Is Iran Getting a Pass at the Financial Action Task Force?

In June, the Financial Action Task Force, which is an inter-governmental body responsible for setting global anti-money laundering standards, issued its quarterly public statement on high-risk and non-cooperative jurisdictions. Somewhat surprisingly, FATF suspended its call for member states to employ countermeasures against Iran for a period of twelve months. Since 2008, FATF has called for states to apply enhanced due diligence and counter-measures against Iran in order to “protect the international financial system from the on-going and substantial money laundering and terrorist financing risks” emanating from Iran.

What are FATF countermeasures? Countermeasures go beyond due diligence, and can include implementing enhanced reporting and monitoring mechanisms, denying Iran from establishing local subsidiary branches, limiting business relationships, prohibiting third-parties within Iran from conducting customer due diligence requirements, requiring banks to review and possibly terminate correspondent accounts, and conducting external audits of financial institutions located in Iran. Determining which countermeasures to employ is left up to each FATF member state. In the United States, for example, there continues to be an almost complete prohibition on conducting business with Iran. In the European Union, sanctions relief provided under the Joint Comprehensive Plan of Action actually limits the practicality of applying countermeasures and enhanced due diligence against Iran.

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