Financial Watchdog Keeps Iran on Global Blacklist

iranintl – Iran has retained its place on the Financial Action Task Force’s(FATF) blacklist, for not respecting international banking and related rules after a meeting in Singapore concluded Friday.

The FATF is a global financial watchdog that leads action to tackle money laundering, terrorist and proliferation financing. The watchdog does not have enforcement powers but describes itself as a monitoring system on how criminals and terrorists raise, use and move funds.

The continuation of the blacklist designation means Tehran is subject to increased monitoring and restrictions.

Toby Dershowitz, the Managing Director of the Foundation for Defense of Democracies (FDD)’s Action, said being on the blacklist has “reputational” and “realistic” consequences like having an impact on investments, thereby deterring other countries from doing business with Iran.

“It sends a message to the whole financial system, that is to banks, to all kinds of financial institutions. You know, the whole economies, that receive a signal that basically says it’s not safe to do business with Iran.”

Dershowitz said it means Iran has to constantly find tactics to get around these measures.

But those implications, according Mahdi Ghodsi, an economist with the Vienna Institute for International Economic Studies, may actually benefit Iranian regime insiders who assist in circumventing sanctions, which hurt ordinary citizens.

“So these are the people who we don’t know. They are not part of the government. They are hidden financial apparatus that nobody cares about them. They’re just people that are providing some service circumventing sanctions. And they’re getting enormous amount of financial profits. At the same time, they’re benefiting the governments who are in line with them,” he said.

Ghodsi told Iran International that Tehran is selling oil in Malaysia which is being exported to China. US government officials have also said that Iran uses the help of service providers in Malaysia to sell its oil abroad, circumventing US sanctions.

“As long as they’re benefiting from this, they don’t care about blacklisting,” said Ghodsi.

Ghodsi said the significance to the Iranian government is a message from the FATF that “we are watching you.”

“I don’t think that it can have any significant impact on what they’re [Iran] is doing,” said Ghodsi.

While Dershowitz agrees that ordinary citizens suffer the most, she said the FATF listing can make Iran’s economy risky to its partners like Venezuela, which was, for the first time, placed on the graylist Friday.

“And one of the reasons that it did so is because of the ties that Venezuela has with Iran. So Iran has some malign activities, in this space, are adversely impacting other countries such as Venezuela,” she said.

Friday’s blacklist also a signaling, Ghodsi, said that the US administration may change their tone on Iran to include more pressure and stricter policies.

Myanmar and North Korea are also on the FATF blacklist in addition to Iran.