The Financial Action Task Force (FATF) concluded its three-day plenary session in Singapore, reaffirming its stance on high-risk jurisdictions. This session saw significant updates, with a strong focus on countries with strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation.
The FATF’s “blacklist” continues to include Iran, the Democratic People’s Republic of Korea, and Myanmar due to their significant failures in addressing these deficiencies. The FATF reiterated its call for member countries and all jurisdictions to apply enhanced due diligence and, in the most severe cases, countermeasures to protect the international financial system from the risks posed by these countries.
The clerical regime in Iran remains a focal point in the FATF’s assessment. Despite committing in June 2016 to address its strategic deficiencies, Tehran has failed to complete its action plan, which expired in January 2018. Since February 2020, the FATF has noted that the regime has not made substantial progress. Specifically, it has not enacted the Palermo and Terrorist Financing Conventions in line with FATF standards, prompting the FATF to fully lift the suspension of countermeasures against the country.
Key Points from the FATF on the Iranian regime:
- Increased Supervisory Measures: The FATF urges jurisdictions to implement enhanced supervisory examination for branches and subsidiaries of financial institutions based in Iran, enhance relevant reporting mechanisms, and increase external audit requirements for financial groups with Iranian branches.
- Call for Countermeasures: Given the regime’s non-compliance, the FATF calls on all jurisdictions to apply effective countermeasures in line with Recommendation 19. These measures aim to mitigate the terrorist financing risks emanating from Iran, which pose a significant threat to the international financial system.
- Pending Compliance: Iran will remain on the high-risk list until it ratifies the Palermo and Terrorist Financing Conventions and fully implements measures to counter terrorism financing. The FATF remains concerned about the ongoing risks from Iran and urges immediate action.
The FATF’s decisions highlight the ongoing global efforts to combat money laundering, terrorist financing, and proliferation financing. The organization continues to monitor and evaluate the effectiveness of countries’ measures against these threats. The FATF’s framework and standards, including the Interpretative Note to Recommendation 19, provide a comprehensive approach to applying appropriate and proportionate countermeasures.