Iran remains on global watchdog blacklist

• FATF says Iran will remain on its blacklist until the full Action Plan has been completed.
• Iran along with North Korea are the only two countries on the FATF blacklist, under which access to loans and international aid is severely restricted.

The Financial Action Task Force (FATF) has put Iran on its blacklist after the country failed to comply with international anti-terrorism funding norms.

“In October 2019, the FATF called upon its members and urged all jurisdictions to: require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran; introduce enhanced relevant reporting mechanisms or systematic reporting of financial transactions; and require increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran,” stated FATF, in its statement at the conclusion of the six day plenary in Paris.

The global watchdog said that “given Iran’s failure to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, the FATF fully lifts the suspension of counter-measures and calls on its members and urges all jurisdictions to apply effective counter-measures.”

FATF said that Iran will remain on its statement on [High Risk Jurisdictions Subject to a Call for Action] until the full Action Plan has been completed.

“If Iran ratifies the Palermo and Terrorist Financing Conventions, in line with the FATF standards, the FATF will decide on next steps, including whether to suspend countermeasures. Until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism-financing in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system,” the statement added.

In February 2020, the FATF noted that there are still items that Iran should fully address i.e.: (1) adequately criminalizing terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; (2) identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; (3) ensuring an adequate and enforceable customer due diligence regime; (4) demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; (5) ratifying and implementing the Palermo and TF Conventions and clarifying the capability to provide mutual legal assistance; and (6) ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information.

Iran along with North Korea are the only two countries on the FATF blacklist, under which access to loans and international aid is severely restricted.