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Iran: “If we join the FATF, we’ll have trouble bypassing sanctions”

Financial Action Task Force
Financial Action Task Force

Analysis by PMOI/MEK

 

Iran, Nov. 9, 2018 - Mojtaba Zolnour, a member of the Iranian regime’s Majlis (parliament) has specifically expressed his opposition to Tehran joining the Financial Action Task Force (FATF) conventions.

“If we join the FATF, we will be facing difficulties bypassing the sanctions. The government cannot legally bypass the sanctions. Those sanctioning us must not have leads on how we bypass the sanctions,” he said. “The 22 issues raised by the Guardian Council regarding the FATF counter terrorism financing bill cannot be resolved.”

It is interesting how this Majlis member is specifically raising issues about the Iranian regime having problems with the international community realizing about its financial support for terrorist groups.

“The FATF is fundamentally based on the KYC principle, meaning Know Your Client. The Central Bank and the Foreign Ministry believe the FATF – based on the KYC principle – will be receiving information from Iran. According to this convention, Iran’s relations with other countries must be made specifically clear for the United States and how oil revenues enter the country. Therefore, if Iran joins the FATF, all checkpoints used to bypass sanctions will be identified to the U.S.,” he added.

Zolnour also made it crystal clear how the FATF issue is becoming a dead-end for the Iranian regime.

“Those in favor of the FATF says we must join this convention and not implement it in practice. Whereas if we refuse to implement the FATF after joining it, we will once again be registered in the FATF blacklist. Considering all these difficulties, what is the purpose of joining the FATF? If we are to be blacklisted by the FATF, we should at least go down this path without giving any commitments,” he added.

 

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In late October, the Iranian regime’s parliament had a session behind closed doors to listen to remarks by two high-ranking officials in the government about a controversial issue that has plagued the regime over the past few months and has escalated the tensions between the political factions in the ruling elite.

Javad Zarif, Iran’s foreign minister, and Abbas Araqchi, his deputy, attended the parliament to address the issue of the International Convention for the Suppression of the Financing of Terrorism and to brief MPs on the importance of passing it into law for the country.

Commonly known as Combating the Financing of Terrorism (CFT), the laws required to conform to international norms are globally standardized by the Financial Action Task Force on Money Laundering (FATF) under nine recommendations that act as guidelines to assess a country’s effectiveness in combating terrorism financing.

About a week ago, on October 19, the FATF Plenary, 17-19 October 2018, concluded to give Iran a four-month extension of time to pass the necessary laws to comply with FATF guidelines.

Meanwhile, the four bills related to FATF compliance are stuck amid a power struggle in Iran.

To comply with FATF’s guidelines, the Iranian regime has submitted four bills to the parliament. A bill for joining the Convention against Transnational Organized Crime (Palermo) and an amendment to the law for combating money laundering have already been passed by the parliament and sent to the Guardian Council. The Guardian Council, despite approving the bills, has returned them to the parliament to counsel for the opinion of the Expediency Council. This back-and-forth has created a new controversy in an already heated debate.

Javad Zarif and Abbas Araqchi briefed the parliament behind closed doors about their talks with Europe on CFT. Iranian state television broadcasted a very short report the same night saying: “Members of parliament have been host to the foreign minister and his deputy in a closed-door session and raised issues about the JCPOA, CFT and how Europe will act on its obligations. According to the first deputy of the parliament, the foreign minister reported on his talks with Europe and other countries to the MPs.”

Nemati, spokesperson for the parliament’s board of members said: “In this session, Zarif and Araqchi counted incidents that the US is putting maximum economic pressure on us in the belief that these pressures can lead our country to fall apart.”

Referring to talks with Europe and the financial special purpose vehicle the EU has promised to create to work around U.S. sanctions, Nemati said: “Europe has promised to have the financial vehicle for [dealing with] Iran ready by November 4 and besides Europe, Russia, India, and China are committed to this.”

“In the session, Zarif said, that Europe has stood firmly on this until now… Zarif said the right systems need to be approved by the regime in this four-months’ time frame. He also said that we shouldn’t damage our agreements and bilateral memorandums with some countries through self-sanctioning,” he added.

Ahmad Alirezabigi, a member of parliament from Khamenei’s faction, said to Fars news agency: “In today’s session, Mohammad Javad Zarif and the foreign ministry team tried to excuse their inaction in respect to the JCPOA and FATF.”

“Zarif said that considering the limit of four months that we have, we have no option but to accept FATF and to minimize the costs of FATF and the costs of FATF have become very high today.”

It is worth noting that in the same session with the parliament Zarif said: “These opposing views against FATF in the country paint the regime abroad in a way that in the Islamic Republic there are people who tend to side with and support terrorism.”

Bringing the Expediency Council into the equation has further complicated the fights around FATF.

Ali Motahari, a deputy spokesperson of the parliament, said: “Recently, a new phase has been added to the legislative process. The Higher Commission for Supervision of Executing the Broad Policies has been added to the parliament’s legislation process.”

“This invention will definitely limit the power of legislation and lessen the status of the parliament and the parliament has to defend itself.”

As pointed out earlier, the FATF issue is a dilemma that will have negative consequences for the Iranian regime regardless of the outcome. With the second wave of sanctions coming into effect in a few days, especially targeting Iran’s energy sector which acts as the regime’s lifeblood, it is interesting to see how the power struggle around FATF plays out.

One thing is for sure, the outcome will have a profound impact on near-term developments in Iran and the region.

 

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