Iran Remains on Terror-Financing Blacklist, Int’l Taskforce Toughens Supervision of Banks

By Patrick Goodenough | June 24, 2019 | 5:44am EDT
Iran’s supreme leader Ayatollah Ali Khamenei attends a graduation ceremony at the Islamic Revolutionary Guard Corps’ academy, Imam Hossein University. (Photo: Office of the Supreme Leader)

(CNSNews.com) – In a move largely overshadowed by tensions over Iran’s provocative recent actions, the global anti-money laundering and terror-financing body on Friday reimposed a restriction on Iran which had been suspended for the past three years, ratcheting up pressure on Tehran just ahead of new U.S. sanctions due to be announced on Monday.

The Financial Action Task Force (FATF), meeting in Orlando, Florida, called on its members and all jurisdictions to require increased “supervisory examination” of Iran-based branches and subsidiaries of their banks.

It was responding to what U.S. Treasury Secretary Steven Mnuchin told the gathering was the regime’s “willful failure to address its systemic money laundering and terrorist financing deficiencies.”

The meeting also agreed to keep Iran on the FATF blacklist of countries viewed as not cooperating in global efforts against money laundering and terrorism financing. The only other country now blacklisted is North Korea.

FATF “countermeasures” against uncooperative countries are designed to safeguard the international financial system. They include calls for enhanced surveillance and reporting of financial transactions – steps which can significantly impact investment in the targeted country.

The FATF in a June 2016 “action plan” laid out what the regime would need to do to be removed from the blacklist. Iran undertook to fix its banking system, and the FATF duly agreed to suspend countermeasures.

That suspension was rolled over again at Friday’s meeting, with the exception of reinstating the “supervisory examination” of banks requirement.

Further, the FATF warned Tehran that other suspended restrictions will also be reimposed, if it fails to enact two bills leading to ratifying two key conventions.

The taskforce gave Iran until its next meeting, in October, to do so.

Iran’s parliament has already passed the bills, but they have met opposition from members of two powerful establishment bodies closely associated with the supreme leader, the Guardian Council and the Expediency Council.

The bills are meant to lead to Iran joining most of the world’s nations in ratifying the 1999 Terrorist Financing Convention, and the 2000 U.N. Palermo Convention on Transnational Organized Crime.

Among reasons for opposition in the Iranian establishment is a refusal to define violent actions taken by groups and individuals claiming to be fighting against “foreign occupation” as terrorism.

In its 2016 action plan, the FATF said Iran must stop making an exception in its approach towards terrorism for actions taken by such groups.

Iranian 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)

The Lebanese Shi’ite terrorist group Hezbollah is a major Iranian surrogate, and Tehran also back the Palestinian terrorist groups Hamas and Palestinian Islamic Jihad. (It also continues to sponsor Iraqi militias with a history of targeting U.S. troops in Iraq during the war there.)

When Iranian lawmakers passed the bill on terror financing last fall, they cited a 1999 Organization of Islamic Cooperation (OIC) convention on combating terrorism – which to this day states that “armed struggle against foreign occupation … shall not be considered a terrorist crime.”

In Orlando, the FATF said Iran had yet to address “adequately criminalizing terrorist financing, including by removing the exemption for designated groups ‘attempting to end foreign occupation, colonialism and racism.’”

It said Iran had also not fulfilled its obligation of “identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions.”

The FATF urged its 37 members, and all jurisdictions, “to continue to advise their financial institutions to apply enhanced due diligence with respect to business relationships and transactions with natural and legal persons from Iran.”

(Photo: FATF)

‘The highest levels of Iran’s government’

Responding to the FATF move, Secretary of State Mike Pompeo said in a statement the Iranian regime “regularly seeks to use deception and subterfuge to fund its illicit activities, threatening the integrity and security of the international financial system.”

He said the Islamic Revolutionary Guard Corps engages in “large-scale illicit financing schemes to fund its malign activities” – schemes which he said were “facilitated at the highest levels of Iran’s government.”

Reacting to Friday’s decisions, Foundation for Defense of Democracies (FDD) senior vice president for government relations and strategy Toby Dershowitz said the taskforce was correct to keep Iran blacklisted.

“As victims of its corruption, the people of Iran know best that their government runs amok of global standards,” she said in an email. “But the security and integrity of the global financial system are also victims of Iran’s willful and persistent failure to comply with FATF’s standards.”

Dershowitz said banks’ risk managers “justifiably continue to be wary of doing business with Iran and should be wary until Iran chooses a different path, one that abandons terror financing and rampant systemic money-laundering.”

“It’s not more time that Iran needs,” she said. “It’s a strategic choice Iran needs to make and it’s obvious to all it has not done that.”

Also welcoming the FATF decisions was United Against Nuclear Iran (UANI), although the advocacy group also said it should go further.

“As long as Iran chooses to remain an extremist regime, it should remain closed for business,” said UANI chief executive and co-founder Mark Wallace, a former U.S. ambassador to the U.N.

The FATF was established by G7 leaders in 1989 to counter money laundering, a mandate that was broadened after 9/11 to including combating terrorist financing.

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