FATF extends Iran sanctions waiver but sets deadline

The world’s financial watchdog has extended a waiver for punitive measures against Iran but set a deadline of October for the country to adopt financial reforms or face consequences.

The Paris-based the Financial Action Task Force (FATF) is facing US opposition to remove Iran from an economic blacklist despite the steps that Tehran has taken to enact legislation barring terrorist financing and money laundering.

Iran’s removal from the blacklist had gained support in European capitals but a flurry of visits by a top US official to France and other European countries thwarted the bid in February.

US curbs bid to take Iran off financial blacklist

The Financial Action Task Force (FATF) had been weighing Tehran’s request for the lifting of so-called countermeasures but a flurry of visits by a top US official to Europe thwarted the bid.

The FATF took a harder line on Friday, apparently taking its cue from the US decision to reimpose sanctions on Iran. The group warned Tehran of “appropriate and necessary actions” if it does not  to enact amendments in in full compliance with its standards.

Iran has been trying to implement anti-money laundering (AML) and combating the financing of terrorism (CFT) standards set by the FATF for years, but the group said it was not satisfied with the measures.

“The FATF is disappointed with Iran’s failure to implement its action plan to address its significant AML/CFT deficiencies,” the organization said in a statement after a week of deliberations in Paris.

The group said it expected Iran to enact amendments in full compliance with the FATF standards by October 2018, “otherwise, the FATF will decide upon appropriate and necessary actions at that time.”

The FATF cannot impose sanctions, but individual states that are its members have used the group’s reports to take punitive measures against their adversaries. As a result, Iran and Syria have been targeted by US and European sanctions.

Nevertheless, countries seeking to attract foreign investors have little choice but to adopt the FATF’s requirements or risk financial exclusion.

According to Tom Keatinge, the director of the Center for Financial Crime and Security Studies at the RUSI think-tank in London, the FAFT is “the most powerful organisation most people will have never heard of.”

“A lot of aggravation that people suffer with their banking is FATF-related but they don’t realize it,” the Middle East Eye online news portal quoted him as saying.

As in Iran’s case, membership in the Financial Action Task Force has not only failed to attract investment, but it has also exposed various institutions to extraterritorial regulations and penalties.

The situation has sparked a heated debate in the country, with proponents of the FATF facing strong opposition from those who believe membership in the group only makes the country vulnerable to outside meddling.

Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei urged the parliament earlier this month to pass legislation to combat money laundering based on its own criteria.

The parliament “must make laws independently on issues such as combating terrorism or battling money laundering,” the Leader said.

“Of course, some provisions of international treaties may be good, but there is no necessity to join conventions whose underlying objectives we are not aware of or know that they have some problems by citing these provisions.”

Last month, US President Donald Trump announced Washington’s exit from the JCPOA and vowed to impose “the highest level” of economic bans on the Islamic Republic.

US Secretary of State Mike Pompeo also threatened Iran with the “strongest sanctions in history” if it did not comply with a list of steep demands, including ending uranium enrichment.