Accession to anti-money laundering group divides Iran elite

Iranian President Masoud Pezeshkian's call for accession to the international money laundering watchdog FATF conventions during his first press conference has ignited a fresh wave of opposition among Islamic Republic’s loyalists.

Pezeshkian reiterated that joining the Financial Action Task Force (FATF), reviving the 2015 nuclear deal (JCPOA), and improving international relations are crucial for removing barriers to foreign investment and trade. He emphasized that these steps are essential for achieving the goals outlined in Iran's 20-year Vision Plan (2005-2025). Pezeshkian also pledged to formally request that the Expediency Council prioritize FATF accession on its agenda.

Without accession to several international financial conventions demanded by FATF, Iran cannot have full access to global banking, normal trade relations and investments by large global companies.

In 2018, the Parliament approved two pieces of legislation that the FATF required to take Iran off of its black list. The hardline Constitutional watchdog, the Guardian Council, however, rejected the legislation and the issue was referred for arbitration to the Expediency Council which has has not acted to date. Two other laws were never approved by parliament.

Iran has been on the money-laundering watchdog’s blacklist since February 2020.

Hardliners, ultra-hardliners, and their supporters in the parliament, media, and across social media platforms have reacted forcefully to Pezeshkian’s remarks. A political analyst in Tehran told Iran International that powerful individuals whose financial interests will suffer from transparency are the main driving force behind the opposition to accession to FATF. They also prefer economic sanctions to remain in place because as regime insiders they make money by circumventing trade and banking restrictions.

Iranian media and politicians often refer to individuals who make huge profits from selling Iran's oil in international black markets as “profiteers of sanctions”. The extent of such dealings, and profits involved, was revealed in 2013 when business magnate Babak Zanjani was arrested for withholding at least $2.7 billion of the proceeds of sanctioned oil sales on behalf of the Oil Ministry.

Authorities claim Zanjani whose death sentence was commuted to twenty years in prison in April “with the approval of the Supreme Leader” has returned the embezzled money.

“Khamenei did initially oppose Rouhani’s insistence on the necessity of accession to the FATF but without his consent, the parliament could not have passed the two pieces of legislation in 2018 despite the extreme opposition of hardliners,” the political analyst said.

He also pointed out that at the time, Parliament Speaker Ali Larijani told lawmakers expressly that there was no objection from the Leader’s Office to the controversial legislation.

“Oligarchs like Zanjani are now many. Bloomberg’s recent revelation of the role that Hossein Shamkhani is now playing as the top seller of sanctioned oil in global markets is very telling of the extent of these individual’s influence,” he added.

Ali Shamkhani, Hossein Shamkhani’s father, served as Iran's National Security Council for almost a decade until May 2023.

In a speech at the Parliament on September 17, Mahmoud Nabavian, an ultra-hardliner Paydari Party lawmaker, claimed that the international money-laundering watchdog requires Iran to “announce” that the “Qods Force's, [slain commander Qasem] Soleimani, the people of Gaza and Hamas, Yemen and all resistance forces are terrorists.”

Nabavian, an ally of Saeed Jalili who ran against Pezeshkian in the recent elections also insisted that FATF accession means that information on all of Iran's financial activities and trade should be provided to the US and other countries.

“This means identification and full obstruction of all the trade paths of the Iranian nation,” he said.

Speaking to Mehr news agency Tuesday, Mostafa Mirsalim, a hardliner politician and member of the Expediency Council, contended that joining the FATF would be more damaging than not joining it unless the US, which has listed the IRGC and “resistance front” as terrorist organizations, lifts its sanctions and “ends its hostility” with the Islamic Republic.

In one of the election debates in June, Mostafa Pourmohammadi, a conservative candidate, alleged that then secretary of the Supreme National Security Council (SNSC), Saeed Jalili, had been the major force behind the rejection of accession to financial conventions since 2016.

Pezeshkian’s hardliner predecessor, Ebrahim Raisi, in whose government Jalili wielded much influence from behind the scenes also criticized the Rouhani administration, claiming that trade problems were better solved by relying on “neighbors and friendly countries” including China and Russia, and scraping the use of the dollar.

While also emphasizing trade and good relations with “neighbors and friends”, Pezeshkian and his government appear to be determined about joining the FATF.