President Rouhani's government has reached a crucial stage toward Iran joining the International Convention for the Suppression of the Financing of Terrorism (CFT).
On Sunday, October 7, the Iranian parliament approved the controversial bill by a relatively narrow margin. The Guardian Council must approve the legislation before it becomes law, but according to Parliament Speaker Ali Larijani, it no longer faces opposition from the Supreme Leader Ayatollah Khamenei.
Iran’s parliament has repeatedly stalled on consideration of the bill since June, a delay likely to have been influenced by the leader’s initial opposition to the proposed legislation. In a meeting with members of the parliament on June 20, Ayatollah Khamenei encouraged parliament “to resist submissively abiding by conventions that only secure the interests of a few major powers.” Instead, he advised them, Iranian parliamentarians should draft a domestic law to fight the financing of terrorism — one that would not go against the interests of the Islamic Republic. “We should not accept things when we don’t know their eventual consequences,” he said. But this process never got underway.
During the presidency of Mahmoud Ahmadinejad, the parliament passed such a home-brewed law, but the Financial Action Task Force (FATF) found it lacking and not robust enough to ensure that Iran would be taken off the FATF blacklist.
Based in Paris, the FATF is an inter-governmental body established in 1989 “to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.” Initially, the task force was created to combat drug trafficking but, later, fighting terrorism was added to its mission.
The General Assembly of the United Nations adopted the CFT in December 1999. The FATF ranks countries using several criteria, including whether or not they adopt the convention to suppress terrorism financing. Among the member states of the United Nations, 188 have ratified the CFT. Iran has been one of the eight remaining countries to have not adopted it, even though regional neighboring countries including Yemen, Iraq, Afghanistan and Pakistan have joined.
For some time, the FATF advised banks and financial institutions to take “counteractive measures” when dealing with Iran, which appeared on a blacklist of nations alongside North Korea. But after the nuclear agreement, officially known known as the Joint Comprehensive Plan of Action (JCPOA), the FATF removed Iran from this list. It also made recommendations to make it possible for Iranian banks to resume normal transactions with the international financial system.
Getting Off the Blacklist
The FATF’s recommendations included amending two domestic Iranian laws on fighting money laundering and financing of terrorism and joining the CFT and the United Nations Convention against Transnational Organized Crime (UNTOC), also known as the Palermo Convention. Implementing these recommendations is voluntary and Iran is under no obligation to carry them out, but the FATF has repeatedly warned the country that its failure to heed them would adversely affect its international financial relations. The FATF is scheduled to convene its quarterly meeting from October 14 to 17, and it is likely that a review of Iran’s compliance with its recommendations will be on the agenda. As of now, the Guardian Council has approved and parliament has passed revisions to Iran’s domestic law pertaining to the fight against the financing of terrorism, but taken no further measures to meet the recommendations.
Almost five months after Ayatollah Khamenei publicly opposed it, the Iranian parliament passed the bill to join the Convention for the Suppression of the Financing of Terrorism with 143 votes in favor, 120 against and five abstentions.
In recent days, and as the final vote approached, even the Supreme Leader’s close associates could not agree with one other. Cleric Mohammad Yazdi, a member of the Guardian Council, which must give final approval for the legislation, wrote a letter to the members of parliament, asking them to avoid making a decision that would go against the interests of the regime. But Kamal Kharrazi, who Ayatollah Khamenei appointed as the head of Iran's Foreign Policy Strategic Council, stated that joining the convention was in the interests of the regime.
The same dissonance dominated the parliament’s deliberations on the day of voting. Hossein Naghavi-Hosseini, a member of the opposition against President Rouhani, challenged the president to give his “guarantee to the parliament” that if Iran joined the convention “all our financial and money problems would be solved.”
Foreign Minister Mohammad Javad Zarif, who was present in the parliament during deliberations, responded to this. "Neither I nor the president can guarantee that all problems will go away if we join," he said. "But I guarantee that not joining will provide the US with more excuses to increase our problems.”
Another representative, Mohammad-Javad Abtahi, tore up the text of the convention during the parliament’s public session, and called on his colleagues to vote against it. Nasrollah Pejmanfar, a cleric member of the parliament, accused Speaker Larijani of “intimidating” the representatives to ensure they would vote for the bill. Larijani denied the claims, and said that, if anything, representatives were more likely to have been intimidated by text messages they had received on their phones. This is a new phenomenon in Iranian politics: Anonymous individuals threaten politicians via text message in a bid to influence them into voting for or against certain bills.
But Ali Larijani’s announcement to the parliament that the office of the Supreme Leader did not oppose the review of the bill, or the vote on it, can be reasonably interpreted as a means of influence. The speaker has often used this tactic, a move that has invited occasional criticism from members of the parliament.
“Day of Mourning”
Regardless, members of the parliament were left with no doubts that the Supreme Leader had done a U-Turn with regard to the legislation, contradicting his comments in June. The shift in attitude came amidst street protests against the bill in Tehran, when opponents chanted: “This is the day of mourning!”
Among the 188 countries that have joined the convention, including 132 signatories, are Syria and Lebanon, two close allies of Iran. Islamic Republic authorities have worried that by joining the convention Iran might face obstacles in providing financial help to organizations and individuals in these countries, including the Lebanese Hezbollah, which is accused of terrorism.
But the Iranian officials who support the convention argue that Iran can annex its own definitions of terrorism and what constitutes a terrorist group to the convention, so it will not face obstacles when helping its allies. International law allows countries to join conventions such as the CFT voluntarily, but these countries are also permitted to take exception to parts of the convention in consideration of their domestic laws, or for any other reason, and they are allowed to announce that they cannot be held responsible for those provisions. This caveat, called the “reservation right” in international law as defined by the 1969 Vienna Convention on the Law of Treaties, is acceptable only to the point that it does not violate the basic concepts and provisions of the convention.
Still a Long Way Off
For the moment, however, it is likely that it will be a considerable time before the CFT becomes law in Iran. Apart from the usually time-consuming deliberations by the Guardian Council, recently the Expediency Council has taken it upon itself to check certain legislation passed by the parliament against its own resolutions. In some cases it has even raised objections to those pieces of legislation. This new practice was ushered in by the council’s secretary, Mohsen Rezaee, part of his efforts to restore the council’s political influence following the death of Akbar Hashemi Rafsanjani, the former president and chairman of the council, in January 2017.
Even though it is possible that Ayatollah Khamenei could issue orders to expedite or even circumvent the process, there are other features of the Iranian political environment that will make it very difficult for Iran to implement all the FATF’s recommendations before its session on October 14.
On November 4, US oil and gas sanctions on Iran come into effect. If Iran has not been removed from the FAFT blacklist by then, or worse, if it is put back on the “counteractive measures” list — akin to a financial and banking embargo — Islamic Republic authorities will be forced to deal with self-inflicted restrictions on Iran’s ability to conduct financial and banking transactions with the world.
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When Will US Sanctions Hit Iranian Oil Sales?, May 18, 2018
Money Laundering and Terrorism: Rouhani vs the Revolutionary Guards, September 7, 2016