Iran Approves Anti-Money Laundering Bill

An Iranian arbitration body gave its approval on Saturday to an anti-money laundering bill seen as crucial to maintaining international trade and banking ties, the official IRNA news agency reported.

"The bill on amending the law to counter money laundering was approved with certain changes and will be sent to the parliament speaker to be communicated to the government," Expediency Council member Gholamreza Mesbahi-Moghadam told IRNA.

The Expediency Council settles disputes between parliament, which approved the bill last year, and the conservative-dominated Guardian Council, which vets all legislation and had rejected it.

Conservatives have argued that new legislation on money laundering and terrorist financing will provide Western powers with leverage over Iran's economy and how it funds regional allies such as Lebanon's Hezbollah.

But the government of President Hassan Rouhani says the laws are needed to meet demands set by by the international Financial Action Task Force (FATF), which monitors countries' efforts to tackle financial crime.

Iran is alone with North Korea on the FATF's blacklist—although the Paris-based organization has suspended counter-measures since June 2017 while Iran works on reforms.

The FATF will meet again in February to discuss Iran's progress.

The government is hoping to salvage banking and trade ties after the United States walked out of a landmark 2015 nuclear deal between major powers and Iran and reimposed crippling unilateral sanctions.

The other parties to the deal—Britain, France, Germany, China and Russia—have sought to salvage the agreement and maintain trade with Iran, but have called on Tehran to meet FATF requirements.

The anti-money laundering bill is one of four pieces of legislation put forward by the government to that end. 

A previous bill on the mechanics of monitoring and preventing terrorist financing was signed into law in August.

Two others—allowing Iran to join UN conventions against terrorist-financing and organized crime—have been approved by parliament but are still being delayed by higher authorities, including the Guardian Council.

The Expediency Council currently has 38 members, all appointed by supreme leader Ayatollah Ali Khamenei. 

Photo Credit: Fars

FATF Grants Key Extension for Iran Financial Reforms

The Financial Action Task Force has granted Iran until February to complete necessary reforms in the area of anti-money laundering and combating financing of terrorism. In a statement issued following the conclusion of the group’s plenary meeting in Paris, the FATF announced that it had “decided at its meeting this week to continue the suspension of counter-measures.”

The move will be seen as a victory by reform-minded bankers and politicians in Iran, who have battled fierce domestic opposition and foreign skepticism to push through critical legislation required by the FATF action plan.

The United States, which recently took over the presidency of the FATF, had been pushing aggressively for Iran to be returned to the so-called “blacklist.” Senior Republican lawmakers had recently written to President Trump to ask him to ensure Iran would not be able to earn a clean bill of health from the FATF.

But European resistance, motivated in part by a desire to avoid politicizing the evaluations of the global body, helped ensure a fairer assessment of Iran’s technical progress on its action plan.

Despite the extension, Iran will continue to face pressure to complete its reforms. In its statement, the FATF expressed, “its disappointment that the majority of the Action Plan remains outstanding and expects Iran to proceed swiftly in the reform path.”

The group’s statement identifies nine items that remain to be addressed. At a minimum, by February of next year, “the FATF expects Iran to have brought into force the necessary legislation in line with FATF standards” in order for counter-measures to remain suspended.

The full statement follows below:

In June 2016, the FATF welcomed Iran’s high-level political commitment to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Given that Iran provided that political commitment and the relevant steps it has taken, the FATF decided in June 2018 to continue the suspension of counter-measures.

In December 2017, Iran established a cash declaration regime. Since June 2018, Iran has enacted amendments to its Counter-Terrorist Financing Act and Parliament has passed amendments to its AML law and bills to ratify the Palermo and TF Conventions. The FATF notes the progress of the legislative efforts. As with any country, the FATF can only consider fully enacted legislation. Once the remaining legislation is fully in force, the FATF will review this alongside existing enacted legislation to determine whether the measures contained therein address Iran’s Action Plan, in line with the FATF standards.

Iran’s action plan expired in January 2018. In October 2018, the FATF noted that the following items are still not completed and Iran should fully address its remaining items, including: (1) adequately criminalising terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; (2) identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; (3) ensuring an adequate and enforceable customer due diligence regime; (4) ensuring the full independence of the Financial Intelligence Unit and requiring the submission of STRs for attempted transactions; (5) demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; (6) ratifying and implementing the Palermo and TF Conventions and clarifying the capability to provide mutual legal assistance; (7) ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information; (8) establishing a broader range of penalties for violations of the ML offense; and (9) ensuring adequate legislation and procedures to provide for confiscation of property of corresponding value.

The FATF decided at its meeting this week to continue the suspension of counter-measures. However, the FATF expresses its disappointment that the majority of the Action Plan remains outstanding and expects Iran to proceed swiftly in the reform path to ensure that it addresses all of the remaining items by completing and implementing the necessary AML/CFT reforms. By February 2019, the FATF expects Iran to have brought into force the necessary legislation in line with FATF standards, or the FATF will take further steps to protect against the risks emanating from deficiencies in Iran’s AML/CFT regime. The FATF also expects Iran to continue to progress with enabling regulations and other amendments.

Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence, including obtaining information on the reasons for intended transactions, to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19.

Photo Credit: IRNA