FATF blacklists Iran

February 20, 2010

The Financial Action Task Force, the world’s major watchdog for anti-money laundering and terrorist financing measures, has identified “substantial deficiencies” in Iran.  From FATF’s public statement yesterday:

The FATF welcomes the recent steps that Iran has taken to engage with the FATF, but remains concerned by Iran’s failure to meaningfully address the ongoing and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. The FATF remains particularly concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in June 2010.

Several countries were cited for deficiencies, and The Guardian notes that, “This the first time in 10 years that the taskforce has published such an extensive list.” 

However, Iran was the only country FATF singled out as a jurisdiction that FATF member nations should take active countermeasures to guard themselves against.

One wonders whether Venezuela, a member of the Caribbean Financial Action Task Force (a FATF regional body) will heed FATF’s urgent warning, or whether Venezuela will continue its financial relationship with Iran including support for its acquisition of uranium.

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