Global watchdog toughens scrutiny of Iran over terror financing

New measures will make it more difficult for Iran to trade or do business.
Friday 21/02/2020
The logo of the FATF (the Financial Action Task Force) is seen after a plenary session in Paris, France, October 18, 2019. (Reuters)
The logo of the FATF (the Financial Action Task Force) is seen after a plenary session in Paris, France, October 18, 2019. (Reuters)

PARIS - The world agency monitoring terrorism funding announced it was reimposing tough sanctions on Iran February 21 over the country's failure to apply by the convention's standards. 

The decision came after more than three years of warnings from the Paris-based Financial Action Task Force (FATF) urging the Islamic Republic to either enact terrorist financing conventions or see its reprieve from the blacklist reversed and some countermeasures imposed.

In a statement issued after a meeting in Paris, the 38-nation Financial Action Task Force (FATF) announced it was reimposing sanctions that were suspended in 2016 to give Iran time to work on reforms.

Given "Iran's failure to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, the FATF fully lifts the suspension of counter-measures," the body said, referring to the United Nation's 2001 convention against organised crime.

It also called on FATF members and "all jurisdictions to apply effective counter-measures."

Last month, an Iranian arbitration body gave its approval to an anti-money laundering bill seen as crucial to maintaining international trade and banking ties.

The government of President Hassan Rohani said the laws were needed to meet demands set by the FATF.

The government is hoping to salvage banking and trade ties after the United States walked out of a landmark 2015 nuclear deal with Iran and re-imposed 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 the FATF requirements.

The FATF said that it would keep Iran on a "high risk jurisdictions list," and will decide on next steps "if Iran ratifies the Palermo and Terrorist Financing Conventions, in line with the FATF standards."

"Until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism-financing... the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system," it said.

Iran and North Korea are now the only two countries on the agency’s black list. That means international financial transactions with those countries are closely scrutinised, making it costly and cumbersome to do business with them. International creditors can also place restrictions on lending to black-listed countries.

The extra measures decided by the FATF could require audits or more transactions and make it even harder for foreign investors to do business in Iran.

The head of Iran’s central bank, Abdolnasser Hemmati, claimed the decision will not affect the country.

“Such incidents will create no problem for Iran’s foreign trade and currency,” he said in a statement. Hemmati said the FATF decision was based on the “enmity” of the US and Israel towards Iran.

(With AP, AFP, Reuters)