FATF Placed Iran on its Terrorism Financing Blacklist

FATF Placed Iran on its Terrorism Financing Blacklist

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The global dirty money watchdog FATF placed Iran on its terrorism financing blacklist on Friday after it failed to comply with international anti-terrorism financing norms. The move will deepen the country’s isolation from financial markets.

The decision came after more than three years of warnings from the Paris-based Financial Action Taskforce (FATF) urging the Islamic Republic to either enact terrorist financing conventions or see its reprieve from the blacklist lifted and some counter-measures imposed.

NO ISLAMIC COUNTRY SPREADING TERROR

The group’s 39 members said in a statement after a week-long plenary session:

Given Iran’s failure to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, the FATF fully lifts the suspension of counter-measures and calls on its members and urges all jurisdictions to apply effective counter-measures.

These would entail more scrutiny of transactions with Iran. They also enact tougher external auditing of financing firms operating in the country and extra pressure on the few foreign banks and businesses still dealing with Iran.

A Western diplomat told Reuters:

The consequence of (Iran’s) inaction is higher costs of borrowing and isolation from the financial system.

The United States commended the task force’s action after what it said was Tehran’s failure to adhere to FATF’s standards.

Iran “must face consequences for its continued failure to abide by international norms,” U.S. Secretary of State Mike Pompeo said in a statement.

Iran’s central bank chief dismissed FATF’s decision. “(It) is politically motivated and not a technical decision,” the state news agency IRNA quoted Abdolnasser Hemmati as saying. “I can assure our nation that it will have no impact on Iran’s foreign trade and the stability of our exchange rate.”

Foreign businesses say Iran’s compliance with FATF rules is essential if it wants to attract investors; especially since the United States reimposed sanctions on Tehran in 2018.

Iran’s leaders have been divided over approach to the FATF.

Supporters of cooperation say it could ease foreign trade with Europe and Asia, offsetting U.S. sanctions. Hardliners argue that passing legislation to join the FATF could hamper Iran’s support for its allies, including Lebanon’s Hezbollah.

MAXIMUM PRESSURE

Washington has since pushed a policy of “maximum pressure” on Iran. The U.S. believes a broader deal should be negotiated to encompass nuclear issues, Iran’s ballistic missile program and Iranian support for terrorism and proxy forces around the Middle East.

France, Britain and Germany have tried to salvage the nuclear accord. The U.S. applied pressure on the trio to join its efforts to isolate Iran.

A European official said:

The United States was pushing for the toughest position (by FATF), while other countries like China and Russia preferred something more flexible. The Europeans were looking for something in between.

U.S. sanctions have crippled Iran’s economy. They decimated its oil exports and largely sealed it off from the international financial system.

FATF said:

Until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism-financing…, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.

Iran’s action plan to meet with the FATF requirements, implemented in 2016, expired in January 2018.

Foreign Minister Mohammad Javad Zarif this week appeared resigned to the FATF blacklisting. He accused Washington of using its maximum pressure campaign to exert influence at the FATF.

FATF Placed Iran on its Terrorism Financing Blacklist

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