Iran International
Iran’s government says it is taking steps to resolve the long-standing problem of being black-listed by the Financial Action Task Force (FATF) but hardliners still staunchly oppose accepting the watchdog's recommendations.
Q: How long has Iran been on the FATF black list:
The Islamic Republic of Iran was on FATF black lists from 2008 to 2016. In February 2020 Iran was black-listed again and has remained so to date.
Q: What does being on the FATF black list mean?
The FATF black list is officially called “high-risk jurisdiction subject to a call for action”.
Countries that fail to address deficiencies in their anti-money laundering and counter-terrorism financing regimes are described as “high-risk jurisdiction subject to a call for action”.
The FATF advises its members and financial institutions to apply “enhanced due diligence” in their dealings with black-listed countries. Enhanced due diligence makes international transactions high-risk, costly, and time-consuming for financial institutions.
Countries may also be called upon to apply “countermeasures” to protect the international financial system from money laundering, terrorist financing, and proliferation financing risks including limiting or terminating business relationships, increased monitoring and reporting, restrictions on correspondence banking relationships, prohibiting certain transactions, and increased external audit requirements, and encouraging the use of alternative payment methods.
Q: What happened in Iran's case between 2016 and 2020:
In June 2016, after the 2015 nuclear deal with world powers and the lifting of UN sanctions, FATF called on its members to suspend the countermeasures they used in their dealings with Iran for twelve months.
This meant being included in the so-called gray list and continuation of due diligence.
Q. Why was Iran put on the gray list?
Iran was temporarily removed from the black list because the country committed to implementing an action plan to address FATF’s concerns regarding the establishment of a cash declaration regime and counter-terrorism financing and anti-money laundering legislation and by-laws.
In February 2020 the FATF noted that there were still items not completed and several requiring to be fully addressed and urged member countries to once again apply countermeasures in their financial dealings with the Islamic Republic, i.e., black-listed Iran again.
Q: How does being black-listed affect Iran?
Without accession to the international financial conventions demanded by FATF, Iran cannot have full access to global banking, normal trade relations, and investments with large global companies. Being black-listed means Iran can also not have access to loans by the International Monetary Fund (IMF) and the World Bank.
Being black-listed has thus caused disruptions to Iran's international trade with most countries over the years and discouraged foreign investment. It has also damaged Iran's reputation and reinforced the impact of previous UN sanctions and sanctions by the US.
Q. How does FATF enforce its decisions?
The FATF is only an advisory body but countries, including Iran, must make their own legislation based on FATF recommendations to ensure compliance and avoid negative assessment of the health of their financial system by the task force.
Q: Is Iran cut off from SWIFT for being on the FATF black list?
Being cut off from SWIFT (Society for Worldwide Interbank Financial Telecommunication) is related both to US sanctions and being black-listed by the FATF.
Banks and other financial institutions that use SWIFT must comply with the anti-money laundering and counter-terrorism funding regulations of their respective countries based on FATF recommendations.
The United Kingdom, for instance, has several laws, such as the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, to ensure compliance with FATF regulations.
Q: What steps did Iran take towards completion of its action plan before being black-listed again in 2020:
The FATF has made 41 recommendations to the Iranian government 37 of which, including a cash declaration regime, it has accepted by passing legislation, although actual implementation remains in doubt.
In a statement in June 2018, the FATF said Iran had introduced draft amendments to its anti-money laundering and counter-terrorism financing laws but had failed to complete its action plan.
The global anti-money laundering task force, therefore, urged its members to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran.
Q. What were the four pieces of legislation that Iran planned to introduce?
The Iranian parliament approved the following four pieces of legislation but two of these, the legislations for accession to the Palermo and CTF conventions, have not been finalized to date.
Q: Why have the laws required for accession to the Palermo and CTF conventions not been finalized?
Iran's hardline-dominated constitutional watchdog, the Guardian Council, rejected the two pieces of legislation. The dispute between the parliament and the Council was referred to the Expediency Council in 2019 for arbitration.
The Expediency Council has stayed the matter since then and neither approved nor rejected them, purportedly due to the objection from hardliners who claim accession will be harmful to Iran's “national security” because the transparency will shed light on the country’s dealings with its proxy forces in the region among other things; exactly the reason for the existence of the international conventions.
Q. What is the approach of Masoud Pezeshkian’s government to the FATF issue?
Unlike his hardliner rivals, Pezeshkian repeatedly called for accession to the FATF’s conventions during his campaign as a crucial move to prevent the country’s financial isolation. His government says a final resolution of the matter may be near. But the presidential administration has little influence in such matters that could impact the country's foreign military projects.
Speaking on Saturday, Alireza Kazemi stated that the widespread school dropout rates are largely driven by familial, economic, and social factors, rather than structural shortcomings within the Ministry of Education.
Inflation in Iran has been hovering around 40% for the past five years, impoverishing about one-third of the population. As families find themselves under tremendous financial pressure, they are unable to afford expenses and many children go to work at menial jobs.
Kazemi reported that about 150,000 of these dropouts are from the early primary education level, while the remaining students come from both lower and upper secondary levels.
“The dropout issue is more complex than a lack of school infrastructure. It involves broader socioeconomic factors that extend beyond the ministry’s direct control,” he added.
