A ‘HIGH RISK JURISDICTION’: FATF KEEPS IRAN ON BLACKLIST, CALLS FOR COUNTERMEASURES
Latest Developments
Iran’s Failure to Comply: The intergovernmental Financial Action Task Force (FATF) announced on February 21 that Iran will remain on its blacklist, citing the clerical regime’s failure to complete an action plan aimed at addressing Tehran’s financing of terrorism. FATF, which sets global standards for countering money laundering and terror finance, said in a statement that it remains “concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.”
Describing Iran as one of several “High-Risk Jurisdictions,” FATF said it “calls on its members and urges all jurisdictions to apply effective countermeasures” that would place financial restrictions on the Islamic Republic
A History of Iranian Inaction: FATF first placed Iran on its blacklist in 2007. In the intervening period, FATF has called upon Tehran to address technical issues, like weak customer due diligence mechanisms, and processes for identifying and sanctioning unlicensed money transfer service providers — among other problems — and ensure that financial institutions verify originator and beneficiary information. FATF has also urged Iran to join the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention Against Transnational Organized Crime. However, the Islamic Republic has yet to take these steps, which would make it harder for the regime to launder money and evade sanctions.
Treasury Secretary Welcomes FATF Announcement: U.S. Secretary of the Treasury Scott Bessent welcomed the announcement, saying, “The United States welcomes the FATF’s reaffirmation of countermeasures against Iran for the terrorist financing risk emanating from that country, as well as the continued work to strengthen the international financial system against all illicit finance.” On February 24, following new sanctions on the Iranian oil trade announced by the State and Treasury Departments, Bessent warned that the United States “will use all our available tools to target all aspects of Iran’s oil supply chain, and anyone who deals in Iranian oil exposes themselves to significant sanctions risk.”
FDD Expert Response
“Officials of the Islamic Republic of Iran have been debating whether to join the UN anti-terrorism conventions for years. This should not be complicated. They have not adopted them because Tehran has not made a strategic decision to end its use of terrorism, even though getting off FATF’s blacklist would economically benefit the people of Iran. Whether or not Iran technically joins the conventions, Iran’s bankrolling of al-Qaeda, Hezbollah, Hamas, Palestinian Islamic Jihad, and the Houthis, who block world trade, must cease before Tehran can be removed from the blacklist.” — Toby Dershowitz, Managing Director, FDD Action
“Tehran remains one of the most egregious offenders in the international financial system. Its networks of sanctions evasion, money laundering, and terror financing compromise and endanger global financial flows. FATF’s decision to keep Tehran on its blacklist is the right one.” — Saeed Ghasseminejad, Senior Iran and Financial Economics Advisor
“Iran’s continued placement on FATF’s blacklist is no surprise. What’s truly alarming is how little attention is paid to the enablers of Tehran’s malign activity. The regime depends on a sophisticated web of corrupt officials, front companies, and opaque financial networks to bypass sanctions and bankroll its illicit operations. These facilitators grant Tehran access to global markets, critical technologies, and hard currency — the very lifelines the regime needs to fund terrorism, advance its nuclear ambitions, and maintain its grip on power.” — Elaine K. Dezenski, Senior Director and Head, FDD’s Center on Economic and Financial Power
FDD Background and Analysis
“5 Reasons Why South Africa Must Remain on FATF’s Financial Crime Watchlist,” by Max Meizlish
“Iran Should Stay on the Global Terror Finance and Money Laundering Blacklist,” by Toby Dershowitz and Saeed Ghasseminejad
“Iran is failing to adhere to Financial Action Task Force standards,” by Toby Dershowitz, Saeed Ghasseminejad, and Serena Frechter
