Reading Into FATF’s Iran Decision

EghtesadOnline: The Financial Action Task Force finally issued a public statement about Iran on Friday, ending months-long speculations about the fate of a country it has kept on it blacklist for almost a decade.

News ID: ۷۸۱۹۳۳

27 February 2018

The statement is ambivalent in tone, which neither fulfills Iran’s best hope of quitting the blacklist nor does it justify the worst fears envisioned  by archrivals like the US of bringing back countermeasures suspended since 2016.

The Paris-based body, which acts as the world’s financial watchdog decided for a third time to suspend its countermeasures against Iran gradually and steadily implementing an action plan devised by the body in 2016.

In its latest statement of June 2016, FATF welcomed Iran’s high-level political commitment to address its strategic anti-money laundering/combating the financing of terrorism deficiencies and its decision to seek technical assistance for implementing the action plan, according to Financial Tribune.

“Given that Iran provided that political commitment and the relevant steps it has taken, the FATF decided in November 2017 to continue the suspension of countermeasures,” so begins the FATF’s public statement as a way to remember the things past.

But this time, the body, in a departure from its previous habit of keeping to general statements, has specifically identified what it wants from Iran to address. First and foremost, it raised the one thing that has proved controversial among political circles of the country, as hardliners assert that it seeks to undermine the revolutionary values of the country.

It requires Iran to “adequately criminalize terrorist financing, including by removing the exemption for designated groups attempting to end foreign occupation, colonialism and racism”.

Some had argued that this condition is out of step with the 154th article of the Iranian Constitution that states that while Iran “will not meddle into other nations’ affairs, it supports the rightful struggle of the oppressed against the arrogant forces anywhere in the word”.

However, what FATF really wants is that that Iran identifies and recognizes what it deems as terrorist groups and organizations based on its own standards and those of the United Nations.

FATF’s public statement goes on to recommend “identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions” by Iran as another cornerstone of its action items.

“As long as terrorist organizations are concerned, the UN Security Council and Iran see eye-to-eye and there is no problem regarding that,” says Hossein Gharibi, a Tehran-based legal expert specializing in AML/CFT.

That is why, Gharibi said, the government has already approved this measure in its amendments to the current AML/CFT law that is pending parliamentary approval.

Groups like the self-styled Islamic State and Al-Qaeda on UNSC’s terrorist list are regarded as reactionary, terrorist organizations by Tehran, as they have perpetrated acts of terrorism against the country.

After some lawmakers raised objections to the CFT amendment in January, saying it should come from the judiciary rather that the government, the latter approved it summarily.

In its statement, the body also asks Iran to ensure an adequate and enforceable customer due diligence regime and ratify and implement the Palermo and TF conventions and clarify the capability to provide mutual legal assistance.

The bill to join the United Nations Convention Against Transnational Organized Crime (Palermo) was approved by the lawmakers in January but the bill on Iran’s accession to the International Convention for the Suppression of the Financing of Terrorism has yet to be approved by them.

Where to From Here

Asked whether the latest public statement by FATF is positive for Iran, Gharibi believes that depends on one’s perspective.

“If we consider the continued suspension of countermeasures, that could be viewed as a positive point but if you aim to exit the blacklist altogether, then things may not look so positive,” he said.

That is a balance struck in the official response of Iran’s Economy Ministry to the FATF decision.

The ministry welcomed the fact that despite “heavy lobbying by the US and its regional allies” ahead of the meeting, they failed to reinstate countermeasures in place before 2016 and considered the verdict as “a victory” for the government’s diplomacy.

But it also staked the country’s claim that with all that the country has done so far, it deserved a complete removal from the blacklist.

“The final outcome as FATF once again reconvenes in June depends on whether Iran decides to complete its action plan or not by that time,” Gharibi said.

So far, Iran has opted to cooperate: In its statement, the Economy Ministry envisions a normal state for Iran in four months with smooth financial relations enjoyed by it internationally.