Baku, Azerbaijan, Sept. 3
By Farhad Daneshvar – Trend:
The West’s concerns over anti-money laundering and combating the financing of terrorism (AML/CFT) have caused Iran’s financial policymakers to take serious measures aimed at re-structuring the country’s banking system.
Although most of international sanctions against the Islamic Republic were lifted following the implementation of the Joint Comprehensive Plan of Action (aka nuclear deal) in January, difficulties in banking ties and money transactions still remain in place.
While the domestic critics of the President Hassan Rouhani’s administration suggest that the JCPOA has, so far, failed to help Iran to fully re-establish banking ties with the rest of the world, the country’s financial officials have admitted that there are several obstacles against the Islamic Republic’s reintegration with the world and those obstacles need to be removed.
On the other hand, strengthening the framework for AML/CFT seems critical to facilitate the reintegration of the country’s banks into global trade and financial systems.
Now, in a surprising development two Iranian leading banks have reportedly refused providing a company affiliated with the influential Islamic Revolution Guards Corps (IRGC) with financial services citing international sanctions.
According to Iranian media reports, Bank Sepah and Bank Mellat have recently refrained from doing business with Khatam ol Anbia company, the construction and engineering arm of the IRGC, a noticeable fact that leads us to believe that the country’s financial policymakers have come up with a new idea to impose sanctions on companies affiliated with the IRGC.
In the meantime conservatives have expressed concerns that more banks would join the “plan” to sanction the IRGC with some others who say that imposing sanction on the IRGC is not in the favor of the Islamic Republic.
It seems that the decision came following a June 24 announcement by the Financial Action Task Force (FATF), the global standard setting body for AML/CFT, suspending its counter-measures against Iran for 12 months in order to monitor the country’s progress in implementing an Action Plan to address Tehran’s strategic AML/CFT deficiencies.
According to the announcement, if the FATF determines that Iran has not demonstrated sufficient progress in implementing the Action Plan at the end of that period, FATF’s call for counter-measures will be re-imposed but if the Islamic Republic meets its commitments under the Action Plan in that time period, the FATF will consider next steps in this regards.
Many believe that European leading banks remain reluctant to do business with Iran as they are worried about running afoul of existing regulations. Therefore, financial policymakers in the Islamic Republic see no other ways except for implementing technical advices provided by the international financial institutions.
The FATF has further urged Iran to fully address its AML/CFT deficiencies, in particular those related to terrorist financing.
While the FATF says it will continue to closely monitor Iran’s progress, concerns have grown in the Islamic Republic that Khatam ol Anbia will not be the only company affected by the Action Plan and more domestic entities, individuals as well as companies would suffer from the “self-imposed sanctions”.
Simultaneously as the information on sanctioning the IRGC affiliated company began to be shared, conservative media outlets seized on the situation as a way to attack the administration.
It has obviously provoked a backlash from President Rouhani’s conservative opponents which is likely to spell a new trouble for his administration as well as the financial policymakers in implementing the new financial reforms.
Farhad Daneshvar is Trend Agency's staff journalist, follow him on Twitter: @Farhad_Danesh