0852 GMT July 16, 2019
Iran's cooperation with the Financial Action Task Force (FATF) is still debated among political spectrums.
The opponents say cooperation with FATF — "an intergovernmental organization that sets standards and promotes measures for combating money laundering and terrorist financing" — will lead to the disclosure of the country's financial affairs to the organization. They also say such cooperation demand that Tehran cut off any link with entities that are on FATF's blacklist.
This is while the proponents believe FATF can help Iran overcome obstacles pertaining to transactions with major global banks. They also highlight the government's assurances that any cooperation with the body will not undermine national interests such as those mentioned by the opponents.
The imposition of tough US-led sanctions adversely affected Iran's economy. The export of oil and its byproducts fell and a large number of international banks were banned from conducting trade transactions with the Islamic Republic.
Nonetheless, the removal of nuclear-related sanctions followed by last year's nuclear deal between Tehran and the P5+1 group of countries — the United States, Britain, France, China and Russia plus Germany — reversed the situation.
In the wake of the removal of anti-Iran sanctions, oil exports increased. Likewise, global transaction network SWIFT reconnected a number of Iranian banks to its system, allowing them to resume cross-border transactions with foreign banks.
Iran’s reconnection to Society for Worldwide Interbank Financial Telecommunication (SWIFT) has resolved some problems pertaining to banking transactions.
Nevertheless, Iran is still facing problems to access financing from abroad as many large banks fear breaking the remaining US restrictions. Some American and European banks are concerned about retribution by the United States. The restrictions dictated by Washington prohibit trade with Iran in dollars and bar Iranian access to the US financial system. Such concerns come as the US government has said major banks can resume ties with Iran under the nuclear deal.
Iran's cooperation with FATF is aimed at removing excuses made by major international banks.
Financial obstacles during sanctions prompted Iran to receive payments for oil exports through a third party. This increased the pressure of sanctions on the country.
Presently, Iran can use SWIFT for conducting foreign trade. But cooperation with FATF is essential to allay the fears of major banks over retribution by Washington.