Dirty money circulated in the country’s irregular economy is estimated to be around $6 billion. For the same reason, the government is trying to get the anti-money laundering legislation passed to expose illegal financial dealings.
According to Persian daily Hamshahri, the Sixth Majlis reviewed and ratified the anti-money laundering bill. However, the bill didn’t get the approval of the Guardian Council and thus parliament was forced to submit it to the State Expediency Council for arbitration. The Council reviewed the bill and recommended certain amendments before returning it, this time, to the Seventh Majlis.
The anti-money laundering bill was once again reviewed by the Seventh Majlis. After ratification it was submitted to the Guardian Council where it was rejected. On parliament’s insistence the bill was once again submitted to the State Expediency Council.

Mafia Tool
Money laundering is a tool used by people involved in illegal activities, such as drug trafficking, organized crime, tax-evasion, bribery and corruption. It can have a wide range of adverse effects on a country’s economic, political and social structures. Because laundered money passes through the financial system, money laundering may also affect the financial system as a whole and banks in particular.
One of the most serious effects of money laundering is on the private sector.
Money launderers use front companies to convert the proceeds of illicit activity into legitimately acquired funds and in the process obscure their illegal gains. They may have access to huge illicit funds, allowing them to subsidize the front companies and to offer products and services at below market rates. This gives such front companies an advantage over their competitors, who have to rely on legitimate sources of funding.
The fiscal system is the focal point of anti-money laundering initiatives because dirty money is most easily identified when it first enters the financial sector. It is the responsibility of the central banks to ensure that the financial system does not become a conduit for laundering money.

Procedures
According to a number of studies, washing dirty money involves three basic steps: placement, layering and integration. In the first stage, attempts are made to hide the dirty money’s illegal origins by changing its form through investment in cash-intensive businesses. Next, a number of shell companies are set up in countries known for strong bank secrecy laws or for lax enforcement of money laundering statutes. Then the dirty money is circulated within these shell companies until they appear clean.
Money is laundered through currency exchange houses, stock brokerages, gold dealers, automobile dealerships, insurance companies and trading companies. Private banking facilities, offshore banking, shell corporations, free trade zones, wire systems, and trade financing all can mask illegal financial activities.

Economic Impacts
Money laundering is a fact of life in every country but it has far more adverse impacts on the fragile economy of developing nations because they have smaller financial markets and institutions.
Among its other negative socio-economic effects, money laundering transfers economic power from the market, government, and citizens to criminals. Furthermore, the sheer magnitude of economic power that goes to criminals from money laundering has a corrupting influence on all elements of society.
Money laundering can result in unexpected changes in money demand and increased volatility of international capital flows, profit rates and exchange rates. The unpredictable nature of money laundering, coupled with the loss of policy control may make sound economic policies difficult to implement.
It also can make government tax collection difficult and thus reduce tax revenues. The negative repercussions from illegal fiscal activities may further diminish legitimate opportunities for sustainable economic growth while attracting international criminal organizations.
Factors such as ineffectual financial system, frail anti-money laundering legislation, ineffective implementation of rules and regulations, incorrect policies and corruption, improper financial penalties for money launderers can aggravate the situation and make it even harder to fight money laundering and organized crime.
Money laundering corrupts managers and personnel of financial institutions and also limits the scope of their financial relations with other nations. A country with a fragile financial system will find it difficult to get loans and credits from other nations.
Dirty money can likewise dent efforts to privatize state-run companies and institutions, because money launderers always make a higher bid to purchase such companies to use them as a front to legitimize their illegal activities. Such investments strengthen the capabilities of organized crime with greater impact on public sector institutions and financial activities.
Campaign
Iran is a signatory to the 1991 Vienna Convention. That is why it will have to make greater effort to curb money laundering in its irregular economy, which continues to undermine the regular economy and legitimate financial businesses. The Central Bank of Iran has likewise devised its own rules and regulations to fight money laundering and also to coordinate and regulate the activities of decentralized financial institutions.
The Iranian government has put in place new, more stringent penalties to prevent money laundering in the financial system. Without exception it is the financial institutions that have to provide the first line of defense Ð and it is clear that the onus is on the executives of financial institutions to ensure that all efforts are made to comply. Penalties are already being handed out in the form of imprisonment, fines and damage to reputation.Ê
ÊDetecting fraudulent deals that may be used as a basis of illegal activity for money laundering are far from easy. The simple logistics of checking every attempted or implemented transaction and to monitor each contact with the customer is daunting in itself.
To counter organized financial crime needs a thorough understanding of the business the illegal institution is involved in and how it operates; the clients it deals with, and the ability to detect the process by which illegitimate funds are placed, layered and integrated within the financial markets to give them an air of legitimacy. Inability to understand and address these issues opens the door for dirty money to become clean.
Money laundering has also become a top concern for financial institutions and advisory firms in Iran--given an estimated £6 billion of dirty money being laundered through the irregular economy each year. As a result, significant steps have been taken to tackle the problem. The bill to fight money laundering is just one of such measures that demand advisors have sufficient processes in place to reduce the possibility of money laundering in financial institutions. The challenge is a huge one, but with customized anti-money laundering solutions firms can implement processes and checks that satisfy the requirements of the anti-money laundering bill.
In conclusion, it should be reiterated that money laundering could have devastating economic, security, and social consequences. It provides the funds needed to finance drug dealers, terrorists, criminals, corrupt public officials, and others to operate and expand their criminal enterprise.
Also it should be noted that the success in fighting money laundering requires necessary reforms in financial and banking sectors of the country, plus changes in fiscal management and policies. A comprehensive plan to devise and implement the anti-money laundering legislation will likewise minimize illegitimate activities in the financial system.
To start with, not only the banking system, but the entire financial system will have to cooperate and acknowledge that money laundering is an unacceptable practice per se. That is why the fight against money laundering and terrorism is a top priority for the international financial network and why such a fight continues to be debated among governments and financial officials to this day.
Indeed, the Islamic Republic is serious about ensuring that it fully complies with its international obligations to curb the crime and that its financial system and activities continue to meet the international criteria.