The Financial Action Task Force advised nations to take additional “countermeasures” against Iran on Friday, two years after the country failed to meet the group’s deadline to implement stronger due-diligence rules and criminalize terrorist financing in line with global standards.
The Islamic Republic appeared on FATF’s blacklist of high-risk nations alongside North Korea more than a decade ago, but avoided the formal consequences of that status by agreeing to tackle illicit finance. Since 2016, the country has adopted cash declaration rules and updated its anti-money laundering statutes under an action plan set by the intergovernmental group.
But the country’s remaining deficiencies drew criticism from FATF, which last year advised nations to more frequently inspect banks with branches in Iran, subject such banks to “increased external audit requirements,” and require either enhanced monitoring or “systematic” reporting of payments to and from the country.
The six remaining countermeasures that FATF imposed Friday range from barring financial institutions from using third parties in Iran for due diligence and maintaining correspondent accounts for Iranian banks, to prohibiting transactions with Iranian nationals or ordering institutions to pull out of the country altogether.
“Until Iran implements the measures required to address the deficiencies … FATF will remain concerned with the terrorist-financing risk emanating from Iran and the threat this poses to the international financial system,” the group said.
Iran revised its counterterrorist financing law by the February 2018 deadline, but, according to FATF, refused to eliminate its exemption for groups and individuals fighting “to end foreign occupation, colonialism and racism”—an apparent reference to Hezbollah and other militias that depend on Tehran’s financial and logistical support.
Iranian authorities also failed to show that they have taken action against unlicensed money transmission, ensure that they will legally assist other countries’ investigations of financial crime, and verify that the banks under their watch identify the originators and beneficiaries of wires.
FATF’s decision to activate all of its countermeasures against Iran comes less than two years after the U.S. exited a global nuclear accord with the country, then renewed secondary sanctions aimed at isolating Iranian banks from the global financial system.
Arrivals, departures and close calls
FATF separately removed Trinidad and Tobago from a second, so-called “gray list” of jurisdictions with strategic anti-money laundering deficiencies but added seven others: Albania, Barbados, Jamaica, Mauritius, Myanmar, Nicaragua and Uganda.
Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Panama, and Zimbabwe remained gray-listed. Syria and Yemen completed their action plans to get off the list, FATF said, but wars in both countries prevented assessors from visiting and verifying those reforms in person.
Pakistan risked inclusion on FATF’s blacklist Friday after implementing only 14 of 27 reforms by deadline but was given a reprieve of four months to complete the remaining upgrades—several of which pertain to counterterrorist financing.
“Pakistan is treated better than less strategic countries would be,” Ross Delston, an anti-money laundering attorney based in Washington, D.C., told ACAMS moneylaundering.com. “The idea is to keep it within the bounds of international commerce, while with Iran, the decision is to erect walls.”
Latvian authorities also may have breathed a sigh of relief Friday after FATF voted against adding their country to the gray list.
Eighteen months ago, Moneyval, FATF’s representative in Europe, found that Latvian banks failed to guard themselves against illicit finance from abroad, including billions of dollars in suspicious funds from Russia and other former Soviet states.
The group’s damning report came six months after U.S. officials proposed to blacklist ABLV Bank, then Latvia’s third-largest lender, as a “primary money laundering concern” for knowingly helping corrupt officials and other criminals move funds through corporate and foreign-controlled accounts.
ABLV collapsed shortly after the U.S. proposal.
Krisjanis Buss, an attorney with Cobalt in Riga, told moneylaundering.com that in the wake of ABLV’s collapse, Latvian authorities introduced far more stringent anti-money laundering rules and sanctions requirements following ABLV’s demise.
“Our current system requests much more information from clients than is the case in other Baltic or Nordic jurisdictions, particularly when it comes to disclosure of beneficial owners,” Buss said.
Those measures, and increased efforts to freeze criminal assets and prosecute money launderers, likely kept Latvia off FATF’s gray list, he said.
Contact Gabriel Vedrenne at email@example.com and Koos Couvée at firstname.lastname@example.org
|Topics :||Anti-money laundering , Counterterrorist Financing|
|Document Date:||February 21, 2020|