Iran is failing to prevent money laundering and the financing of terrorist groups, according to an intergovernmental financial watchdog.
Watchdog attacks Iran's efforts to halt terrorism funding
ABU DHABI // Iran is failing to prevent money laundering and the financing of terrorist groups, according to an intergovernmental financial watchdog. The Paris-based Financial Action Task Force (FATF), in a report released at a week-long anti-money laundering conference in the capital, also warned other countries to take steps to protect themselves against operations based in the Islamic republic.
Iran was singled out for special criticism as the group named 27 other countries it believes are failing to stem the tide of illegal cash moving around the globe. The task force applauded Tehran's recent greater engagement with the issue, but said it "remains concerned" about the country's "failure to meaningfully address the ongoing and substantial deficiencies" in its anti-money laundering and terrorism financing practises.
"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," said the report, published on Thursday. "The FATF urges Iran to immediately and meaningfully address its deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting requirements."
It also repeated its 2009 warning for financial institutions to give extra scrutiny to dealings with Iran. The report was released at the close of the conference, which brought together more than 500 participants and financial watchdogs from 53 countries. Also on Thursday, the International Monetary Fund reported that Tehran had asked for technical assistance in drafting laws to combat terrorism financing.
In an annual assessment of Iran's economy, the Washington-based global financial institution "noted progress in establishing a more comprehensive" framework in Iran for tackling terrorism financing and money laundering. It urged Iran to strengthen those efforts. Chizu Nakajima, the director of the Centre for Financial Regulation and Crime at City University in London, said it was no surprise that Iran should appear on the list.
She said FATF had scored significant success in strengthening anti-money laundering legislation since it was launched in 1989. "There is a practical impact for failing to go along with the FATF recommendations in that other countries could be more reluctant to do business with you," Ms Nakajima said. "In this day and age, countries can't afford not to be part of the global financial system." Angola, North Korea, Ecuador and Ethiopia were also singled out for strategic deficiencies, while Pakistan, Turkmenistan, and São Tomé and Príncipe were cited for not fully addressing strategic flaws in anti-money laundering laws. The UAE did not appear on the list.
In November 2008, the FATF criticised the UAE's lack of reporting of "suspicious transactions". "This list is a welcome move by the FATF and will put significant pressure on the named countries to take money laundering seriously," said Anthea Lawson, a campaigner for Global Witness, a human rights group, which also monitors international trade. "However, the rich countries at the heart of the FATF need to get their own house in order and ensure that they too are meeting its standards."
Robert Palmer, the director of Global Witness, added: "The United States has serious loopholes in its laws. Banks are not required to properly identify their customers. Every dollar has to go through New York, and yet its own laws are not up to track." In 2002, the UAE passed federal anti-money laundering laws. Two years later, terrorism laws were adopted making it possible for judges to issue the death sentence for money-laundering.
Qatar, which also appeared on the FATF blacklist, signed a deal with the UAE on Thursday vowing to exchange more information regarding suspicious cases. The other countries on the FATF list were: Antigua and Barbuda, Azerbaijan, Bolivia, Greece, Indonesia, Kenya, Morocco, Myanmar, Nepal, Nigeria, Paraguay, Sri Lanka, Sudan, Syria, Trinidad and Tobago, Thailand, Turkey, Ukraine and Yemen. email@example.com