0954 GMT October 23, 2019
The Financial Action Task Force (FATF) said Friday Iran has until June to fix its anti-money laundering and terrorism financing rules or face increased international scrutiny of its banks.
In a Friday statement, the Iranian Central Bank (CBI) praised the steps that have been taken so far by the Iranian legislative bodies in relation with completing the reforms required by FATF, which prompted the global watchdog to extend the deadline for Iran.
Last October, the Paris-based watchdog had already given Iran until February to complete an action plan of reforms that would bring it in line with global norms, or face consequences.
The FATF concluded this week at a meeting that “there are still items not completed” and said in a statement it “expects Iran to proceed swiftly in the reform path”.
"While welcoming the passage [by Iran] of the Anti-Money Laundering Act, the FATF expresses its disappointment that the Action Plan remains outstanding and expects Iran to proceed swiftly in the reform path to ensure that it addresses all of the remaining items,” the statement said.
It warned that if Iran fails to enact the remaining legislation based on FATF’s standards by June 2019, the FATF will “require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran.”
Iran's Parliament has approved four bills put forward by the government to meet standards set by the FATF but the oversight Guardian Council dismissed one of the bills.
The council said it had found "flaws and ambiguities" in the draft legislation which is purported to fight terror financing, but in fact targets Iran for supporting resistance movements such as Hezbollah.
"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," the Friday statement said.
If the shortcomings were not remedied by June, currently suspended countermeasures would automatically kick in, said Marshall Billingslea, the US assistant Treasury Secretary for terrorist financing, after chairing the FATF meeting
“That is a significant indication from the FATF that time has expired, the action plan is overdue and we expect it to be implemented without delay,” Billingslea told journalists.
If counter-countermeasures are reimposed, FATF members worldwide would be required to step up supervision of Iranian bank branches on their territory, including on-site inspections, Billinglsea said.
In the absence of compliance, the FATF called on its members to advise their banks to scrutinize all business with Iran, including obtaining information on reasons for intended transactions, stepping up controls on transactions and identifying patterns of transaction for further scrutiny.
Foreign businesses say compliance and Iran’s removal from the FATF’s blacklist is key for making investments in the country, especially after the United States re-imposed sanctions on Iran.
France, Britain and Germany have tied this compliance angle with the use of a new channel for non-dollar trade with Iran to avert US sanctions.
Those countries have said they expected Iran would swiftly put into place all elements of its FATF action plan.
Reuters, Press TV and Mehr News Agency contributed to this story.