Iran given three months to reform money laundering

An international group that monitors money laundering said Iran had until October to complete reforms that would bring it into line with global norms, or face consequences that could further deter inward investors.

Tehran has tried to attract foreign investors after completing a landmark 2015 agreement with the United States, Russia, China, France, Germany and Britain under which some sanctions were lifted in exchange for Iran agreeing to curbs on its nuclear programme.

Iran has been trying to implement the standards set by the Financial Action Task Force (FATF) – a global group of government anti-money-laundering and counter-financing of terrorism regimes, in the hope it will be removed from a blacklist that makes foreign investors reluctant to deal with it.

“The FATF is disappointed with Iran’s failure to implement its action plan to address its significant AML/CFT deficiencies,” the organisation said on Friday after a week of talks in Paris.

“The FATF urgently expects Iran to proceed swiftly in the reform path to ensure that it addresses all of the remaining items in its action plan.

The FATF expected Iran to enact amendments to its laws in full compliance with international standards by October 2018, “otherwise, the FATF will decide upon appropriate and necessary actions at that time”.

The decision buys time for Iran, knowing that punitive measures by the group could worsen its financial sector, which is beginning to feel the effects of the US’s decision in May to withdraw from the nuclear accord and Washington’s push to implement a raft of new sanctions that are deterring businesses.

Iran’s supreme leader said on June 20 that parliament should pass laws against money laundering according to its own criteria.

Ayatollah Ali Khamenei’s call made it less likely that parliament uses FATF criteria.

Foreign businesses said a bill that included FATF guidelines was essential if they were to invest further.

Hardliners in Iran’s parliament have opposed passing laws towards compliance with FATF standards, arguing it could hamper Tehran’s financial support for allies such as Lebanon’s Hezbollah, which the US has classified as a terrorist organisation.

Until Iran carries out measures to address deficiencies, FATF said it would remain concerned and “urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran”.