Will Iran wordsmith its way off our terrorism list? It certainly is trying
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Iran is on a diplomatic offensive to persuade global illicit finance regulators to accept that Hezbollah is not a terrorist group. It may be just a matter of time before the international body in charge of protecting the global financial system succumbs to pressure from businesses on a gold rush back into Iran. 

The Financial Action Task Force (FATF) sets global standards to combat money laundering and finance for terrorism and proliferation. In June, FATF announced it would keep Iran on its high-risk blacklist, saying it “remains concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.” The business community was advised to “apply enhanced due diligence to business relationships and transactions” with Iran.

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Still, FATF suspended mandatory counter-measures for a year on the promise that Iran would take steps to address “deficiencies” and seek “technical assistance” to implement its Action Plan.

Neither FATF nor international financial institutions should be blind to what Iran has in mind. On July 11 Iran’s nuclear negotiator Abbas Araghchi was blunt: “It took us 18 months to reach an understanding with FATF regarding the definition of terrorist groups. We have clear red lines and will not sacrifice Hezbollah.” Hezbollah has a decades-long terrorist rap sheet against America and its allies.

On June 24, the day FATF suspended mandatory counter-measures on Iran, Hezbollah’s Secretary General Hassan Nasrallah tested FATF and the international community by announcing, “We are open that Hezbollah’s budget, income, expenses, everything it eats and drinks, and its weapons and rockets, come from the Islamic Republic of Iran.”

In roadshows throughout the world, Iran has asserted that it has passed a counter-terrorism law to comply with FATF standards. “This law will be helpful in sending a message of goodwill to financial bodies across the world and would be effective in allaying their fears in doing business with our banks,” Hamid Tehranfar, the Central Bank of Iran's deputy for supervision affairs explainedadding that passage of the law would improve Iranian credit ratings.

But how Iran defines terrorism reveals its real intentions. Abdolmahdi Arjmandnejad, the Central Bank’s deputy for anti-money laundering affairs, said “liberation organizations are not subject to this law and the Supreme National Security Council decides who is a terrorist.” He added that FATF has no access to bank account information and transactions.”

Terror financing in Iran occurs because the state orders it. The state will use its banks to transfer money to terrorist proxies the same way Iran uses banks, both state-owned and private in ways which led to their designation in the first place.

This is where Iran may be playing FATF.

The law’s significance is not that it may impose special measures and limitations on its banking system purportedly to prevent terrorism financing. Rather, as Tehranfar states, its aim is to provide an internationally acceptable definition of terrorism, and “reduce concerns held by international banks for increasing cooperation with Iranian counterparts.” It is a charade that seeks to give international financial institutions a cover story to work with the regime.

Iran uses wordplay not to cease terrorism but to justify it. Iran determines who are and are not terrorists.

The “Anti-Terrorism Financing” bill was introduced to parliament in 2010 by then-president Mahmoud Ahmadinejad, and passed in 2012. The Guardian Council rejected the bill. Parliament passed an amended version in February 2016, and the Council approved it in March 2016. The bill’s main backer was the Central Bank, which insisted that in the absence of such a measure, Iranian banks would face difficulty gaining access to international financial markets.

Businesses should make no mistake about Iran’s commitment to use terrorism as it wishes. The State Department named Tehran as the leading state sponsor of terrorism. It has continued to support terrorist groups including Hezbollah, Palestinian Islamic Jihad, Hamas and more. It funds and arms the Syrian regime through the Islamic Revolutionary Guard Corps (IRGC) and Hezbollah, and other foreign Shiite fighters propping up the Syrian regime’s brutal five-year war.

Democratic senators have called Iran’s bluff and urged Treasury to address FATF’s “alarming” action. Congress’s clarion call should usher in concrete steps to address Iran’s gamesmanship. 

Lawmakers should prohibit the administration from lifting counter-measures until Iran is off of the State Sponsor of Terrorism list, and that removal from the terror list can only come with Tehran’s end of terrorism.

Congress and the administration should encourage the European Union to designate Hezbollah as a whole, and not differentiate between its political and military wings as it does now.

Rather than integrate Iranian banks into the global financial system, banks controlled, owned or used by the supreme leader and the IRGC should be sanctioned.

The World Trade Organization should bar Iran from membership until its terrorist activities cease. Iran’s efforts to convince international investors and international ratings agencies like Moody’s and Fitch to enter its market should not be legitimized until its malign activities have stopped.

Iran is seeking legitimacy as a nuclear supplier and a regional power. As long as Iran does not change its underlying nefarious activities, its counterfeit terrorism law must not serve as its ticket to financial legitimacy.


Toby Dershowitz is Vice President for Government Relations and Strategy at the Foundation for Defense of Democracies where Saeed Ghasseminejad is Associate Fellow.