Keep Tehran on the terror finance blacklist

Less than a year ago, U.S. law enforcement uncovered a plot by the Islamic Republic of Iran to kill President Donald Trump. Iran’s Islamic Revolutionary Guard Corps (IRGC) has been conspiring with hitmen to target and gun down Americans on U.S. soil for many years. “That simply won’t be tolerated,” the FBI said when it revealed the plot. Now is the time to ensure these words are matched by deeds.

The Financial Action Task Force (FATF) — the group established to protect the world from serial terrorism financing and money laundering — meets in Strasbourg, France, beginning on June 10. The watchdog should resist any temptation to remove Iran from the blacklist — on which it placed Tehran in 2007 — until the regime ends its global malign activities.

President Trump knows he was not the only American Iran’s supreme leader sought to assassinate. The regime plotted to kill many more dissidents, journalists, diplomats, and regular citizens both in the United States and overseas.

Terrorism is only one tool Tehran uses to circumvent global sanctions and export its revolution to threaten America, our allies, and the global financial system.

For example, Iran operates a clandestine network of tankers known as the “ghost fleet” to move oil to sanctioned buyers, including China. Falsifying maritime documents to conceal the oil’s origin, Iran has illicitly facilitated the sale of hundreds of thousands of barrels of Iranian crude.

The proceeds fuel the Islamic Republic’s military and proxies like Hezbollah and the IRGC-Quds Force, which, in turn, destabilize countries and engage in terrorism.

Some say that FATF may offer Tehran concessions. This would be premature and a serious mistake.

FATF has already told Iran it must complete a series of action items before it can leave the blacklist. These include strengthening how banks verify customer identities, cracking down on unlicensed money transfer businesses, and ensuring that banks clearly identify who sends and receives funds.

Recently, Tehran agreed to join the Palermo Convention against organized crime, but even with this, Iran has not fully completed the FATF action plan. And any words it may utter prove empty when its global terrorism rap sheet is held up.

On October 7, 2023, Hamas, an Iran-funded terrorist group, killed or kidnapped nearly 1,500 people in southern Israel. Victims included Israeli civilians, at least 40 Americans, and citizens of 45 other countries.

Iran continues to support terrorist groups like Hezbollah in Lebanon and the Houthis in Yemen, and it publicly supports terrorist attacks elsewhere, including the assassination of diplomats in Washington, DC.

Kayhan, the mouthpiece of Iran’s Supreme Leader Ali Khamenei, praised Elias Rodriguez, who boasted of assassinating two Israeli embassy employees in May, calling him “our dear brother” for shooting “two wild Zionist beasts in Washington and sending them to hell.” The diplomats, in fact, were at an event discussing how to increase humanitarian assistance to those in need in Gaza and elsewhere, but the Islamic Republic incites terrorism regardless of the circumstances.

Iranian TV also celebrated the murders, referring to Rodriguez as “the American Yahya Sinwar.” The program’s host said that the development heralds “the declaration of a branch of the Basij” in the heart of Washington, DC. The Basij is the paramilitary organization that answers to the IRGC and is used to repress the people of Iran. Calling the attack “a good and desirable beginning before God,” Iranian TV called for more such terror operations on U.S. soil.

Masoud Pezeshkian, the country’s president, believes removal from the blacklist would help Iran reconnect to global financial networks, boosting the country’s economy.

There has been a debate within Iran about fully complying with FATF standards, though for years, only compliance tied to deceptive and conditional language has been put forth.

If Tehran fully and unconditionally adheres to FATF rules, the regime would find it harder to evade sanctions, launder money, or finance terrorism. Hardliners strongly oppose compliance because they believe it would limit the regime’s ability to support terrorist groups abroad.

The pragmatists inside the regime argue differently. They believe staying on the blacklist hurts Iran’s economy too much. However, their approach too involves creating exceptions — not permitted by FATF — to how Iran defines terrorism.

FATF requires Iran to adopt laws making it a party to two UN conventions: the International Convention for the Suppression of the Financing of Terrorism and the Palermo Convention against organized crime. Iran’s parliament introduced these bills in 2018. However, Tehran tried to define terrorism in ways that protect its proxies to allow continued funding for groups like Hamas, Hezbollah, al-Qaeda, and the Houthis.

FATF does not accept such exceptions or carve-outs. Its standards require countries to clearly and fully criminalize terrorist financing without exclusions.

In 2018, Iran’s parliament passed legislation intended to satisfy FATF, but the Guardian Council blocked it. The Guardian Council is a powerful group of 12 people who decide if laws align with Iran’s Islamist ideology. Since then, the issue has been stalled, waiting for action from another powerful body — the Expediency Discernment Council — which resolves disagreements between parliament and the Guardian Council. Only recently, in May, did the Expediency Discernment Council approve Iran’s joining the Palermo Convention, the less controversial one, though it caveated to give it questionable wiggle room “within the framework of the Constitution and domestic laws.” However, Iran has not agreed to join the crucial International Convention for the Suppression of the Financing of Terrorism.

Iran has not fully complied with FATF’s basic requirements. Iran’s government openly continues financing terrorism, laundering money, and evading international sanctions. Pezeshkian himself has publicly supported terrorist groups like Hamas, Palestinian Islamic Jihad, Hezbollah, and the Houthis, which have disrupted billions of dollars in global trade, and on his watch, Iran has launched hundreds of deadly missiles toward allies in the Middle East.

To protect the global financial system, FATF should not allow itself to be played by Iran’s games. Being blacklisted tells global markets clearly that it is unsafe to do business with Iran. This is necessary until Tehran commits unequivocally to international conventions, fully adheres in deeds to FATF standards, and, finally, stops fueling and executing terrorism. Its words are not enough.

Toby Dershowitz is managing director at FDD Action, and Saeed Ghasseminejad is a senior advisor at the Foundation for Defense of Democracies (FDD). FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy. FDD Action is a non-partisan 501(c)(4) organization established to advocate for effective policies to promote U.S. national security and defend free nations. Follow the authors on X @tobydersh and @SGhasseminejad.