MADRID – For some time, the debate over Iran's potential membership in the Financial Action Task Force (FATF) has polarized both public opinion and the political class within the country.

Proponents of the initiative emphasize the economic and financial benefits of joining the FATF. They argue that, in an interconnected world, integration into global infrastructures is key to facilitating international transactions, attracting foreign investment, and alleviating the banking restrictions that have burdened Iran's economy. They also assert that advancing toward greater cooperation with international organizations is a necessary step to overcome economic challenges and reduce the country's isolation.

On the other hand, critics view the FATF as a tool of foreign pressure that could compromise national sovereignty. Some even refer to it as a "second Treaty of Turkmenchay," alluding to the 19th-century agreement that weakened Iran against Russia. They warn that membership could violate key articles of the Iranian Constitution, designed to prevent foreign interference in the country's internal affairs.

Beyond these opposing viewpoints, this article seeks to examine the potential implications of Iran's membership in the FATF, both positive and negative, and provide an analysis of the role this organization plays in the international financial system.

History and functions 

The Financial Action Task Force is not a treaty or a convention but rather an intergovernmental organization. These entities, composed of sovereign states or other international institutions, play a key role in global governance and the shaping of international public law.

The FATF was established in 1989 at the initiative of the G7 member countries, with the initial purpose of evaluating and strengthening regulations against money laundering in international financial markets. However, the September 11, 2001 attacks marked a turning point in its mandate. Since then, the organization has expanded its focus to include monitoring financial flows to detect and prevent the financing of groups it designates as terrorists. 

Within the FATF, there is a prevailing view that these terrorist groups not only operate for ideological reasons but also require financial resources to sustain their activities. In response, the organization has developed ongoing monitoring mechanisms to identify and block their sources of funding.
It is important to note that the terror list the FATF refers to is at times controversial. For instance, it includes Resistance groups like Hezbollah, which were formed to fend off Israeli colonialism and aggression. 

Role and Impact 

On its official website, the FATF defines itself as an international political organization whose purpose is to foster the political will necessary to reform laws and regulations in the fight against money laundering and the financing of terrorism. Its mission, it says, is to establish standards and promote the effective implementation of legal and operational measures to combat these threats and protect the integrity of the global financial system.

Due to its broad mandate and powers, the FATF produces reports and evaluation lists that determine the level of investment risk in various countries. These rankings not only influence financial decisions but can also have far-reaching political and economic implications.

The FATF reports serve as a key reference for financial institutions and international investors. Its impact is primarily driven by two factors: Reduction of investment risk by following the recommendations of a specialized organization, and avoiding sanctions for non-compliance with FATF regulations, which can restrict access to global financial markets.

Ultimately, the FATF plays a pivotal role in regulating international financial flows. Its influence extends beyond the technical realm, making it a central actor in global financial and political architecture.

Members of FATF

The FATF consists of 39 members, including 37 countries and 2 regional organizations. Additionally, it has several observers, including important international organizations.

The FATF member countries represent various regions around the world. They include Germany, Saudi Arabia, Argentina, Australia, Austria, Belgium, Brazil, Canada, China, South Korea, Denmark, Spain, the United States, Finland, France, Greece, Hong Kong, India, Ireland, Iceland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Norway, New Zealand, the Netherlands, Portugal, the United Kingdom, Russia, Singapore, South Africa, Sweden, Switzerland, and Turkey.
The Member Organizations include the European Union (EU) and Persian Gulf Cooperation Council (GCC) The FATF also has countries and entities with observer status, including Saudi Arabia and Israel.

Furthermore, several international actors collaborate with the FATF in overseeing and enforcing global regulations. Notable organizations are the United Nations (UN), the International Monetary Fund (IMF), and the Organization for Economic Cooperation and Development (OECD). These institutions work alongside the FATF in implementing financial regulations and strategies at the global level.

In favor of Iran's membership FATF

Proponents of Iran's accession to the FATF take a global and strategic view of the issue. They argue that joining the FATF is a necessary step in a broader process toward economic globalization. They contend that in an increasingly interconnected world, no country can afford to isolate itself without facing significant costs and losses.

Additionally, they highlight that Iran has been a victim of terrorist acts and has suffered considerable damage due to the threat of extremist groups. From this perspective, they argue that FATF membership would provide the country with more effective tools to combat terrorism and mitigate its internal impact.

Another key point raised by supporters is the need to facilitate international financial transactions. Joining the FATF would allow Iran to better integrate with global banks, reducing the risk of sanctions and financial restrictions. They argue that without this membership, the country could face severe limitations in its commercial relations, affecting foreign investment, exports, and imports.

Ultimately, supporters believe that Iran needs to be part of a well-regulated global financial system to enhance its economic stability and reduce pressure from international actors.

Against Iran's membership in the FATF

Opponents of Iran's accession to the Financial Action Task Force primarily criticize the organization's lack of transparency. They argue that accepting its regulations would amount to self-imposed sanctions, as it would force the country to align with a set of rules established by an entity whose most influential members are long-standing adversaries of Iran.
Furthermore, they warn that Iran’s financial transaction information would be made accessible to the FATF, allowing for a detailed analysis of the country’s economic strengths and vulnerabilities. They fear that this data could be used to develop strategies against Iran, as has occurred in the past with leaks of sensitive information that have caused significant harm to the country.

Another key argument against Iran’s membership is the potential threat to national security and the impact on the Resistance Axis in the region. They fear that membership could compel the country to limit or sever ties with strategic allies, undermining its foreign policy.

Middle ground perspective

Beyond the extreme positions, some experts take a more balanced approach, acknowledging both the benefits and risks of cooperating with the FATF. They argue that engagement with the organization could offer economic opportunities but also present political and strategic challenges that require thorough analysis by both the government and parliament.

While the FATF has developed a regulatory framework with 40 recommendations to protect the interests of its member countries, some believe that Iran’s specific situation makes its membership different from that of other nations. Therefore, they contend that any decision should be made with caution, ensuring that it does not compromise national interests.

What’s underway right now

Iran’s Expediency Discernment Council is currently debating draft bills concerning the Combating the Financing of Terrorism and the Palermo Convention (on Transnational Organized Crime). The approval of these laws would be a critical step toward Iran's removal from the Financial Action Task Force blacklist, with far-reaching implications for both its access to the global financial system and its geopolitical standing.

The Iranian Parliament has already discussed the issue. On Sunday, February 2, the representatives debated Iran's membership in the FATF, though their role in the final decision was limited. According to Parliament Speaker Mohammad Baqer Qalibaf, the body had approved joining the organization in a previous legislature, but disagreements with the Guardian Council blocked the process, shifting the matter to the Expediency Discernment Council. However, after a year of deliberations, no definitive conclusion has been reached, and the deadline for review has expired.

The debate on Iran’s membership in the FATF goes beyond the technical realm and enters the domain of political strategy. Iran stands at a crossroads, where it must carefully weigh the benefits and risks before making a decision that could redefine its economic and diplomatic future.