Following meetings that took place on October 19 – 21, the Financial Action Task Force (FATF) has decided to keep the Iranian regime on its blacklist due to their continuous malign activities, including money laundering and financing terrorism around the world.
Currently, this blacklist only features two countries with North Korea joining Iran on the FATF’s ‘call for action’ list. The FATF has warned its 36 member countries, including the European Union and the Gulf Cooperation Council (GCC), to deal with the blacklisted countries with ‘enhanced due diligence’ and to have countermeasures in place to protect international financial systems.
Iran’s regime was first entered into the FATF blacklist in February 2020. The regime was given ample warning and opportunity to adjust its financial system and implement two laws that would make it conformant with the FATF anti-money laundering (AML) and countering terrorism financing (CTF) standards. But the regime has failed time and again to meet the FATF’s deadlines.
Allied countries of the Iranian regime, including China and Russia, have previously raised concerns over the regime’s unwillingness to comply with FATF recommendations, as well as their lack of transparency. Even if sanctions are lifted against the regime by the United States, Iran’s inclusion on the blacklist will make it extremely difficult for the regime to carry out financial transactions undetected.
Debates over the FATF bills in the Iranian government have been ongoing for many years without ever concluding. The regime’s supreme leader Ali Khamenei has the final word on all the government’s critical matters, and his previous rulings have been contradictory. After having ordered the Expediency Council to examine several bills that would bring Iran in compliance with the FATF, but later criticized the bills.
By joining the convention, it will have to become transparent on its financial relations, which will make it very hard for the regime to finance its terrorist activities, including IRGC Quds Force and the payments it makes to the Lebanese Hezbollah, the Hashd Al-Shaabi in Iraq, and its other terrorist proxies in the region.
The regime’s refusal to join the FATF as a member state has left them facing worse problems. The current economic situation in Iran is worsening by the day, leaving society as a powder keg on the verge of explosion. Warnings have been given by economic experts, along with reports in state media, of the possibility that another nationwide uprising is on the horizon.
Despite heavy security measures and the overwhelming Covid-19 crisis, protests are taking place more than ever across Iran as Iranian citizens are at breaking point due to the regime’s inaction to address the crisis. The regime is trying desperately to suppress the demonstrations due to the fear of an uprising that could threaten their position of power, however, they currently have trouble funding their security forces.
The regime is in a deadlock situation. On the one hand, it needs access to the international financial system to fund its illicit activities. But on the other hand, complying with the FATF rules defeats the very nature of this regime, which is founded on financial corruption, terrorism, and suppression.
However, for Iran to be removed from the FATF’s blacklist, the regime would need to experience a fundamental change.