Iran’s Conditions Rejected by FATF; Second Negative Response

According to Rokna, citing a report published by the Financial Intelligence Center regarding the FATF plenary meeting held from 22 to 24 Bahman in Mexico City, the group has once again notified countermeasures against Iran.

According to Fars, although the final statement of the FATF meeting has not yet been published, the Financial Intelligence Center’s statement indicates that more than 20 hours of discussions were held between the Iranian delegation and FATF members during the meeting; however, in the end, out of the ten reservations applied to the Palermo and CFT conventions, only Iran’s defenses regarding five conditions were accepted.

Previously, in the FATF report following the Madrid meeting, it had been stated that Iran’s reservations regarding the Palermo Convention were overly broad and that Iran’s domestic compliance with Palermo was not in line with FATF standards. Therefore, in that statement as well, members had been urged to apply countermeasures against Iran.

Although five of Iran’s reservations were not accepted, the Financial Intelligence Center described the acceptance of five reservations as resulting in the implementation of 11 out of 17 articles related to FATF recommendations in the CFT Convention and 10 out of 21 articles related to the Palermo Convention, as well as the updating of the country’s action plan progress report.

An important point in the Financial Intelligence Center’s statement is that the United Nations’ emphasis, in the reinstated resolutions related to the snapback mechanism, on using FATF capacity to implement UN sanctions against the Islamic Republic of Iran, and the non-acceptance of the Iranian delegation’s defenses regarding certain reservations applied to the two conventions on the grounds that they were broad and unrelated, led to pressure by some FATF members on the group’s secretariat.

This issue has once again resulted in the continuation of FATF countermeasures against Iran.

In its statement, the Financial Intelligence Center emphasized that despite securing the unprecedented support of 11 out of 39 FATF members for the expanding measures of the Islamic Republic of Iran in combating money laundering and the financing of terrorism, and despite breaking the previous unanimous consensus of members against Iran, the text of the public statement at the Paris and Mexico City meetings was altered. At the Mexico meeting, FATF members (including 28 opposing members out of 39) while acknowledging the country’s effective and forward-moving measures in strengthening anti-money laundering and counter-terrorism financing infrastructures, on the pretext of incomplete implementation of the action plan, unanimously notified new countermeasures to all countries and jurisdictions worldwide for implementation, as follows:

1. Refraining from granting Iran permission to establish subsidiaries, new branches, or representative offices of financial institutions and virtual asset service providers in all countries and jurisdictions worldwide;

2. Prohibiting the establishment of representative offices or branches of foreign financial institutions and virtual asset service providers in Iran;

3. Limiting business relations or financial transactions, including cryptocurrency transactions, with Iran and persons affiliated with Iran by countries and jurisdictions;

4. Requiring all countries worldwide to carefully examine funds related to Iran, such as humanitarian aid, food, health services, embassy expenses, and the like, in terms of links to terrorism financing and the financing of the proliferation of weapons of mass destruction, and to define new countermeasures where necessary.

Despite FATF’s rejection of Iran’s conditions, the Financial Intelligence Center criticized domestic institutions for leaving certain issues unresolved, including the amendment of reservations to the Palermo and CFT conventions, Iran’s membership in a regional anti-money laundering group, the removal of certain exceptions in the law on combating the financing of terrorism, and the clarification and notification of procedures for identifying and seizing the assets of international terrorist individuals and groups (pursuant to UN Security Council Resolution 1267).

Following this criticism, it warned that the approval of the Palermo and CFT conventions may ultimately remain without result and that countermeasures against Iran could increase.