With a new wave of US sanctions just two months away, there appears to be growing opposition in Tehran to the Iranian government’s long-standing policy of falling into line with international rules to prevent terrorism financing and money laundering.
On June 10, MPs voted to suspend discussion of a bill that would have seen Iran sign up to the United Nations’ International Convention for the Suppression of Financing of Terrorism. That bill was approved by the cabinet in October last year and has been working its way through the Majlis (parliament) since May.
However, on Sunday, MPs voted by 138 to 103 to suspend the process while further talks are held with the government. “We hold in abeyance the bill for two months,” said parliamentary speaker Ali Larijani.
A day before the vote, a group of hard-line clerics and students had reportedly demonstrated in from of Larijani’s office in the city of Qom to urge him to reject the UN convention.
The vote means that Iran will – for now at least – remain on the list of “high risk” jurisdictions compiled by the Paris-based Financial Action Task Force (FATF), the intergovernmental body that monitors anti-money laundering and anti-terrorism financing standards. The only other country on the blacklist list is North Korea.
The administration of President Hassan Rouhani is still arguing in favour of Iran pressing ahead with the commitments it has previously made to clean up its banking system. Speaking to the Iranian parliament on June 10, deputy foreign minister Abbas Araqchi said full membership of FATF would not pose any security threat to the country.
Iran has been on the FATF “high risk” list since 2008. In June 2016, Tehran agreed to follow an action plan set by FATF so that it could be removed from the blacklist – including acceding to the UN convention. While Iran was implementing this plan, FATF had suspended any sanctions against the country.
However, although Iranian officials have brought in some reforms they have been slow to put the full plan into action. In February this year, FATF said the majority of items on the action plan had yet to be implemented, with the shortcomings including a need to adequately criminalise terrorist financing, including removing an exemption for “attempting to end foreign occupation, colonialism and racism”, and a requirement for stronger legislation and procedures covering the confiscation of property.
FATF also noted in February that draft legislation in front of the Majlis would close some of the gaps. That was enough for it to be able to justify the continued suspension of any counter-measures against Tehran. The situation is due to be reviewed by FATF again this month.
The decision by parliament to delay signing up to the convention means FATF will be in a delicate position when it conducts that review. If it does decide to re-impose sanctions on Tehran it will further reduce the Iranian financial system’s access to other banks around the world – already a long-standing problem for the country.
Conservative politicians in Iran have opposed signing up to the FATF rules for fear of undermining Iran’s ability to offer support to groups such as Hamas and Hezbollah. They argue that signing up to FATF now will give the US even greater leverage over the Iranian economy at a time when the administration of US President Donald Trump has already adopted an aggressive stance against Iran.
The decision by MPs to suspend any debate on the bill for two more months is significant as it means the deliberations will now resume after the deadline that Tehran has set France, Germany and the UK to come up with a package of measures to ensure the Iran nuclear deal – the Joint Comprehensive Plan of Action (JCPOA) – can survive even after the US pulls out.
“Now that the future of the JCPOA has become vague after the withdrawal of the US and the order to return the sanctions, it is illogical to join the FATF,” said a statement issued by conservative members of the Velayat (Jurisprudence) faction in parliament.