Iran TerrorismFrench finance group wary of Iranian banks

French finance group wary of Iranian banks


New York Times: In a boost to the American-backed effort to isolate Iran, a leading international organization responsible for combating financial crimes called on Thursday for all countries to be wary of Iran’s banking system because of concerns over money laundering and aid to terrorism. The New York Times

Published: February 29, 2008

WASHINGTON — In a boost to the American-backed effort to isolate Iran, a leading international organization responsible for combating financial crimes called on Thursday for all countries to be wary of Iran’s banking system because of concerns over money laundering and aid to terrorism.

The action, by the Paris-based Financial Action Task Force, was hailed by the Bush administration as likely to help its drive to punish Iran economically for its nuclear activities and support of Hezbollah and other militant groups.

It came also as a separate American effort to get the United Nations Security Council to impose a round of mild sanctions on Iran has proceeded slowly, and with European countries planning to offer new incentives to Iran if it agrees to halt its uranium enrichment program.

In a separate development on Thursday, the Bush administration imposed penalties on four Syrians accused of facilitating the flow of money, weapons and persons involved in terrorism through Syria into Iraq. The action had the effect of freezing their assets in the United States, a largely symbolic step because they are not thought to have assets.

On Iran, the language of the Financial Action Task Force’s statement is indirect, in that it simply calls on banks and other institutions to take into account the risk of the Tehran government’s “deficiencies” in controlling money laundering and financial support for terrorism, and to exercise “due diligence” in dealing with Iran.

But experts at the Treasury Department said the statement would have a powerful effect on the world’s financial institutions at a time when many American and European banks have already started to pull back from transactions with Iran in response to pressure from the United States.

In a statement, the Treasury Department said the task force’s action “sends a clear message to governments and financial institutions worldwide that the threat Iran poses to the international financial system continues unabated.”

The Bush administration has been trying to persuade banks in the Persian Gulf and Asia to follow the lead of European and American banks in withdrawing from Iran, with mixed success. The number of foreign branches operating in Iran has dropped from 46 to 20 in two years, according to American and Western diplomats.

The American hope is that the financial task force will strengthen the case for isolating Iran, especially because Russia and China are task force members and both countries have resisted sanctions on Iran at the United Nations.

Sir James Sassoon, president of the task force, said that its action, adopted at a board meeting in Paris, “increases the pressure on Iran” to “urgently” address its shortcomings in money laundering and anti-terrorism financing areas.

“In view of the continued risks emanating from Iran, the F.A.T.F. is calling on all countries around the world to advise their financial institutions to pay special attention to financial dealings with Iran,” he said.

The financial task force has 32 member countries, as well as the European Union and the Persian Gulf Cooperation Council.

Administration officials said it was significant that China and Russia, which had recently joined the financial task force, supported the task force’s move on Thursday, in part because the task force is a technical body affiliated with the Organization of Economic Cooperation and Development.

A Task Force official in Paris, speaking anonymously under ground rules used for anyone explaining the group’s public statements, said Iran had made a major effort to head off the Task Force’s action in recent months. The action was threatened in a statement last October, which warned Iran to change its laws or face difficulties.

Last week, the Bush administration disclosed that a senior Treasury Department official, Daniel L. Glaser, had attended a meeting of the Task Force in Paris along with representatives from Iran, who were lobbying the group to persuade it that it would correct the shortcomings in its banking system.

Since then, the task force official said, Iran changed some of its laws but made only minimal progress in reducing the chances of money laundering in its banking system and no progress in setting up restrictions against aiding terrorism groups.

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