As Iran mulls joining financial watchdog, Israel sees win-win situation
If Iran joins the FATF anti-money laundering organization, the Islamic Republic might find it harder to fund militant organizations in the region, but if Iran does not join, it may lose what few international banking connections it already has.
As Iran's parliament debates whether or not to join the Financial Action Task Force (FATF) — a global organization that develops policies to combat money laundering — recent developments indicate such a move on the part of Tehran would be good news for the state of Israel.
Pressure from the FATF recently forced the Pakistani government to ban a terror-related organization (Jamat-ud-Dawa) as well as a financial organization with terrorist links (Falah-e-Insanyat Foundation). According to the same report, six Pakistani banks and 109 bankers are being investigated by Pakistani authorities for opening fake bank accounts. What is even more interesting is that Pakistan is not a FATF member, but a member of Asia/Pacific Group on Money Laundering (APG). However the prospect of being moved to FATF’s blacklist has motivated it to take stringent action. Iran is currently not a member of any anti-money laundering or terror-financing-prevention treaty. Lawmakers have been debating whether to join the FATF and its associated agreements. So far, two parts of the FATF agreement have been approved by Iranian authorities. However two other requirements, namely joining the CFT (Combating the Financing of Terrorism) and the Palermo Convention (the UN Convention against Transnational Organized Crime) still need to be approved by the Expediency and Discernment Council.
There are numerous advantages for Israel if Iran joins the FATF. By joining, Iranian banks will be under what will be unprecedented international scrutiny. This will make it more difficult, although not impossible, for Iran to transfer money to terror organizations whom Israel considers as its enemies, such as Hezbollah, Hamas and the Islamic Jihad. Additionally, Iranian membership in the FATF would weaken the financial strength of the Iranian hard-liners, who have always called for a more aggressive foreign policy in the region. Such weakening would likely to come as a result of regime-affiliated economic institutions such as various bonyads (foundations) and various companies owned by the Islamic Revolutionary Guard Corps finding it more difficult to hide their financial transactions — something they have allegedly done for smuggling activities, money laundering and to avoid paying taxes.
Shadowy regime-affiliated companies that do not answer to the government play a very important part in Iran's economy. Mohsen Safayee Farahani, a member of the Reformist organization Jebhey-e Mosharekat (Participation Front) and a well-known executive with experience in several industries, told Khabaronline that 65% of Iran's economy is in the hands of 120 organizations and foundations over which there is no state control. He said that “50% of Iran's GDP is in the hands of such organizations,” in which he includes Supreme Leader Ayatollah Ali Khamenei's own Bonyad Setad Ejraiye Farmane Emam (Headquarters for Executing the Order of the Imam). Hitting the balance sheets of shadowy regime foundations and companies by making it more difficult for them to take part in tax avoidance and money-laundering activities would also be good news for Israel, as it could damage these organizations' leverage within Iranian politics. Hitting Iranian smugglers in their pockets would be also be welcome news to Israel as smugglers have played a leading role in sanctions-busting activities.
