The Iranian regime is witnessing a new wave of internal divisions as the issue of Financial Action Task Force (FATF) legislation resurfaces. These laws, which have been stalled in the legislative process for years, have sparked renewed debate among the country’s political factions, reflecting the complexity of the interplay between domestic politics and international pressures.
The Iranian regime’s Minister of Economic Affairs and Finance recently announced that Supreme Leader Ali Khamenei has approved the reconsideration of FATF-related bills by the Guardian Council. Masoud Pezeshkian, the regime’s president, confirmed this during a meeting with the Iranian Chamber of Commerce on December 31, 2024, emphasizing the need for collective action by all authorities to address the country’s economic challenges.
These developments come amid a severe economic crisis, including the collapse of the Iranian currency, exacerbated by international sanctions and geopolitical challenges. The discussions center on two key bills: the Palermo Convention and the Countering Financing of Terrorism (CFT) Act, aimed at aligning Iran’s financial regulations with FATF standards.
The FATF is an international body focused on combating money laundering and terrorist financing. It blacklists non-cooperative countries, and currently, Iran and North Korea remain the only nations on this list, further isolating Iran from the global financial system.
The issue of complying with FATF standards has long been contentious in Iran. Proponents argue that compliance would help ease sanctions, while opponents claim it would limit the regime’s ability to support allied groups such as Hezbollah.
Although the bills were approved by the Parliament in 2018, the Guardian Council, whose members are tightly controlled by Khamenei, rejected them, turning the matter into a recurring source of disputes. The issue has often been used as a tool to manipulate market sentiments during times of economic crisis.
Following Khamenei’s announcement approving a review of the bills, the Iranian stock market saw increased demand for bank shares, reflecting investor optimism about a potential economic breakthrough if FATF standards are met. However, skepticism remains, as previous endorsements by Khamenei, such as in December 2020, failed to produce tangible outcomes.
The opposition to these bills is led by hardline factions, who view them as a tool for “foreign infiltration.” Critics claim that adhering to FATF recommendations could hinder Iran’s ability to circumvent sanctions. Prominent voices such as Gholamreza Mesbahi Moghadam and Mohsen Rezaei have raised concerns about sovereignty and the regime’s strategic interests.
On the other hand, the worsening economic conditions and the failure of nuclear negotiations under former President Ebrahim Raisi’s administration have increased pressure to address the FATF issue. Although Raisi initially ignored the legislation, he later acknowledged its importance, calling compliance “inevitable” under the current circumstances.
While Khamenei has not explicitly opposed the bills, his influence on the Guardian Council’s decisions is evident. In October 2018, Khamenei stated he was not against reviewing the bills in Parliament, yet final approval remains elusive. The council, dominated by hardliners, continues to oppose the legislation, reflecting deep divisions within the regime.
The FATF reaffirmed in July 2023 that Iran remains on its blacklist, warning that the country would stay on the list unless deficiencies are addressed. These international pressures, coupled with domestic economic challenges, add further complexity to Iran’s political landscape.
The reopening of the FATF file highlights persistent disagreements within the Iranian political scene. With Khamenei’s tacit approval and mounting economic pressures, the Guardian Council is set to reconsider the Palermo Convention and CFT bills. However, hardline opposition remains strong, driven by ideological concerns and resistance to international oversight. As Iran navigates these internal and external challenges, the question of FATF compliance remains unresolved, carrying significant implications for its economic and geopolitical future.
