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The Paris-based anti‑money‑laundering body, the Financial Action Task Force (FATF), has doubled down on measures that tighten Iran’s access to the global financial system — explicitly flagging banks, correspondent relationships and virtual asset service providers (VASPs) as high‑risk. Tehran says it remains committed to getting removed from the FATF blacklist, but powerful political divisions at home are slowing reforms and complicating the negotiations.
What the FATF said — and why it matters
– The latest guidance urges banks and regulators worldwide to be extra cautious with Iranian financial institutions. It recommends refusing new representative offices and discouraging new correspondent banking ties, while asking existing relationships to be reassessed on a risk‑based basis.
– VASPs and crypto‑related flows are singled out as particular vulnerabilities for sanctions‑ or proliferation‑related evasion, meaning exchanges and wallet providers can expect sharper due diligence and tighter banking access.
– The watchdog also warns that transfers tied to humanitarian aid and diplomatic spending require heightened scrutiny — a move that could create frictions even for legitimate channels.
How Tehran frames its response
– Iranian officials say delisting is essential to reconnecting banks and businesses with international finance, and they insist negotiations and legal work will continue despite domestic resistance.
– Tehran calls the FATF’s tougher guidance a form of countermeasure intended to further isolate the country; at the same time, it insists on pursuing compliance steps that preserve what it views as political and security priorities.
Practical consequences for payments and trade
– International banks and payment providers are likely to narrow formal payment corridors and cut exposure to counterparties deemed high‑risk. That raises the cost and complexity of cross‑border transfers for Iranian firms and state entities.
– For crypto providers, the squeeze is twofold: increased transaction screening and reduced access to traditional banking rails make routine operations costlier and slower.
– Humanitarian groups and diplomatic channels may face extra hurdles when moving funds — even when the purpose is legitimate — because of the heightened scrutiny.
Why Tehran’s politics complicate compliance
– Centrist lawmakers and pragmatic officials have pushed laws and regulations aimed at meeting FATF standards: stronger reporting, tougher controls on intermediaries and clearer oversight.
– Conservative factions oppose sweeping transparency, arguing that some financial opacity underpins regional policies and networks they call the “axis of resistance.” Those objections have stalled and diluted earlier reform efforts.
– The result: conditional or partial legislation that the FATF says does not meet the unconditional standards it requires, prompting the watchdog to intensify countermeasures.
Economic fallout on the ground
– Restricted correspondent banking and limited trade routes force sellers into discount sales, opaque sea transfers and informal exchange channels. Those workarounds lift transaction costs and raise operational risks.
– The state takes a revenue hit when oil and commodities sell below market value; businesses face delays and fees; consumers encounter price volatility and scarcer imports.
– Smaller firms tend to be hit hardest, lacking the scale or connections to navigate increasingly complicated payment pathways.
A recurring pattern: unfinished reforms and technical talks
– Momentum toward full compliance has repeatedly faltered. After the 2015 nuclear deal and the U.S. withdrawal in 2018, political opposition hardened and several conditional laws stalled or were never fully implemented.
– Tehran has since ratified FATF‑related laws with caveats — clauses that, for example, rule out recognition of Israel or bar certain referrals to international courts. The FATF rejected these reservations, saying they undermine the standard’s intent.
– Negotiations remain active: regulators, industry groups and international authorities are holding technical dialogues to pin down benchmarks, timelines and the concrete steps Tehran must take to be delisted.
What to watch next
– Progress will hinge on whether Iranian lawmakers accept measures that the FATF considers unconditional, and whether regulators can demonstrate enforceable asset‑freeze mechanisms and stronger controls on proliferation financing.
– If benchmarks aren’t met, Tehran risks staying on the watchlist and facing continued restrictions on correspondent banking, correspondent payment corridors and VASP access. If it does meet them, banks and payment providers would still need verifiable proof before rebuilding formal ties.
– In the near term expect more technical consultations, political bargaining in Tehran, and industry‑level talks to clarify implementation deadlines. The FATF has broadened its focus to include crypto and digital assets, raising the stakes for Iran’s financial engineers. Tehran says it wants off the blacklist, but domestic divisions and conditional legislation have left the process tangled. Until negotiators land clear, enforceable reforms that international partners accept, Iranian banks, businesses and ordinary people will keep feeling the squeeze.