Iran Fails to Meet FATF’s Anti-Money Laundering Demands, Faces Global Consequences
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The Financial Action Task Force (FATF) has reiterated its concerns over Iran’s failure to address strategic deficiencies in its anti-money laundering and combating the financing of terrorism regime. Despite being given multiple opportunities to correct these issues, Iran remains a high-risk jurisdiction for money laundering and terrorist financing.
Background
Iran was first identified as a high-risk jurisdiction by the FATF in 2016 and has since failed to complete its action plan aimed at addressing these concerns. In February 2020, the FATF noted that Iran had not made sufficient progress in implementing the necessary reforms.
Key Concerns
* Failure to Adequately Criminalize Terrorist Financing
- Failure to Identify and Freeze Terrorist Assets
- Insufficient Customer Due Diligence Regime
- Lack of Clarification on Sanctioning Unlicensed Money/Value Transfer Service Providers
- Failure to Ratify and Implement the Palermo and TF Conventions
- Inadequate Capability to Provide Mutual Legal Assistance
As a result, the FATF has fully lifted the suspension of countermeasures against Iran and is urging all jurisdictions to apply effective countermeasures to protect their financial systems from the money laundering, terrorist financing, and proliferation financing risks posed by Iran.
Consequences for Iran’s Financial System
The FATF’s decision will likely lead to a range of consequences, including:
- Increased scrutiny by international authorities
- Restrictions on Iran’s access to international financial markets
- Potential penalties against Iranian banks and other financial institutions
Global Effort Against Money Laundering, Terrorist Financing, and Proliferation Financing
The FATF is part of a broader effort to promote global cooperation in combating money laundering, terrorist financing, and proliferation financing. The organization has identified 23 jurisdictions as being high-risk for these threats, including Iran, North Korea, and Yemen.
Technical Compliance Deficiencies
In addition to its concerns over Iran’s anti-money laundering regime, the FATF has also expressed concerns over the country’s failure to address technical compliance deficiencies related to R.7, which relates to the implementation of targeted financial sanctions related to proliferation financing.
Call to Action
The FATF is urging all jurisdictions to apply enhanced due diligence measures when dealing with Iranian entities and individuals, including banks, money/value transfer service providers, and other financial institutions.
Implications for Iran’s Financial System and International Trade
Iran’s failure to address these concerns has significant implications for the country’s financial system and its ability to engage in international trade. The FATF’s decision will likely have far-reaching consequences for Iran and is a warning to other countries that fail to take necessary steps to combat money laundering, terrorist financing, and proliferation financing.