In June 2016, the FATF welcomed Iran’s high-level political commitment to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. In light of Iran’s demonstration of its political commitment and the relevant steps it has taken in line with its Action Plan, the FATF has decided to continue the suspension of counter-measures. The FATF will keep monitoring progress in the implementation of the Action Plan and consider next steps.
Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19. The FATF urges Iran to fully address its AML/CFT deficiencies, in particular those related to terrorist financing.
The FATF will continue to engage with Iran and closely monitor its progress
The following is an excerpt from the recent Joint Communiqué of the G7 Foreign Ministers meeting in Lucca, Italy 10-11 April 2017:
"We support the Joint Comprehensive Plan of Action (JCPoA) as an important contribution to the non-proliferation regime. Continued and full implementation of the JCPoA is essential to build confidence that Iran's nuclear program is exclusively peaceful in nature. We value the JCPoA's comprehensive structure and the commitment by all parties to its solid verification mechanism. We commend and continue supporting the IAEA in its crucial work in Iran, including monitoring and verification to help ensure compliance with Iran's JCPoA commitments and safeguard obligations, thus playing a key role in fostering mutual trust. We stress the need for all parties to entirely and consistently fulfil all their commitments under the JCPoA in good faith.
"We reaffirm the need for Iran to strictly abide by all its nuclear related commitments. UN Security Council Resolution 2231 needs to be fully implemented, including its provisions prohibiting the transfer of arms. We deeply regret Iran's testing of ballistic missiles; as such tests are inconsistent with UN Security Council Resolution 2231.
"We call upon Iran to play a constructive regional role by contributing to efforts to achieve political solutions, reconciliation and peace in Syria, Iraq, and Yemen and other parts of the region and to cooperate in countering the spread of terrorism and violent extremism. We also call on Iran to comply with its international human rights obligations and in particular to ensure freedom of expression and to end arbitrary detentions and executions."
As at the end of October 2016, banking services for Iran trade transactions are not generally available in the UK. They are more so, but still limited in other EU countries and around the world. Some UK banks will undertake Iran business, others won’t and would rather close the customer’s account than do so. The banks that will, do so, confidentially, for their best long-term customers, usually transaction by transaction not on a treaty basis. This means that the banking system doesn’t generally provide Iran trade finance services.
Those banks that won’t provide banking services for trade with Iran also do what they can to inhibit the rest of the market from doing so, by implying that they would withdraw clearing or correspondent banking.
This leaves "unbanked" exporters for Iran to construct specific payment routes. These involve using the buyer suggested payment arrangements, if necessary, in combination with banks which will undertake banking services for Iran trade (usually the correspondents of Iranian banks, EIH and others) so that the UK exporter’s payments are unknown to their UK bank. This involves risk to the exporter, of course. This may be happening as UK exports increased by about 30% in the first 6 months of 2016 by comparison with the similar period for the year before. This payment procedure happened under sanctions for allowable exports.
Something similar happens in Germany, Italy and other EU countries. Germany has a large number of small regional banks, many of whom are willing to provide payment services for Iran. These smaller banks are not constrained by the ability of the big German banks to hold the market to their own management policies on Iran. The Iranian banks in London could provide a route through this, if they weren’t hamstrung by clearing and correspondent relationships in the UK.
The term of the market doesn’t go beyond 360 days at present, although Iran is beginning to call for longer term credit.