The Paris-based global anti-money laundering watchdog issued a four-month deadline in mid-October, giving Tehran a last and final chance to comply with international anti-money laundering rules by February 2020, Financial Tribune reported.
“The upcoming FATF decision, whether or not it extends the deadline, will not significantly affect our currency market,” Abdolnasser Hemmati wrote in a note on his Instagram account on Sunday.
He was referring to the government’s political opponents and currency speculators who have launched a propaganda campaign claiming that the global anti-money laundering watch-dog will put Iran on its blacklist this month.
“Without cognizance of the complexities in FATF procedures, speculators and rent-seekers in the currency market claim the FATF is not in favor of extending the suspension [of countermeasures],” he wrote.
In the October statement, the FATF said should Tehran not comply before the deadline expires, it would call on all its members to apply counter-measures against the country.
The FATF Working Group and Plenary meetings will be held at the OECD Conference Centre on Feb 16-21 in Paris. The failure to uphold the FATF warning could place Iran on the international black list.
Noncompliance with FATF standards and getting blacklisted will take a heavier toll on the country’s financial system, transfer of money and financial ties with trade partners.
Already Hit Hard
Hemmati’s argument about immunity of currency market to the negative effects arising from the probable inclusion on FATF’s blacklist is founded on the premise that any FATF decision will do little to further undermine a banking system that is already hit by the toughest US sanctions in recent memory.
“In the present conditions where most foreign banks are not willing to work with Iranian banks… the FATF decision won’t affect our currency status,” he wrote.
The CBI has devised alternative mechanisms and payment channels to fend off the US banking sanctions, the CBI governor said without elabortion.
“Using the FATF issue as a pretext to gouge currency prices is not in line with realities of the market and with the [CBI’s] capacity in making available forex for foreign trade,” he added.
Iran has enacted amendments to counter-terrorist financing and anti-money laundering acts. But in order to escape an FATF blacklist in this month’s February’s plenary session it has to ratify two more bills, namely, the Palermo (convention against transnational organized crime) and terrorist financing conventions.
The key bills have been passed by the Majlis but not yet endorsed by higher legislative authorities.
The 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 the final decision.
The bills have so far been in limbo more than a year after referral to the top arbiter and the body is not likely to make a ruling in the remaining few days to the FATF meeting as confirmed recently by the secretary of the Expediency Council, Mohsen Rezaei.
FATF membership has grown to 39 nations, including all members of the G20 (with the exception of Indonesia, which has observer status). More than 200 jurisdictions have signed up to the FATF recommendations.
Enforcing AML Rules
Despite the fact that Iran has so far failed to fully meet the standards of the global watchdog, the CBI has stepped up efforts to enforce AML rules. Hemmati reiterated that the CBI will continue to control circulation of money and fight money-laundering.
Last October the CBI made it mandatory for banks and credit institutions to create specialized units to deal with suspected money laundering issues.
The bylaw was announced after the government ratified an amendment to the AML and Countering Financing of Terrorism Law in the same month.
In a similar measure in December, the regulator set limits on daily bank transactions, limiting transactions via all inter-bank systems to 1 billion rials ($7,500) per person per day.
Last January the CBI obliged all bank clients to provide authentic and verifiable documents for large transactions.
The above measures have been coupled with a series of diplomatic efforts to dissuade FATF from putting Iran on the blacklist.
In December, Economy Minister Farhad Dejpasand informed a group of ambassadors of European and Asian countries in Tehran about the anti-money laundering measures.
Whether these efforts satisfy the FATF that its concerns have been met remains to be seen.