Iran Parliament Amends AML/CFT Laws to Satisfy FATF

EghtesadOnline: Iranian lawmakers on Tuesday came one step closer to fulfilling deficiencies in the country's action plan with the Financial Action Task Force, and passed amendment bills to the existing Law of Anti-Money Laundering and Law of Combating Financing of Terrorism.

News ID: ۷۸۲۵۴۵

12 May 2018

According to the official news outlet of the parliament, 139 of the 225 lawmakers present in the latest open session ratified the general outline of amendments to the AML/CFT laws that was formally submitted by President Hassan Rouhani on Nov. 20.

MPs postponed the discussion and ratification of the details of the bill to their next open session on Wednesday or Sunday.

Iran's original AML law was approved by parliamentarians in 2008, according to Financial Tribune.

A total of 129 MPs approved the general outline of amendments to the CFT law originally passed by the parliament and approved by the Guardians Council–the country's highest constitutional watchdog–in March 2016.

The CFT amendment bill has now been delivered to the Majlis Legal Commission to further discuss details and will ultimately require the final verification of the Guardians Council before it becomes law.

What Will Change?

When the AML/CFT bills were presented by Rouhani, the main objectives of CFT revisions were to include terrorism-related crimes, define examples of national and international terrorist persons, groups and organizations by the Supreme National Security Council and devise more efficient regulations to confiscate assets and instruments of terrorism financing.

On the AML front, the government's amendments targeted faults, including lack of proportion between crimes and punishments, lack of deterrence and efficacy of punishments, confinement of the crime only to local sources and lack of prosecuting money laundering crimes independent of the original crime, in addition to addressing the lack of an acceptable operational structure of bodies combating money laundering i.e. the Financial Intelligence Unit affiliated with the Ministry of Economic and Finance Affairs.

On Tuesday, a main talking point between lawmakers was a provision in the original CFT law that states, "Actions taken by liberation-seeking people, nations, groups or movements with the aim of combating issues like foreign domination, occupation, colonization and racism are not exemplifications of terrorism acts subject to this law."

The provision further states that "deciding on the exemplifications of groups and organizations subject to this provision is the responsibility of SNSC".

The amendments aim to altogether eliminate that provision, because when FATF renewed the suspension of countermeasures against Iran for the third time in February and called on the country to address several deficiencies in its action plan before June 2018 when the FATF is to hold its next plenary meeting and make a new decision, one of its demands was for Iran to "remove the exemption for designated groups attempting to end foreign occupation, colonialism and racism".

"There will certainly be much more discussion and dialogue concerning that provision, as it is the most important issue in the CFT law," Fatemeh Mahjourian, a senior AML/CFT expert with the Central Bank of Iran, told Financial Tribune.

Hosseinali Amiri, Iran's vice president for parliamentary affairs who was at the open session to elaborate on the amendments, said the issue of differentiating liberation and terrorist entities was one of the reform measures that is being debated, while the rest are minor reforms.

The parliamentary commission now tasked with reviewing the details of CFT amendments, including the said provision, was against the general amendments, but was overruled when the bill was passed by a majority of MPs.

According to Mahjourian, the selection of SNSC as the main domestic entity deciding exemplifications of terrorism financing is not contested.

"In this regard, the Europeans have an easier time because they have the European Union, but in our case, the SNSC is actually a good fit for this purpose as a high-level council," she said.

Last but not least, changing the formation of the High Council of Anti-Money Laundering, an entity that is currently filled with government members, is a major mandate of the AML amendments.

"The council is now meant to become a trans-governmental entity," the CBI expert said, adding that legal and judicial executive bodies including the attorney general and the Law Enforcement Force are to be added to it.

As Amiri mentioned in the parliament, "one of the main approaches of this [AML amendments] bill is to strengthen local entities". He also said the judiciary and SNSC fully back the AML bill.