of the blacklist. Tehran managed to approve and enact amendments to counter-terrorist financing and anti-money laundering rules.

But the government failed to get approval from the main legislative bodies about the two remaining bills, namely Palermo (convention against transnational organized crime) and terrorist financing conventions (CFT), despite the fact that the key bills were passed by the government and parliament.

The two remaining bills were not approved by the Guardian Council - a watchdog that ensures laws are in line with the Islamic Republic Constitution and Sharia - and were sent to the Expediency Council - constitutional arbiter between the Majlis and the Guardian Council – for a final decision.  The bills have remained in limbo since then.

Weeks before the FATF’s February meeting, which resulted in Iran’s blacklisting, senior government officials, namely President Hassan Rouhani and CBI Governor Abdolnasser Hemmati, appealed to the top legislative bodies to approve the FATF bills.

Tighter AML Rules

The US Treasury said on Friday that the FATF has agreed to revamp its standards to beef up monitoring of financing aimed at evading US and United Nations sanctions and proliferating weapons of mass destruction.

It claimed that North Korea and Iran had established complex and elaborate networks, including front and shell companies incorporated in many FATF member countries, to evade US and UN sanctions and move funds to “further their dangerous purposes.” Claims denied by both governments.

Washington began pushing for the changes when it headed the global watchdog in 2018-2019. Germany currently leads the body, which was set up in 1989 and currently includes 37 member jurisdictions and two regional organizations, the European Commission and the (Persian) Gulf Cooperation Council, Reuters reported.

The change requires countries and private companies to assess and mitigate proliferation financing risks related to the “potential breach, non-implementation or evasion of UN financial sanctions”.