This statement follows recent comments by Ali Rabiei, advisor on social affairs to President Masoud Pezeshkian, who reported on Thursday that 170,000 children were not attending school at the primary level, with dropout rates increasing sharply after elementary school.
Rabiei’s comments highlight a worrying trend of educational disengagement at a young age, particularly in rural and economically disadvantaged regions.
Kazemi, however, countered statements that the Iranian education system is underfunded or under-resourced.
Iran's education system faces numerous systemic challenges, including outdated curricula, overcrowded classrooms, and underfunded schools, all of which hinder the quality of learning. Teachers often work in difficult conditions with limited resources, struggling to address the diverse needs of students.
The lack of adequate infrastructure, particularly in rural areas, exacerbates these issues, making it harder for students to access quality education.
The minister also pointed to the challenges faced by secondary-level students, many of whom, Kazemi claimed, are seeking employment or vocational training opportunities.
He also identified cultural and gender barriers, particularly for rural girls who are prevented from attending mixed-gender schools.
“There are sociocultural factors at play,” he added, suggesting that these barriers to education are a significant driver of the dropout crisis.
Criticism of the ministry’s handling of the dropout issue has grown in recent months. Farshad Ebrahimpour, a member of the Education Committee in Parliament, said on October 21 that around two million students had failed to register for school this year, largely due to economic constraints faced by families.
Kazemi also dismissed the notion that there is a shortage of schools, teachers, or educational resources, instead arguing that the issue stems from external pressures on families, not the system's capacity to deliver education.
In a provocative response to critics, Kazemi suggested that those questioning the education system could ask children seen working at Tehran’s intersections why they aren’t in school.
"The issue is not one of access," he said. "It is about the choices made by families and communities in the face of economic hardship."
Iran's education system is further undermined by the economic struggles of teachers, whose salaries have not kept pace with inflation, leading to widespread dissatisfaction.
Teachers in Iran face financial hardship, as they earn less than $200 a month. This economic pressure has sparked a series of protests in recent years, with educators demanding better pay, improved working conditions, and greater investment in the education sector.
Despite these protests, the government's response has been largely dismissive, contributing to a sense of neglect and disillusionment among teachers. The lack of attention to their demands has not only affected teachers’ morale but also impacted the quality of education, as many educators seek additional work to make ends meet, diverting their focus from their primary responsibility of teaching.
Data provided by Iranian media in September showed that nearly 790,000 students were out of school this year.
In a separate report, Mohammad Molavi, Deputy Chairman of the Education Committee in parliament, said in July that 911,000 students were not attending school, with 400,000 of them at the primary education level.
Molavi also highlighted that financial difficulties were a major factor behind the dropouts, with 279,000 students leaving school due to their families' inability to cover education-related costs.
As the debate over the country's educational crisis continues, the broader socioeconomic challenges does not mean that parents are opposed to education but they are just poor.
Yousef Pezeshkian, the President's son, was appointed on Wednesday as the Media Advisor and Assistant to the Presidential Chief of Staff, Mohsen Haji-Mirzaei.
Despite publicly decrying preferential hiring practices, the president’s son, son-in-law, and other family members have secured government positions so far, echoing controversies that marred previous administrations led by Hassan Rouhani and Mahmoud Ahmadinejad.
Ironically, during a recent meeting with members of the medical community, Pezeshkian called for the inclusion of academics and experts in addressing national challenges.
“Unfortunately, problems are often entrusted to individuals who lack the necessary expertise,” he said, criticizing the influence of personal connections in staffing decisions. However, his remarks were overshadowed by media reports a day earlier that his son, Yousef Pezeshkian, had been appointed as media advisor and assistant to the chief of staff in his father’s administration.
Yousef, who holds a degree in physics and has no known professional experience in media, is not the only relative to benefit from the administration's appointments.
Hassan Majidi, the president’s son-in-law, was previously named special assistant to the chief of staff. Meanwhile, Shahram Dabiri, the president’s parliamentary deputy, reportedly facilitated appointments for his own relatives, including his brother-in-law and brother, to key positions.
The revelations are a sharp contrast to Pezeshkian’s campaign rhetoric. In addition to pledging a transparent and merit-based government, he promised to end internet restrictions, consult citizens before price hikes, and enact broad reforms.
However, internet access remains heavily restricted, and price increases have continued, fueling frustration among citizens who expected a reduction of the annual 40% inflation rate.
The move by Pezeshikian is not new in Iran’s political arena. Former president Hassan Rouhani faced backlash for appointing his brother, Hossein Fereydoun, as a special aide involved in nuclear negotiations. Fereydoun was later arrested on corruption charges.
Rouhani’s son-in-law, Kambiz Mehdizadeh, also faced nepotism allegations after being named Head the Geological Survey of Iran.
Mahmoud Ahmadinejad’s tenure also saw the appointment of several family members, including his late brother Davoud as head of the Presidential Inspection Organization and his son’s father-in-law Esfandiar Rahim Mashaei to influential advisory roles. These appointments sparked controversy and accusations of consolidating power through personal networks.
The controversies surrounding family appointments in Pezeshkian’s administration come at a critical time for Iran, as economic challenges and public dissatisfaction grow.