The Islamic Republic of Iran and the Challenge of Money Laundering

At the beginning of this week, on Saturday, Kamal Kharrazi, head of the Strategic Council on Foreign Relations of Iran, spoke about new conditions for an agreement between the government and the Financial Action Task Force (FATF) against money laundering. According to him, these conditions were set by Iran's Supreme National Security Council. Kharrazi believes that such an agreement would facilitate Iran's relations with the world and asserts that due to laws passed by the Iranian parliament to combat money laundering, Iran's membership in the FATF does not face obstacles. The goal of this international body, as its name suggests, is to combat money laundering and specifically to fight the financial strengthening of terrorism. Following the nuclear agreement, this body halted sanctions against Iran, but some conservative critics and opponents of the government, alongside certain Friday prayer leaders, prominent figures from the IRGC, and the Guardian Council, deemed the agreement with the international action plan against money laundering as a continuation of sanctions and a denial of the country's independence. Especially since opposition media had previously reported on the refusal of Sepah and Mellat banks to provide currency services to the Khatam al-Anbia headquarters. However, if the decision of the Supreme National Security Council, which Kharrazi mentioned on Saturday, is approved by the Supreme Leader of the Islamic Republic of Iran, the resolution of the disagreement will become clear. I am with you alongside three guests of this week's program to examine the prospects of combating money laundering in Iran. Before starting the discussion, the definition of money laundering from Shahin Fatemi, one of the guests and a professor of political economy at the European Studies Center in Paris: 'Money laundering is when you have funds that you cannot show and prove in terms of how they were obtained, consumed, and produced legally. From this perspective, you must enter this work through illicit means.' And the view of Iranian law on the phenomenon of money laundering from another guest, Ghasem Shole-Sadi, a lawyer and representative of the third and fourth terms of the Islamic Consultative Assembly in Tehran: 'Iranian law considers this as acquiring, possessing, and keeping or ??? from the proceeds of illegal activities that have been obtained directly or indirectly as a result of committing a crime or converting their exchange or concealing and hiding the true nature of those proceeds and assets.' The third guest of this program, Fariba Adelkhah, is a researcher at the Political Science University, Sciences Po in Paris, and a lecturer in Iranian studies at the New Sorbonne University. The path and challenges of combating money laundering in Iran from the perspective of Ghasem Shole-Sadi, Shahin Fatemi, and Fariba Adelkhah. Mr. Shole-Sadi, in the dispute between the government and the Supreme National Security Council with the IRGC, Friday prayer leaders, the Guardian Council, and other institutions under the supervision of the leader regarding compliance with the laws and regulations of the action plan to combat money laundering, which has been more successful so far? Which side has the upper hand? Ghasem Shole-Sadi: The result is that I think the FATF has been more successful. Although it was recently revealed that Bank Mellat or another bank stated that they could not cover all the activities of the Khatam al-Anbia headquarters, which led to criticisms in the country. However, in practice, there are laws that have been approved in Iran, both the anti-money laundering law and the anti-terrorism financing law. These are laws passed in Iran and are not directly related to the JCPOA. However, since important international organizations are scared, and coincidentally, Iran and North Korea are two countries that are on the FATF blacklist, banks, especially, are very worried. They have previously faced severe penalties for circumventing sanctions, so they are cautious. It seems that since there have been no tangible achievements after the JCPOA, they are doing their own work. Although various factions in Iran criticize each other and delay work, my overall assessment is that they have been more successful and have put us in a serious problem such that we cannot practically benefit much from the JCPOA. I asked which side, the government or its opponents, has been more successful regarding this action plan to combat money laundering, and Mr. Shole-Sadi said that the FATF has been successful. Now, Mr. Fatemi, considering that some economists believe a significant portion of the money laundering phenomenon stems from oil, rent, and the lack of accountability of the entire government, what help can the action plan to combat money laundering provide to the Iranian economy? In such an economy, can the government significantly curb money laundering? Shahin Fatemi: A fundamental decision must be made in the Islamic Republic system. If I were to advise, I would say they should pursue the leader's resistant economy and not care about the world and create a system similar to North Korea for themselves and trade with North Korea and possibly with Russia. You cannot have it both ways. You cannot enter the international community, which has its own rules that Mr. Khamenei usually considers unfair, and then expect that exceptions will be made for you. This is impossible. Money laundering is the first issue they are facing. Other issues will arise one after another. The issue of statistics, the issue of cooperation between banks. All of these gradually. The more they want to align with the international economy and the globalized economy, the more problems will increase. Some of these problems are fundamental and cannot be solved with words and speeches. Money laundering is one of the most fundamental issues. What I have seen, if a list were to be made, Iran would top the list of countries regarding money laundering and financing terrorist organizations. Even Mr. Putin has been preaching against money laundering these days. Therefore, this is a serious issue and not something that can be forgotten. These organizations are serious in their work; OSCT regarding bribery... Look at each of these international organizations regarding money laundering and bribery and terrorism; their policies are becoming stronger day by day, especially since today the world has tasted terrorism and wants to cut it off at the root. Cutting it off will only be through eliminating the financial resources of these organizations. Ms. Adelkhah, with a sociological perspective on the history and causes of money laundering in the years following the revolution, what can be said about the nature of the dispute between the government and its opponents over the action plan