The latest plenary meetings of the intergovernmental organization in charge of setting global standards on anti-money laundering and combating the financing of terrorism began a few days ago and it announced its outcomes on Friday, saying "depending upon Iran’s progress in completing its action plan, the FATF will take further steps in June 2018”.
In June 2016, the FATF welcomed Iran’s high-level political commitment to tackle its strategic AML/CFT deficiencies and suspended countermeasures for a year. Given Iran's steps in the following year, the organization decided in November 2017 to continue the suspension of countermeasures.
Iran devised a variety of corrective measures, but its deadline to implement its action plan with the FATF passed on Jan. 31 with a number of items remaining incomplete, according to Financial Tribune.
Those items include amendments to the current AML/CFT laws and another bill concerning Iran’s accession to the International Convention for the Suppression of the Financing of Terrorism, which is currently being debated at the influential Majlis National Security and Foreign Policy Commission.
The original AML/CTF bill was ratified by Majlis and subsequently approved by the Guardians Council–the constitutional and Sharia watchdog–in March 2016 after it was rejected once and revised by the judiciary.
On the other hand, the bill aimed at joining the United Nations Convention Against Transnational Organized Crime was recently approved by an overwhelming majority of lawmakers to signify another positive step.
More importantly, the Central Bank of Iran recently amended its executive directive for regulations overseeing foreign exchange, banking instruments and bonds carried by travelling individuals for improving its adherence with AML/CFT regulations.
Incomplete Action Plan
However, even after recognizing that Iran has established its cash declaration regime and introduced draft amendments to its AML and CFT laws, FATF said its action plan "has now expired with a majority of the action items remaining incomplete".
Hence, FATF has directed Iran to fully address its remaining action items, including adequately criminalizing terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; ensuring an adequate and enforceable customer due diligence regime; and ensuring the full independence of the Financial Intelligence Unit and requiring the submission of suspicious transaction reports for all transactions.
Demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; ratifying and implementing the Palermo and terrorist financing conventions and clarifying the capability to provide mutual legal assistance; ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information; and establishing a broader range of penalties for violations of the money laundering offense are other items on the list.
Ultimately, ensuring adequate legislation and procedures to provide for confiscation of property of corresponding value completes the list of items required from Iran by FATF.
Iran’s View
Iranian officials have repeatedly announced that they are committed to and expect an eventual full exit from the FATF blacklist, but they do not necessarily see eye to eye on every detail of the new statement.
"FATF has said most of the items on our action plan remain incomplete and we do not accept that," Fatemeh Mahjourian, an AML/CFT expert with the central bank, told Financial Tribune.
Mahjourian believes that signs of US meddling can be clearly seen in this clause of the FATF statement. She noted that a month ago, US House Foreign Affairs Committee Chairman Edward Royce had urged President Donald Trump's administration to press FATF to keep Iran on its blacklist and reinstate countermeasures to supposedly protect the global financial system from Iran.
"Apparently he is not happy now and this anger has been reflected in the phrase 'with a majority of the action items remaining incomplete' in the recent FATF public statement," she said, stressing that FATF is seemingly under great pressure from the US to ignore the achievements of Iran.
Iran has criticized US meddling and its endeavors in methodically using the FATF to further its agenda from the beginning. Last June and shortly following the FATF’s decision to suspend countermeasures against Iran, the Economy Ministry issued a statement through its AML division.
“Even though we regard the recent FATF decision as a step forward, we announce that this positive measure does not satisfy Iran so we will continue to follow up the matter to provide the Iranian people with their full rights,” the statement read, adding that a handful of countries, including the US, Argentina, Israel and a representative of the Gulf Cooperation Council had called for a reinstatement of active countermeasures against Iran “without technological logic and strictly based on political bias”.
In her remarks, Mahjourian also pointed to another dimension of the FATF decision.
The CBI expert noted that the organization is seemingly excepting an ideal situation where all of its recommendations are fully implementedby Iran, but does not ask the same thing of its current member countries, some of whom have failed to receive ratings better than "non-compliant" or "partially-compliant" on some of the very items now reflected in Iran's action plan.
She pointed to a slew of countries who have been at it for much longer than Iran, but have not had to face what Iran has.
She referred to Bosnia and Herzegovina, which made its political commitment in June 2015, but managed to get delisted almost three years later in February 2018.
“Iraq’s high-level political commitment was given in October 2013 and it is still in progress,” she said, adding that Syria and Yemen’s cases date back to February 2010 and they are still awaiting on-site visits.
The FATF decision comes amid continued uncertainty regarding the Joint Comprehensive Plan of Action, Iran’s nuclear deal with world powers.
US Vice President Mike Pence reiterated Trump’s position in a conference on Thursday, saying “this country will no longer certify the disastrous Iran nuclear deal”.
As Europeans are trying to preserve the deal by striking a balance between appeasing the US and maintaining ties with Iran, the latter’s Deputy Foreign Minister warned, on the same day Pence made his speech, of another “nuclear crisis” if the deal is to be scrapped.
“If companies and banks are not working with Iran, we cannot remain in a deal that has no benefit for us”, Abbas Araqchi, who served as one of Iran’s top nuclear negotiators, also told London’s Chatham House.