Kourosh Ziabari – Asia Times: More than a year after the anti-money laundering and counter-terrorist financing watchdog Financial Action Task Force (FATF) blacklisted Iran as a “high-risk jurisdiction” subject to a call for action, debate on the ratification of FATF-related bills has been rekindled in Tehran.

Reformists are blaming conservatives for stonewalling the normalization of the country’s banking and trade relations with the outside world – an issue that will indirectly factor in the June 18 presidential election where a conservative candidate will almost certainly win.

Headquartered in Paris, FATF is an intergovernmental body set up by the G7 in 1989 to draw up binding regulations to combat money laundering. In 2001, its mission was broadened to develop policies to counter terror financing.

Once a country is placed on the FATF’s blacklist, other jurisdictions are urged to exercise caution and in most cases enforce counter-measures in dealing with them to shield the international financial system from money laundering and terror financing.

At present, only two countries are blacklisted by the FATF: Iran and North Korea.

After the Joint Comprehensive Plan of Action (JCPOA) nuclear deal was agreed in July 2015, FATF granted Iran a temporary reprieve to adopt standards that could rectify the problems in its banking system to allow it to reintegrate into the international financial system.

An action plan was thus devised for Iran to comply with 40 FATF recommendations and ratify the UN Convention against Transnational Organized Crime (Palermo Convention) as well as the International Convention for the Suppression of the Financing of Terrorism (CFT).

The Hassan Rouhani administration, eyeing an end to the Islamic Republic’s isolation and sanctions-caused economic decline, drew up legislation and submitted it to the Iranian parliament, known as the Majlis.

The Majlis, at the time dominated by moderates and reformists, voted in favor of the bills and referred them to the constitutional scrutineer Guardian Council.

The Guardian Council, a hidebound unelected body at which Supreme Leader Ayatollah Ali Khamenei calls the shots, spurned the bills. In September 2018, the case was delegated to the Expediency Council, a dispute settlement ombudsman tasked with reconciling the parliament and the Guardian Council when they hit gridlock.

More than two years later, Expediency Council members, mostly conservatives appointed by the Supreme Leader, continue to stall over ideological points and partisan interests.

It’s becoming a key election issue. Indeed, the stalled enactment of the FATF’s recommendations and relevant ordinances has been raised several times during televised presidential debates ahead of the June 18 polls.

The reformist contender Abdolnaser Hemmati took a swipe at his conservative rivals Mohsen Rezaee and Saeed Jalili, both members of the Council, for dithering over the measures.

On June 6, when the first presidential debate was aired live on national television, Hemmati, a former governor of the Central Bank of Iran, addressed Mohsen Rezaee, a perennial candidate, for his alleged role in blocking the reforms needed for Iran to be removed from the FATF’s blacklist.

“Mr Rezaee, you should know that by refusing to approve the FATF bills at the Expediency Council, you have decimated the national economy. It is surprising that the Supreme Leader has emphasized the referral of FATF scrutiny to the Council, but still we have seen that it was not endorsed,” he said.

Hemmati also tore into Saeed Jalili, one of the other appointees of the Supreme Leader at the Expediency Council now running as a presidential nominee: “Mr. Jalili, in wrecking the JCPOA, you played into the hands of Trump and paralyzed the country. With what you have done in cahoots with Mr Rezaee and your other friends at the Expediency Council, we were placed in the FATF blacklist.”

Influential opponents of the FATF’s agenda at the Guardian Council and Expediency Council argue that by accepting the FATF recommendations and approving the anti-money laundering (AML) and counter-terrorist financing (CFT) laws the Islamic Republic would be limited in its ability to provide financial aid to its militant proxies in the Middle East, including Hamas and Hezbollah.

Both militant groups are recognized by the United States as terrorist organizations. The European Union has also designated Hamas and the military wing of Hezbollah as terrorist groups. But the Islamic Republic considers them essential to its Middle East policy and keeping its arch-foe Israel on its heels.

The detractors also say Iran will lose the workarounds it has concocted to circumvent US and international sanctions if it submits to the transparency-improving measures.

After years of operating in the black market to eschew the punitive measures imposed on its contentious nuclear program, Iran will find it difficult to reintegrate with global markets.