to combat money laundering? Fariba Adelkhah: In the past 15 years, while we have been under sanctions, these financial transfer networks have become astonishingly transparent and are required to comply with international laws. Now, Dr. Fatemi was saying that no country can step outside of that. That is, all financial transfers are under international scrutiny. Now we say American scrutiny. I don't think we can say the FATF has won or we have lost against this. I think we have just lagged behind a bit in these 15 years due to sanctions issues from this overall movement, and no country after the nuclear agreement can negotiate with us if we do not enter the FATF because they are affected by these sanctions. This is why no one wants to take risks. That is, we must first have transparency like all other countries, and second, the issue of aligning our laws, which is known as compliance. That is, our banking mechanisms must align with the banking mechanisms of the international scene. Given this, I think the issue is no longer about a resistant economy. In response to your question about which institution has the upper hand, here the resistant economy is no longer an issue. I think the election of Mr. Rouhani and his entry into resolving the nuclear negotiations is an acknowledgment by the government of the need to be present on the international stage. And I doubt that signing will necessarily be in favor of some institutions and to the detriment of others. Now the implementation mechanism of this and its realization remains, which requires both time and complex management... Very well, Ms. Adelkhah. We will address that. If you allow me, I would like to ask the next question to Mr. Shole-Sadi regarding the discussions prior to the elections in Esfand for the tenth term of the parliament about combating the entry of dirty money into the electoral process, which has been a topic of discussion in political circles and especially among reformist and moderate factions. To what extent does the action plan to combat money laundering of the FATF relate to the upcoming presidential elections in Ordibehesht, and to what extent is it a pre-election and post-election issue? Ghasem Shole-Sadi: First of all, the interior minister who made this statement retreated from his position after being reprimanded. But the reality is that since various factions played roles in the elections and due to the lack of party roles, this role has practically shifted to groups, and those groups undertake many actions for financing and funding elections, especially those that have institutions at their disposal that can have unaccounted resources outside of legal calculations. For example, they have illegal docks at their disposal and can conduct imports and exports outside of customs regulations or, due to their power, can take on large activities in major tenders even outside of tender regulations. There is a kind of lack of transparency. These funds... let's not forget that Mr. Ahmadinejad used a term referring to the 'brothers of smugglers'... Ultimately, this money has been entering elections for years. For example, when elections were held, we would suddenly see the municipality granting unaccounted permits for high-rise buildings or selling density for a short period. Well, it seemed that for a short period, this permit would benefit a number of stakeholders and could naturally serve as under-the-table resources for them and be spent on elections, thus allowing dirty money to enter the elections. Now, I think this work is a bit harder. Because the government is not very aligned with the electoral oversight organizations, and there may be some opposition between them. Therefore, in the previous government, it seemed that there was this alignment, and the oversight institution of the Guardian Council and those close to the Guardian Council who influence it had a strategic alignment with the government, and thus it was easier at that time for those unaccounted funds or, as the interior minister said, dirty money to enter this issue. It seems that in the upcoming elections, this work will be more difficult. But Mr. Shole-Sadi, has the work become harder now? The work is not simple now. Yes. Mr. Fatemi, looking at the experiences of other countries like Iran that suffer from the ailment of money laundering, what can be said? Which other oil-rich country has had a commendable record in controlling and reducing money laundering? Shahin Fatemi: Among these countries was Russia, which has improved its situation and has become one of those claiming to speak against money laundering. Regarding financing terrorism, a fundamental issue that exists is that in some Middle Eastern countries, it is not the governments that directly help terrorists, but they are financed from private sources. Well, they can say that in any case, this money leaves that country, and those governments can be held accountable. But if, for example, someone in a Middle Eastern country has money abroad and never brings it into that country and spends it on terrorist activities, that government cannot supervise this. This is a serious issue. That is, based on religious beliefs or whatever, some of these Islamic terrorist organizations receive help from wealthy individuals in some countries, and this is something that governments do not control. That is, suppose a wealthy person in country X in the Middle East has money in the US and transfers it and finds a way to send it to terrorists. Therefore, it is the banks that can work on this issue at the first stage, and when it comes to money transfers, this is the same work that the US did by sending money to Iran with a plane; this complicates the work. Because the money that goes from one country to another in this way has no documentation in any bank except for the first bank that received that money. The problem lies there. That is, it is not an easy task. But if all these international organizations that exist can prevent it. Unfortunately, however, large countries also intervene in these matters in various ways. As the saying goes, your terrorist is another's fighter. I remember Mr. Khamenei said years ago that terrorism is the weapon of the oppressed countries. Therefore, a bit of the issue of definitions of who is a terrorist, who is a fighter, or a mujahid complicates the work. When Hezbollah says we have no problem because our aids come through various means from Iran, they openly say this, not secretly. A lot remains to be done before we can seriously talk about money laundering and preventing misuse for terrorist activities. The world is neither ready for this nor capable, and I do not think they are genuinely inclined. Unless a bit more terrorist issues occur in their own countries, and at that moment they may take action. Whenever Western governments want to prevent this, they can certainly do so.