Last Friday, a global watchdog disclosed that Iran was given until June to strengthen its rules on anti-money laundering and terrorism financing or it could face heightened international scrutiny of its banks.
Last October, the Financial Action Task Force (FATF), a watchdog that is based in Paris had already given Iran until this month to complete an action plan of reforms that would bring it in line with the global norms, or face consequences.
At a meeting that was held this week, the FATF concluded that “there are still items not completed” and said in a statement it “expects Iran to proceed swiftly in the reform path.”
After chairing the FATF meeting, the U.S. assistant Treasury Secretary for terrorist financing, Marshall Billingslea, said that if the shortcomings were not fixed by June, the currently suspended countermeasures would kick in automatically.
Billingslea told reporters: “That is a significant indication from the FATF that time has expired, the action plan is overdue and we expect it to be implemented without delay.”
Billinglsea said that if the counter-countermeasures are reimposed, the members of FATF worldwide would be expected to step up the supervision of Iranian bank branches on their territory, including on-site inspections.
In the absence of compliance, the FATF urged its members to advise their banks to examine all business with Iran, including obtaining data on reasons for intended transactions, stepping up controls on transactions, and identifying the patterns of transactions for further scrutiny.
Foreign businesses say that compliance and the removal of Iran from the blacklist of FATF is significant for making investments in the country, especially after the United States of America re-imposed sanctions on Iran.
Germany, France, and the United Kingdom have tied this compliance angle with the use of a new channel for non-dollar trade with Iran to avert the sanctions of the United States.
Those countries have said that they expected that Iran would swiftly put into place all of the elements of its FATF action plan.