Anti-Terror Finance Group Deciding Whether to Keep Terror-Sponsor Iran on Blacklist

By Patrick Goodenough | October 19, 2018 | 4:30am EDT
Hezbollah leader Hasan Nasrallah meets with Iran’s ‘moderate’ Foreign Minister Javad Zarif in Beirut on August 12, 2015. (Photo: Al-Manar)

(Update: The FATF on Friday gave Iran until its next meeting in February to take specified steps to clamp down on terror financing -- including ending the “foreign occupation” exemption which for the regime underpins its funding of terrorist groups like Hezbollah and Hamas. “Iran does not need more time,” tweeted Foundation for Defense of Democracies’ Toby Dershowitz after the decision. “It needs the determination to end financing terrorism.” )

( – A meeting of the global anti-money laundering body in Paris on Friday could have a significant impact on Iran’s financial future as U.S. sanctions tighten, as it decides on whether to remove the regime from a blacklist which makes some foreign investors leery of doing business there.

In a bid to meet the demands of the Financial Action Task Force (FATF), Iran’s parliament earlier this month passed a bill on terror financing – but setting limits that fall short of FATF requirements.

Among other things, the FATF said in a 2016 action plan Iran that must stop making an exception in its approach towards terrorism for actions taken by groups or individuals fighting against “foreign occupation.”

Meeting that demand, however, would compel Iran to stop its financial support for Hezbollah, Hamas and Palestinian Islamic Jihad – anathema for a regime styling itself the head of a “resistance front” against Israel.

So the bill passed by Iranian lawmakers this month made clear that struggles against foreign occupation would be excluded. It cited among other things a 1999 Organization of Islamic Cooperation (OIC) convention on combating terrorism, which states that, “armed struggle against foreign occupation, aggression, colonialism, and hegemony, aimed at liberation and self-determination in accordance with the principles of international law shall not be considered a terrorist crime.”

Last June, the FATF agreed to extend a temporary suspension of counter-measures against Iran, but said it must “urgently” take the steps still required, by the time of the meeting that wraps up in Paris on Friday – “otherwise, the FATF will decide upon appropriate and necessary actions at that time.”

The required steps include criminalizing terrorist financing – “including by removing the exemption for designated groups ‘attempting to end foreign occupation, colonialism and racism,’” it said.

Following President Trump’s withdrawal from the Joint Comprehensive Plan of Action (JCPOA) nuclear deal last May, U.S. sanctions eased under that deal have begun to be put back in place.

The most significant ones, targeting the energy and banking sectors, are due to be restored in less than three weeks’ time, with the administration pushing for a complete halt to Iranian oil exports.

Those looming restrictions make it even more critical for the regime to be removed from the FATF blacklist, particularly amid an ongoing crisis of public protests and strikes.

Anyone considering undertaking financial transactions with a country on the blacklist is required to undertake enhanced due diligence, a hurdle for many outside banks and other financial institutions. The only other country currently blacklisted is North Korea.

Iran is especially concerned about how staying on the blacklist could affect business dealings with key partners Russia and China.

When he urged lawmakers this month to pass the bill on terror financing, Foreign Minister Javad Zarif pointed out that even though China and Russia are “strategic partners” their banks would be loath to conduct business with Iran if it remains on the FATF blacklist.

Foreign ministry spokesman Bahram Qassemi said this week Iran hopes the FATF will take its decisions without “interference,” indicating that it expects United States’ opposition to the blacklist removal.

‘Counterfeiting, terror finance, and systemic money laundering’

Established by G7 leaders in 1989 to counter money laundering, FATF’s mandate was widened after 9/11 to including combating terrorist financing. Its 37 members (35 countries plus the E.U. Commission and the Gulf Cooperation Council) include major economies and financial centers across the globe.

Iran's supreme leader Ayatollah Ali Khamenei meets with Hezbollah leader Hassan Nasrallah. Iran created and is the main sponsor of the Lebanese-based Shi’ite terrorist group. (Photo: Office of the Supreme Leader, File)

Foundation for Defense of Democracies (FDD) senior vice president for government relations and strategy Toby Dershowitz and senior advisor Saeed Ghasseminejad argued in a recent policy brief that FATF’s credibility “would suffer greatly if it allowed Iran’s deceptive legislation to satisfy the requirements laid out for removal from its blacklist.”

“It should hold Iran to the same high standard as all other nations, regardless of demands within Iran for exemptions to protect Hamas, Hezbollah, and their ilk,” they wrote.

Dershowitz and Ghasseminejad said FATF should not lower its standards because of considerations relating to the JCPOA.

“Europe, in particular, should not look the other way at a time when Iran continues to use its financial system to engage in counterfeiting, terror finance, and systemic money laundering.”

Iran provides Hezbollah, its Lebanese Shi’ite proxy, with an estimated $700-$800 million a year – accounting for 70-80 percent of the group’s budget, according to a comprehensive 2017 FDD report on Hezbollah financing.

In mid-2016 Hezbollah chief Hasan Nasrallah boasted that, from food to weapons, his group’s every need is met by Tehran, saying that “as long as Iran has money we will have money.”

Hezbollah, a U.S.-designated foreign terrorist organization since 1997, has been linked to major acts of terrorism across the world, and until al-Qaeda attacked the U.S. on 9/11 it was the terror group held responsible for the violent deaths of more Americans than any other.

It is Tehran’s support for groups like Hezbollah, and Hamas, as well as its own Islamic Revolutionary Guard Corps (IRGC) activities in Syria and elsewhere, that the U.S. cites in its ongoing assessment of Iran as the world’s foremost state-sponsor of terrorism.

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