Palermo bill is one of the four government bills that seek to bring Iran's anti-money laundering and countering financing of terrorism standards in line with international norms, specifically those defined by the global body Financial Action Task Force.
Saturday's impasse is a blow to efforts by the President Hassan Rouhani to improve trade ties with the outside world and raises the stake further for Iran at this week's FATF plenary where a verdict on Iran is expected.
As usual with recent meetings of the Expediency Council, Rouhani was absent. Parliament Speaker Ali Larijani, an advocate for FATF legislation, was another absentee. Foreign Minister Mohammad Javad Zarif –a non-member – is out of the country attending the high-profile Munich Security Conference, according to Financial Tribune.
The Expediency Council is the constitutional arbiter between the Majlis and the powerful Guardian Council that endorses or rejects legislation based on conformity with the Islamic Republic Constitution and the Sharia law.
According to Tabnak news website, at Saturday's meeting a report was presented by the political, defense and legal commissions of the council. Later chairmen of the judiciary and national security commissions of the Majlis, Economy Minister Farhad Dejpasand and Vice president for Legal Affairs La'ya Jonaidi spoke on the particularly divisive subject.
"We need to ensure that we prioritize what pertains to national interest and is effective in improving the livelihood of our people and at the same time benefits the system and the revolution," Mohsen Rezaei, the council's secretary told reporters after the three-hour meeting.
The council will meet again later this month.
Mohammad Baqer Nowbakht, head of the Budget and Plan Organization told the parliamentary news website ICANA on Saturday that if FATF measures are not ratified, import and export will become more difficult.
"Under the current condition transfer of money is facing problems and some friendly countries have said if Iran leaves the FATF, they will not be able to engage in foreign exchange transactions with Tehran," Nowbakht said.
A council member was quoted as saying by Tabnak that the recent posture by the European Union in setting preconditions for Iran in operationalizing the INSTEX has hardened their stance vis-à-vis the FATF.
In a recent talk with the Financial Tribune, British Ambassador to Iran Rob Macaire said the EU has set no preconditions for implementing the Special Purpose Vehicle it has set up for Iran known as INSTEX.
He, however, said that the EU very much hopes that Iran would end up compliant with FATF standards lest "the work we have put into INSTEX may be wasted."
FATF convenes in Paris this week for a plenary meeting. Among other things, it will look into Iran's progress with its Action Plan which it says is necessary for Iran to fulfill if it wants to be removed from the list of non-cooperative countries.
The FATF in October 2018 decided to continue the suspension of counter-measures against Iran, but said by February 2019 it expects Iran to pass legislation in line with FATF standards.
Failing to do so, the FATF said, it will take further steps to protect against the risks emanating from deficiencies in Iran’s AML/CFT regime.
Out of the four FATF bills, two have become law and the remaining two have hit a wall.