Iran’s AML/CFT failings deter Chinese and Russian banks

Chinese and Russian banks are increasingly shying away from doing business with Iran after the Islamic Republic failed to enact anti-money laundering and counter-financing of terrorism (AML/CFT) legislation demanded by the Financial Action Task Force (FATF) according to an Iranian business leader.

Earlier this year the FATF blacklisted Iran for these failures in a move that was only going to heighten Iran’s isolation in the global financial system.

Shipping and money transfers

China’s Kunlun Bank is refusing to deal with Iran, according to Iranian Chamber of Commerce member, Ali Shariati.

He told the ILNA news channel that for Iran the toughest challenge is in importing basic goods from China and occasionally Russia. “China is reverting to excuses regarding [sanctions on] shipping and money transfers,” according to Shariati.

FATF’s new restrictions “have definitely created new problems even with neighbouring and regional countries,” he said.

FATF actions

In June 2016, the FATF granted Iran a reprieve from its blacklist after it committed to address strategic deficiencies in its AML/CFT controls.

Efforts from Iran’s presidential administration since 2017 to introduce AML/CFT legislation to satisfy FATF’s requirements have been doggedly blocked by hardline supporters of the country’s Supreme Leader Ali Khamenei who have prevented the full passage of four bills.

FATF reinstated countermeasures against Iran in February and called on its members to implement new measures when considering dealing with financial institutions based in the country (Trade-Based Financial Crime, 26 February 2020).

Categories: Trade Based Financial crimes News

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