Money laundry is a technique in financial trades in which the money source is vague so it is one of the most important techniques which is being used in underground economy. In the past, money laundry was used mostly in organized crimes like drug smuggling or mafia activities but nowadays its concept and application is broadened and includes any illegal activities such as tax evasion or inaccurate audit.
After the September 11 attacks (also referred to as 9/11), institutions were created in order to combat money laundry and financing of terrorism. These institutions’ duty is to develop the standards of combating the money laundry and financing the terrorism and also monitor its enforcement in different countries across the world. The most important and known institution is Financial Action Task Force (FATF).
This institution determines the laws on money laundry and financing of terrorism. FATF ranks countries in this regard. Its reports, standards and evaluations are being accepted among the world gradually.
During recent years, the major concern of International Monetary Fund (IMF), foreign banks and compliance authorities in foreign corporates in order to work with Iran is about money laundry and financing of terrorism conditions among Iranian banks and institutions. In this regard, 10 years ago the parliament passed a law on combating money laundry in Iran’s parliament for the first time in Iran’s history. According to this law, owning, maintaining or earning any revenue from any illegal activity is considered as crime. Since Iran is exposed to drug smuggling and huge amount of tax income is not realized because of tax evasion so that the government is seeking transparency and control the procedure of transferring money in the country.
In Iran, the Central Bank as the regulator of banks and other financial institutions should supervise law enforcement in addition to providing necessary infrastructures.
FATF in 2009 listed Iran as a high-risk country for investment besides countries like North Korea. FATF in its last report on January 2016 again declared that Iran is still a high-risk destination and requested from Iran to develop their procedures and laws in order to combat financing terrorism. Meanwhile, during these years Iran has had significant progress in order to pass new laws that not only increase supervision on tax payments but also decrease doubts and misgivings about financing of terrorism through vague financial markets and finally in 2016 Iran`s Parliament passed a law about financing the terrorism.
Due to the efforts of President Rouhani’s government, FATF on June 2016, removed Iran from its blacklist. Since JCPOA, the diplomacy of Iran is to have a closer relationship with other countries and the government believes that the improvement of Iran’s status in FATF reports can lead to inflows of FDI to Iran. In addition, the relations with international banks can be improved via eliminating different obstacles in connecting to international banking system.