Iran Only Has Itself to Blame for Financial Terror Blacklisting

Iran’s predictable response to being blacklisted by the world’s premier financial terrorism monitoring agency was to point the finger of blame at everyone else. According to the Foreign Ministry, the decision by the Financial Action Task Force (FATF) to demote Iran from the ‘graylist’ to the ‘blacklist’ was down to malicious, “politically motivated” plotting by “the United States, Saudi Arabia and the Zionist regime.”

In reality, Iran has nobody to blame but itself. And after years of kicking the can down the road, stretching back at least as far as February 2008, the FATF finally had enough. In its latest report, the anti-terrorist financing body outlined six key areas where Iran has continued to fail: criminalization of terrorist financing; freezing of terrorist assets; ensuring proper customer due diligence; addressing unlicensed money transfer providers; ratifying the Palermo Convention; and ensuring proper identification for wire transfers.

Now the Islamic Republic joins North Korea on the lowest rung as the only two countries in the world labeled “High-Risk Jurisdictions subject to a Call for Action,” which calls on member states “to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from the country.”

Despite this damning indictment, Iran still absurdly demands that the EU and its firms compensate for the huge commercial losses that have deprived the regime of vital revenues since the U.S. left the Iran Nuclear Deal (JCPOA) in 2018. But as key FATF members, Brussels, Berlin and Paris cannot in all seriousness tell their companies to trade with a country that explicitly poses the gravest threat to the international financial system.

This all begs the question: why doesn’t Iran simply address the problems — those “six points” which the FATF clearly lays out?

That’s easier said than done, sadly, because Iran will always fall at the first hurdle: the adequate criminalization of terrorist financing. Iran will never implement laws that properly deal with violators of terrorist financing for the simple fact it would mean the imprisonment of every senior Iranian Government official, including the Supreme Leader.

When your country is proudly committed to remaining the world’s leading state sponsor of terrorist groups, addressing the financing of terrorism to the FATF’s or anyone else’s satisfaction is surely an insurmountable challenge. Every year, Iran gives almost $1 billion to Hezbollah, Hamas, Palestinian Islamic Jihad, and more recently, the Houthis in Yemen. The idea that Iran in its current manifestation will ever “adequately criminalize terrorist financing” is inconceivable.

Similarly, Iran cannot simply “freeze terrorist assets,” because at least one third of its entire economy is dominated by the Islamic Revolutionary Guards Corps (IRGC), itself a terrorist organization. As correspondence to UANI indicates, even the most sophisticated accounting multinationals are unable to conduct adequate customer due diligence – let alone “enhanced” due diligence – in Iran. With its deep penetration of the economy, the IRGC and its affiliated entities intentionally and successfully obscure real corporate ownership across all industries.

After too many deferrals, in the hope that something might change, the FATF has now effectively recognized what many of us already know: the regime is fundamentally incapable of any reform that deviates from its foundational raison d’etre as a revolutionary terrorist cause.

About the Author
Daniel Roth is Director of Research at United Against Nuclear Iran (UANI) in New York. He leads UANI’s business intelligence and corporate engagement efforts.
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