Controversy over FATF Is Back: Who is the real Pinocchio?
(Front page of Principlist newspaper Vatan-e Emrooz, calling FATF sword of Damocles.)
International anti-money-laundering standards body, the Financial Action Task Force (FATF), announced in late June that it had suspended restrictions on Iran for a period of twelve months, even though it kept Iran blacklisted.
This has prompted international as well as domestic backlashes. “Global financial institutions understand that this illicit conduct, not empty expressions of intent, must be changed before risking business with Iran,” said Mark Dubowitz, an Iran sanctions expert at the Washington-based Foundation for Defense of Democracies, referring to what the west sees as Iran’s support of terrorists groups, an allegation Iran denies based on its own definition of terrorism.
American Israel Public Affairs Committee (AIPAC), one of the most powerful pro-Israel lobbies in the US, criticized the trust-building measure, too, arguing that Iran’s pledge to FATF that it would improve its performance exempted what the lobby called "terrorist" organizations like Hezbollah and Hamas, both of which allegedly funded by Iran. “Even if one imagined Iran would give up funding these organizations, Iran’s pledge to FATF remains only a promise,” the press release said. “The net result is that FATF has dropped countermeasures against Iran in exchange for a deficient pledge by the world’s leading sponsor of terror.”
Immediate domestic backlashes
Domestic opponents of President Hassan Rouhani also immediately joined in what appeared to be an orchestrated move to slam his administration’s gradual steps to make a global financial comeback.
Anaj, a Tabriz-based website affiliated with Principlists, said Iran cannot get itself into the clear from the Public Statement while insisting on its own reading of terrorism in a body in which the Saudis have an observer status. Enumerating other downsides of Iran’s commitment to FATF, Anaj wrote that the Rouhani administration's decision would facilitate Washington’s access to data on Iran’s financial and monetary transactions, potentially a threat against the country’s armed forces, intelligence services and the elite Revolutionary Guards Corps. “Of course, Sayyed Hassan Nasrallah’s unprecedented remarks made a few days ago in which he said Hezbollah is not intimidated by any sanctions because Hezbollah’s funds, money and missiles are all sponsored by Iran can be seen in the same light,” the Anaj report added. Anaj continued that Iran’s removal from the blacklist sounds illogical if the country still insists on its own definition of the terrorism, unless there is a secret “give and take” at work, resembling the win-win game the Rouhani administration run during the nuclear talks and seeks to pursue in a ‘regional deal’ as well. The outlet analyzed Iran’s dismissal of Hossein Amirabdollahian, ex-deputy FM for Arab and African affairs and US’ labeling of the Bahraini Shia revolutionary leader as a moderate in the same line of thought.
Just like other Principlist media, Tasnim was also solicitous. “While senior administration officials have repeatedly insisted on the confidentiality of citizens’ financial accounts, details of the recent FATF-administration agreement indicate that a binding instruction of the international body is to provide access to information regarding nationals of the member states upon request, which could bring irreparable damage for Iran,” wrote Tasnim. In a separate article published on June 27, the news agency drew an analogy between FATF and the International Atomic Energy Agency, warning that the Task Force follows political codes and goals in the guise of a technical organization and could demand unprecedented access to monitor Iran’s financial activity in the same way the IAEA did. Tasnim grounded the theory on remarks made by Iran’s Central Bank chief Valliollah Seif in which he said Iran’s delisting should be a political decision as it was included in the Public Statement for political reasons in the first place. In yet another article published a day earlier, Tasnim had called the administration’s move as making the perfect the enemy of good as it put a stupid political choice forward for Iranian banks: to either boycott the IRGC and Hezbollah in overt self-mutilation or to forget a return to the global financial system.
An article penned by Mahdi Mohammadi, a former member of the Supreme National Security Council’s secretariat and also a fiery critic of Rouhani’s nuclear policies, published by Vatan-e Emrouz on June 28, said the United States’ main strategy is to impair Iran’s resistance in the region through a series of means including “intelligence and negotiations”. The strategy particularly targets IRGC and Hezbollah at an organizational level and Syria in its geographical aspects, according to Vatan-e Emrouz. “At the moment, no goal is more important for the US than to get Iran involved in a series of processes the outcome of which will be to weaken the role of Iran in the ‘axis of resistance’ and to weaken the role of the axis of resistance in the region,” wrote Mohammadi. The article then went ahead to challenge Tehran to publish the Action Plan agreed upon by FATF, so to shed light on the modality of the deal. Supposing the FATF agreement as a ‘side agreement’ of the nuclear deal, it also brings up the “dreadful question” of what lies behind the puzzle of a larger deal between the Rouhani and Obama administrations. The article asked what data-collecting, monitoring, verifying and reporting mechanisms FATF is supposed to employ in Iran, highlighting security concerns that the information will be delivered to Western services. Mohammadi went even so far as to note that FATF recommendations might move Iran toward crippling the IRGC with its own hands if the international body’s definition of terrorism is accredited.
Yasser Jebraeili, political commentator and a bellwether of Principlist outlets, also drew a parallel between the FATF file and the nuclear dossier, on a message he uploaded to his Telegram channel. “That there are individuals who seek to make FATF recommendations operational in Iran cannot have but two motives,” he wrote. The first, he elaborated, was “to accept the accusation of financing terrorism and to stop financing the resistance”, resembling it with the accusation of pursuing the achievement of nuclear weapons [implicitly] accepted(!) during the nuclear talks. The second motivation, according to Jebraeili, was to “open a rift in Iran’s political structure, accept part of governmental institutions as terrorist supporters and help sustain international sanctions to isolate institutions backing Resistance inside the country”. He further theorized that a dossier of terrorism is prepared for Iran, carbon copied from the nuclear dossier, with only some of the phrases changed. This time, however, he said, the goal is to constrict power-generating and protective Iranian institutions such as the elite IRGC.
