Bourse and Bazaar | Maziar Motamedi: On Sunday, Iranian lawmakers approved a bill that may see Iran join the International Convention for the Suppression of the Financing of Terrorism of the United Nations. The bill passed by 143 votes to 120 in a highly contentious session of parliament. The landmark vote keeps hopes alive that Iran may yet earn closer ties with the international financial system.

The success of the vote comes despite a fierce campaign to try and derail crucial financial reforms. The legislation marks the last of four bills intended to address items on Iran's Financial Action Task Force (FATF) action plan to improve anti-money laundering (AML) and combating financing of terrorism (CFT) standards. The three others include a bill aimed at Iran's accession to the United Nations Convention Against Transnational Organized Crime�known as the Palermo Convention�and two bills to amend existing AML and CFT laws. The CFT legislation was signed into law by the Guardian Council, the country's highest constitutional entity, on August 1. The two other bills were passed by parliament on September 25 following amendments to assuage concerns raised by the Guardian Council.

The Guardian Council still needs to ratify the three remaining laws called for by the FATF action plan. The clock is ticking. The FATF will judge Iran�s progress with its action plan at its next plenary meeting, which commences on October 14.�The intergovernmental organization had suspended active countermeasures against Iran pending completion of the action plan, but the tone of its last assessment suggests patience is wearing thin and that Iran could be returned to the so-called �blacklist,� jeopardizing its few operable international banking relationships.

No doubt, opponents to financial reform in Iran will continue their fight and seek to sway the Guardian Council�s deliberations. The council is comprised of six clerics appointed by Supreme Leader Ali Khamenei and six jurists elected by the parliament.

Iran's current saga with the FATF reform process began in earnest in June 2016 when then-economy minister Ali Tayyebnia accepted the action plan, prompting the initial suspension of countermeasures for one year in recognition of Iran's high-level political commitment. It has since extended suspensions three further times.

Over the last six months, the public debate around FATF-related reforms has reached a surreal crescendo. Seldom do countries experience such intensive political debates over measures as technical and obtuse as financial regulations.

On one side of the raging debate stand the administration of President Hassan Rouhani and a majority of parliamentarians, who are responding to the needs of private sector businesses, which have called for the adoption of the action plan through both official statements and individual appeals. Iran�s banking sector also backs the measures as financial institutions rightly fear they will be more isolated than ever�especially in face of U.S. sanctions�if Iran fails to show a serious commitment to reducing money laundering and terrorist financing risks.

The opposition is varied, but unified in fear. As conservative politician and parliament deputy Ali Motahari explained after Sunday's vote, the opponents are generally concerned that they will have to divulge financial information that would compromise opaque dealings. "There are some who may really have personal interests in the [FATF bills] not being approved because they will be cut off from massive profits if there are reforms in the banking system," Motahari said.

At a political level, opponents claim that adoption of the FATF recommendations could hamper financial support for Iran�s allies, especially Lebanon's Hezbollah, which the US has classified as a terrorist organization. Of course, some opponents are simply looking to undermine the Rouhani administration by delivering yet another political defeat.

Opponents to the FATF reforms have spent liberally to orchestrate a campaign designed to intimidate lawmakers into voting down the bills. For months, MPs have received near-daily anonymous text messages. The messages, many of which have been shared on social media by MP Mahmoud Sadeghi, an outspoken supporter of ratification of the bills, include content ranging from religious arguments to outright threats which aim to compel MPs to reject the proposed legislation.







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The battle over the laws has also been fought through print and digital media. Hardliners have minced no words criticizing Rouhani's economic team from the moment FATF's action plan was published. Most dramatically, the ultraconservative Kayhan newspaper stunned many by saying FATF adoption would constitute betraying the blood of those who lost their lives in the recent terrorist attack in Ahvaz. The paper also engaged in fearmongering by claiming that FATF adoption would further depreciate Iran's currency against the U.S. dollar.

"This is a psychological war. Clearly, Iran's economic problems won't be all suddenly resolved through FATF," financial expert Mehdi Pazouki told Bourse & Bazaar in reference to the intensity of the political debate around what are basic economic reforms.

Sunday's vote was a bizarre spectacle. While high-level officials including Foreign Minister Javad Zarif and central bank governor Abdolnasser Hemmati attended the session in support of the bill, dozens of protester rallied outside, holding up banners and chanting in defiance.

Speaking in advance of the vote, Zarif tempered expectations, explaining that the FATF bills will not resolve all problems. But he was adamant that the new regulations will prevent the emergence of future economic problems. According to Zarif, Russia and China, two of Iran's biggest trading partners, have asserted they will be forced to refuse financial services should Iran fail to adhere to FATF standards.

Taking the podium, hardliner MPs caused mayhem, symbolically tearing-up the proposed law and throwing the scraps at parliament speaker Ali Larijani.

Pazouki agrees that failing to satisfy the FATF action plan will amount to a kind of self-sanctioning. "If we wish to work with the global community, especially developed nations and European Union partners, we will need to adopt FATF requirements. We would have had to make these reforms even if the U.S. hadn't withdrawn from the JCPOA,� he explained.

Echoing the message sent resolutely by the 143 lawmakers who voted for the bill, Pazouki points to the cynicism of the opposition. "Only money launderers, terrorist financiers and tax evaders should be worried about passage of the bills," he says. "If we are proponents of fighting corruption and money laundering, the FATF regulations are certainly in favor of transparency.