Iran’s regime remains in the FATF blacklist

Analysis by PMOI/MEK

Iran, October 22, 2021—The Financial Action Task Force (FATF) has opted to keep the Iranian regime in its blacklist after holding meetings on October 19-21. The FATF is an intergovernmental organization that develops policies for combating money laundering and terrorism financing around the world.

The FATF blacklist, which is also known as the “call for action” list, includes countries with “significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation.”

The FATF calls on all its members, which include 36 countries, the European Union, and Gulf Cooperation Council (GCC), to apply enhanced due diligence when dealing with these countries. In the most serious cases, to apply countermeasures to protect the international financial system from financing risks emanating from high-risk countries. The blacklist currently includes only two countries: Iran and North Korea.

Iran’s regime was first entered into the FATF blacklist in February 2020. The regime was given ample warning and opportunity to adjust its financial system and implement two laws that would make it conformant with the FATF anti-money laundering (AML) and countering terrorism financing (CTF) standards. But the regime has failed time and again to meet the FATF’s deadlines.

The inclusion in the FATF blacklist will make it extremely difficult for the Iranian regime to carry out financial transactions even if the United States and other countries lift sanctions against Tehran. Even China, Russia, and other allies of the Iranian regime have raised concerns and warnings at Tehran’s lack of transparency and compliance with FATF recommendations.

The executive and legislative branch and so-called oversight bodies have been debating FATF bills for several years without reaching a conclusion. Making things more complicated is the positions made by regime supreme leader Ali Khamenei, the unelected authority who has the final word on all critical matters. On the one hand, Khamenei ordered the Expediency Council to examine four legislative bills that would bring the regime in compliance with FATF. But on the other hand, he denigrated those same bills. In June 2019, Khamenei told members of Majlis (parliament), “There’s no necessity to join international conventions… that are problematic.”

And indeed, the FATF bills present some serious problems for the regime. By joining the convention, it will have to become transparent on its financial relations, which will make it very hard for the regime to finance its terrorist activities, including IRGC Quds Force and the payments it makes to the Lebanese Hezbollah, the Hashd Al-Shaabi in Iraq, and its other terrorist proxies in the region.

Refusing to join the FATF faces the regime with other problems. With the economic situation in Iran becoming worse by the day, the society is inching toward the point of explosion. Economic experts and state media are warning about the possibility of another round of nationwide uprisings. Protests are sprouting in every corner of Iran despite heavy security measures and the unbridled spread of Covid-19. And these protests are growing more intense every day as the regime refuses to take any measure to address the people’s grievances. And the regime is even having trouble funding its own security forces to continue to suppress protests.

The regime is in a deadlock situation. On the one hand, it needs access to the international financial system to fund its illicit activities. But on the other hand, complying with the FATF rules defeats the very nature of this regime, which is founded on financial corruption, terrorism, and suppression.

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