The Students Basij of Tehran University also demanded that the CBI provides explanation on the deal with FATF as the Principlist association believes it has been achieved at the cost of overlooking the Islamic Republic’s ‘strategic depth in the whole region’.
A new wave of attacks
An English acronym caught the eye in Tehran newsstands here on Monday: FATF. Kayhan called its immediate abandonment a public demand in its headline while Vatan-e Emrouz put a photo featuring President Rouhani, his brother Hossein Fereidoun, and FM Zarif on his front page with its headline reading Damocles.
Images of IRGC’s brigadier general Qassem Soleimani appeared in almost every Principlist Telegram channel with captions saying Iranian banks have imposed sanctions on him. A hero of sacred defense and a leading figure in the ‘axis of resistance’, they said, is not allowed to open bank accounts back in his homeland.
The fuss about the so-called ‘self-mutilating sanctions’ came on Saturday, with images emerged online of two letters issued by Iranian banks Sepah and Mellat, denying forex services to IRGC’s Khatam Headquarter for being listed in the US Treasury blacklist, the Principlist media outlets reported. Both letters are apparently dated in April, way before the FATF announcement.
“It is an important letter but we did not want involvement in the issue at the moment,” Mashregh News, a hardliner outlet, quotes an executive in Sepah Bank. According to Mashregh News, Sepah is already collaborating with the IRGC. “Well, if we say we are doing their jobs, the will embargo us from the other side. If we say we don’t, this side will ask us why. We are between a rock and a hard place,” the official added. Asked if this is about the FATF agreement, he said: “It’s more than that and not limited to FATF.” Another unnamed executive at Mellat Bank has also told Mashregh, that the bank “has not imposed sanctions on them”.
“The letter says because Khatam is blacklisted, we cannot do forex operations for them,” Mashregh quoted the official as saying. According to the official, the move was in compliance with a directive issued by the Central Bank of Iran.
Supreme Leader’s top adviser on foreign policy Ali Akbar Velayati has also joined critics of the so-called FATF-CBI deal, saying that Financial Action Task Force (FATF) restricts activities of some of Revolutionary bodies, Mehr News Agency reported.
Velayati, presidential candidate whose decision not to play scratch for Ghalibaf in the 2013 race helped Rouahni into office and known as a supporter of Rouhani’s foreign policy and the nuclear deal, said it is not expedient for the country to join the Task Force and any decision to join it should be postponed.
Another presidential hopeful from the Principlist camp has adopted unprecedentedly harsh tones to rap the administration. Gholam-Ali Haddad Adel, former Parliament Speaker and Expediency Council member, told Fars News Agency that the nation and the Supreme Leader would not abide such “humiliations, interventions, and submissions”.
In an interview with Fars News, Hossein Shariatmadari, editor-in-chief of Kayhan daily, has also lambasted the administration in the wake of the recent controversy. “Even though the officials see that the nuclear deal has achieved almost nothing, they accept FATF which means they are giving their coins to the Fox and the Cat, to plant and grow gold for them,” he said in an analogy he draw between the Rouhani administration and the fictional character Pinocchio.
In response to what the Principlist media are calling ‘domestic sanctions on the IRGC’, here on Monday, CBI director Valiollah Seif has notified Iranian banks and financial institutions, in a letter, forbidding such restrictions. “Restriction based on US, EU or other international sanctions have no basis in the Joint Comprehensive Plan of Action or other international commitments of the Islamic Republic”, and thus must be avoided, according to the letter.
The Principlist outlets’ propaganda are pointing the finger of blame at the administration as if cooperation with FATF was a decision made without a consensus in favor of AML reforms. In early March, the Guardian Council ratified a long-pending bill to counter money laundering and financing of terrorism. As Iran’s English language daily Financial Tribune wrote, the bill, drafted by the administration [Principlist-dominated] in 2010, had undergone a tortuous path, as it was passed by the [Principlist-dominated] parliament in 2011 but was rejected by the [Principlist-dominated] Guardian Council. It was sent for revision to the judiciary and was once again tabled in the parliament where lawmakers ratified it as a law. Iran has voluntarily asked the International Monetary Fund to review the anti-money laundering regulations so other countries’ banks could feel reassured. The IMF will announce its assessment in 2018, according to CBI official said.
However, supporters of transparency and cooperation with global systems are less heard amid the loud buzz of rival media. On his Instagram account, Hamid Baeidinejad, the Director-General for Political Affairs and International Security Affairs in the Ministry of Foreign Affairs, has called the FATF move a “significant step” and “an appropriate reaction” to the onset of effective measures on the part of Iran.
Baeidinejad also expressed hope FATF will normalize Iran’s status if Tehran succeeds in its nation-wide measures during the one-year suspension. Living up to international banking standards to prevent transactions from illegal sources, he wrote, are not only an international mandate but also a public demand in combating corruption based on increased banking transparency.
Even if the suspension of FATF restrictions goes in vain a year later, it could be artificial respiration for the stagnant economy of Iran in a year Rouhani so dearly needs to show some tangible economic breakthroughs to guarantee reelection while his rivals are busy repeating old mistakes. A majority of Iranians have already demonstrated their support for peaceful collaboration with the world and their aversion towards the isolationist camp. However, the Principlist front is impatient to lose yet another race. Seeing Washington cementing the nuclear deal and making it harder for future administrations to unravel the deal, they have changed course in rapping the sitting moderate administration but the new ground they have found is too shaky.
*An earlier report on this story was published in Iranian Diplomacy on July 1, 2016.
