Financial Action Task Force Grants Iran Four More Months

The Financial Action Task Force (FATF) on Friday, March 3, concluded its week-long meeting in Paris by granting Iran a four-month extension, stating that Iran's suspension from the group's blacklist would be extended until June. According to Reuters, the FATF emphasized that 'there are still outstanding issues' and expressed its expectation for Iran to swiftly move towards economic reforms. The FATF's final statement noted, 'If Iran does not enact laws to comply with the remaining standards of this group by June 2019, the FATF will request increased supervisory inspections of financial institutions based in Iran and their affiliated sectors and organizations.' Furthermore, the statement indicated that until the necessary laws for compliance with the group's standards are enacted in Iran, concerns regarding 'the risk of terrorism financing originating from Iran and the threat this poses to the international financial system' will remain. The FATF is responsible for overseeing financial transparency in international banking transactions and preventing money laundering and terrorism financing globally, having placed Iran and North Korea on its blacklist in recent years. However, this international body has previously temporarily removed Iran from this opportunity and has given Tehran deadlines to comply with FATF standards by enacting necessary laws. The last deadline set by the group expired in February of this month, but the fate of two out of four bills presented by President Hassan Rouhani's government to implement FATF standards faces challenges. The FATF's expectations from Iran include criminalizing terrorism financing without exempting those terrorist groups that 'strive against foreign occupation, colonialism, and racism.' [The Iranian parliament, however, in its resolution on October 7, still does not consider 'legitimate popular struggles against colonial domination and foreign occupation' as acts of terrorism.] Identifying and blocking the assets of terrorists in accordance with UN Security Council resolutions, ensuring the implementation of a reliable regime for 'adequate assessment,' ensuring the complete independence of the financial intelligence unit, and the necessity of reporting suspicious financial transactions if such transactions occur are among the expectations. Additionally, demonstrating how authorities identify and punish unlicensed financial service providers, approving and implementing the Palermo and Terrorism Financing Conventions, ensuring that financial institutions record all financial transactions with complete information of the sender and receiver, considering penalties for violators of money laundering laws, and ensuring the approval of necessary laws and processes for asset confiscation are also part of the expectations. Of the four bills presented by Rouhani's government, two have been approved by the parliament and the Guardian Council, but the other two bills, known as 'Palermo' and 'CFT,' although approved by the parliament, are awaiting decision-making in the Expediency Discernment Council due to opposition from the Guardian Council. The Palermo bill opens the way for Iran to join the Convention against Transnational Organized Crime, while the CFT bill facilitates Iran's accession to the Convention on Combating the Financing of Terrorism. Opponents of Iran's accession to FATF regulations, mainly appointed by the Supreme Leader or opponents of Rouhani's government, argue that this would block financial assistance to 'Hamas' and 'Hezbollah.' However, supporters claim that the reasons for the opposition are 'fear of economic transparency and preventing banking corruption.' Hassan Rouhani, the President of Iran, has also warned that if the related bills to FATF regulations are not approved, financial transactions for Iran will become 20% more expensive.