Iran's Accession to FATF: A Case That Will 'Necessarily' Be Reopened

For many years, various political and economic debates have been ongoing in Iran regarding the Financial Action Task Force (FATF), and now the new president states that there is no choice but to resolve the issue. Opponents claim that joining it is a betrayal of Iran and refer to it as a 'second Turkmenchay,' while supporters argue that without joining, the country's economic system will effectively be locked. The FATF is an intergovernmental organization that, after much deliberation, the new president of Iran, Massoud Pezeshkian, states that there is no alternative but to resolve its issues. In his first press conference, Pezeshkian said, 'We have no choice but to resolve the FATF issue to lift the sanctions,' adding that he would write to the Expediency Discernment Council regarding the final fate of the accession file to this organization. But what is the FATF that its supporters say its opponents do not have a proper definition of? Iran remains on the FATF's blacklist. The FATF was established in 1989 by seven industrialized countries known as the 'Group of Seven.' At that time, the goal of creating this group was announced as examining and providing solutions to combat money laundering. The initial members of this special group were the seven industrialized countries: the USA, Germany, Canada, France, Italy, Japan, and the UK, along with member countries of the European Commission and eight other countries. Currently, 40 countries and international organizations, including the European Commission and the Gulf Cooperation Council countries, are members of the FATF, and counting the suspended membership of Russia, this number will reach 39 active members by 2024. The main task of this group at the time of its establishment was to examine the methods and practices used in money laundering in domestic and international arenas and to provide appropriate solutions and mechanisms to combat this illegal phenomenon worldwide. About two decades later, the FATF expanded its scope to combat the financing of terrorism. This issue appears to be the main point of opposition for the Islamic Republic to join this group. From Ali Khamenei, the leader of the Islamic Republic, who has described international conventions as the result of 'cooking' by the think tanks of great powers and emphasized that 'there is no need for us to accept things we do not know what they are,' to Ali Akbar Raefipour, a hardliner in the government's propaganda apparatus who has pointed out the FATF's interpretation of 'terrorism' in his gatherings with supporters. With this view among officials and appointees of the Islamic Republic, years of internal conflict over joining the FATF began in Iran, and serious warnings and statements from this organization about Iran were issued one after another. The expectations from Tehran are clear. For the past four years, the FATF has had the following requests from the Iranian government: declaring the financing of terrorism illegal, including removing exemptions for groups that Iran deems to be acting 'to end foreign occupation, colonialism, and racism'; identifying and blocking assets belonging to individuals or terrorist groups according to United Nations Security Council resolutions; guaranteeing and providing an enforceable mechanism for monitoring Iranian transaction partners; providing a practical mechanism to identify and combat illegal money transfer channels; signing and implementing the Palermo Conventions (bills to combat transnational organized crime) and combating the financing of terrorism; ensuring accurate registration of the source and recipient of financial resources by transfer institutions. The FATF has emphasized that as long as Iran does not accept these conditions, the country will remain on the high-risk list, or the money laundering blacklist, which currently includes only three countries: North Korea, Iran, and Myanmar. According to economic experts inside and outside the country, remaining on the money laundering blacklist has devastating consequences for the country's economy, including the increased difficulty of obtaining necessary goods from foreign markets, the high costs of sourcing goods from unconventional markets, the increasing collapse of the national currency's value, and the outflow of currency from the country. All of this generally means worsening living conditions for ordinary citizens. Jamshid Asadi's note on Iran's lost economic opportunities under the 'system's world antagonism.' Before Massoud Pezeshkian, Hassan Rouhani also tried to resolve the FATF issue, but the members of the Expediency Discernment Council, appointed by the leader of the Islamic Republic, opposed the re-examination of the FATF bills in 2020. This action at that time led to Hassan Rouhani's complaints, as the then-president had requested that 'the accusation of money laundering should not stick to us' and asked why some were 'obstructing' the bills approved by the government and parliament. The then-president of Iran stated that Tehran was compelled to normalize its relations with the world. However, at that time, there was serious resistance on the other side; a resistance that has continued to this day. This part of the power structure in the Islamic Republic believes that the approval of these bills will disrupt the financial assistance process of the Iranian government to the paramilitary and proxy groups that they call the 'axis of resistance.' This process has become more sensitive with the continuation of the Gaza war and increasing tensions and conflicts between Israel and Hezbollah in Lebanon and missile attacks from the Houthis in Yemen.