Money laundering has been closely linked to the Iranian state and its activities have been stepped up through the IRGC and its fictitious companies, which finance them in the world by categorizing them as official cultural centers and seminaries, primarily aimed at providing support to pro-sectarian groups. The sanctions contributed to the transformation of the Revolutionary Guards into a huge capitalist sector that had the largest institutions, companies and banks inside and outside Iran, seized the opportunity of sanctions by circumventing it and doubled its economic capabilities to various commercial areas, including illegal activities.
The United States has led a series of sanctions that have isolated Iran from the global banking system. The United States has imposed restrictions on Iran since it seized American hostages in 1979, resulting in a full trade embargo on Tehran in 1995. And the UN imposed a huge sanctions on Iran where the Security Council Resolution 1737 of December 2006 obligates all UN member states to “prevent the supply, sale or transfer of all materials, equipment, goods and technology that could contribute to enrichment or heavy water activities.”
In March 2007, the UN Security Council passed Resolution 1747 to increase pressure on Iran over its nuclear program and missile program by preventing the deal with Iran’s state bank (Sepah ) , 28 people and other organizations, most of them linked to Iran’s Revolutionary Guards. Security Council resolutions have also prohibited arms imports to Iran and restricting loans to it. In March 2008, Resolution 1803 extended the ban on Iranian assets and travel to more Iranian figures.
According to the report of the Basel Institute of Governance in Switzerland for the year 2017, which investigates money laundering and counterterrorism crimes, for the fourth consecutive year, Iran ranked first among 146 countries investigated for money laundering crimes. According to the report of this International institution that Iran was ranked first in the years 2014-2017 in the world except in 2013 as Iran occupied second place after Afghanistan , and as stated in the report that Afghanistan , Guinea-Bissau, Tajikistan, Laos, Mozambique, Mali, Uganda, Cambodia and Tanzania came after Iran in the ranks from the second to the tenth in terms of the most risky countries in money laundering.
The “dirty money” is the result of illegal transactions such as smuggling and embezzlement, and is not subject to financial and legal control, and to be used within economic frameworks legally must first enter and be used in the banking system formally and this process, ie the introduction of funds resulting from vague and illegal transactions to formal transactions framework of money laundering , and there are various sources and stages for money laundering . This crime requires sources such as large-scale smuggling of goods, embezzlement, financial operations in the mysterious sector of the economy as well as the existence of ineffective financial system and corrupt banking system, coupled with a lack of integrity and the public and private institutions are not bearing the responsibility, and laws are not appropriate, and the corruption of control institutions, all of which are available in Iran. Last September, Hassan Rowhani’s government signed the Convention on Combating Terrorism and Money Laundering, which made conservatives vehemently opposed, considering the signing a major threat to Iran’s national security because it restricts the movement of the IRGC and its foreign and economic activities based on money laundering to support its militias in Syria, Lebanon, Iraq, Yemen and elsewhere
Since 2012, Tehran has ranked first in the Basel index, with the exception of 2013, which ranked second instead of Afghanistan. According to the report, the International Financial Action Task Force (FATF), which deals with combating money laundering and terrorist financing, warned in July in 1017 AD, of dealing with Iran because of its involvement in money laundering to support terrorism. The group also warned all its members in the world to deal financially with Iran and North Korea, because of their continued support for terrorism.
Iran has received a new blow from the International Financial Action Task Force (FATF), which it has given until February to complete reforms that make it committed to international norms or face consequences. The warnings come as Tehran awaits US sanctions to be in place on Nov. 5, which will restrict its economic activity including the oil supply. Analysts say that the economic situation in Iran has reached a standstill, and that the crisis can not be remedied in light of the suffering of the citizens and the rampant corruption and the domination of religious authority over the country’s wealth and the exploitation of it for foreign political agendas and deprivation of the people from it for four decades. The FATF said after a meeting of its members recently in a statement “Iran has not moved on 9 out of 10 of its guidelines although it has pledged to meet the required level,” . Marshall Bellingly, assistant US Treasury Secretary for Counterterrorism Financing after chairing the FATF meeting said “We expect Iran to act quickly to implement the commitments made for a long time. He added “In line with this, we expect to adopt all these standards by February 2019, if not, we will take further steps,” And warned against dealing with the Iranian regime because of its involvement in money laundering and support of various types of international terrorism, where it considered Iran as the world’s first support for terrorism .The Iranian regime gained the index 8.61 as the highest index of money laundering and support terrorism, followed by Afghanistan index 8.51 and Tajikistan With 8.19.
The financial group, based in the French capital Paris, decided to continue suspension of countermeasures, which could limit or even prohibit the dealings with the state. The Iranian official news agency quoted Iranian Foreign Ministry spokesman Bahram Qasimi as welcoming the decision to extend the deadline to the next February but he criticized the US presidency of the FATF saying it was “an attempt to re-include Iran on the international black list of money laundering,” without giving details. Iran’s parliament has approved some new measures to tackle the financing of terrorism earlier this month under pressure to adopt international standards, but FATF says it can only take fully into account existing legislation.
The FATF members have already given Tehran a deadline by the end of this month to comply with its anti-money laundering and terrorist financing rules, and if this does not happen, Iran would risk returning to a blacklist of non-compliant countries, prompting foreign investors and banks to refrain from dealing with it. The Iranian authorities have many options in the face of American pressure, but the European Union does not appear solid, according to experts, under Iranian practices may undermine the European support for the nuclear agreement and the efforts of European countries aimed at continuing financial flows to Tehran.
Britain, France and Germany are seeking to keep some of the financial channels open to Iran after the United States withdraws from the nuclear deal in 2015 and reinstates sanctions on Tehran. Economists say Tehran’s inclusion in the IFC blacklist could make it almost impossible. Iran ranks late on the Transparency International Index, ranking last year in the 131st place in the fight against corruption among the 176 countries monitored by the index, which means that most state institutions within the circle of nepotism and exploitation. According to Iranian experts, corruption in Iran is responsible for the economic problems in the country because of the corrupt financial system in their country and the support for terrorism,
It is expected that Iran will be exposed early November to the biggest sanctions in the fields of oil and banks, where it is prohibited to export oil completely and deal with Iranian banks and expected the largest economic downturn, which will have significant repercussions and very influential on Iran. Iranian watchers see the “money laundering” as an Iranian policy to circumvent sanctions.
Iranian Studies Unit
Rawabet Center for Research and Strategic Studies