For Trump, the debate in Iran around tackling financial crimes presents an opening

The acronym FATF probably doesn’t mean much to most people around the world. It refers to the Financial Action Task Force, a Paris-based intergovernmental organisation seeking to tackle money-laundering and financing of terrorism. But this relatively obscure body is almost a household name in Iran given its central role in political debates in the country.

Alongside North Korea and Myanmar, Iran is one of only three countries on the FATF’s dreaded “blacklist”. The debate that pervades the country is about what it should do to get off this list.

This issue is important on its own, but the passionate debate it causes signals that something even larger is at stake. The FATF issue is part of a broader debate: how much is Iran willing to open up to the rest of the world? And ultimately, will it talk to the US and seek a new deal with President Donald Trump that could help lift sanctions on their country?

Many see the FATF debate as a dress rehearsal for that bigger question. But the issue matters on its own, too. Iran’s presence on the blacklist prevents it from many financial transactions, not just with western countries but even in the Global South and with Russia and China. Iranian politics has been divided over the FATF for many years. The reformists and centrists wish for Iran to take the necessary measures to get off the list, while the hardliners are adamantly opposed to any such action.

This debate had been dormant for a while.

The FATF had given Iran a list of 41 recommendations, most of which the administration of former president Hassan Rouhani had implemented between 2013 and 2017. What remained outstanding was whether Iran should join two key international treaties – the UN Convention against Transnational Organised Crime and the Terrorism Financial Convention. The proposed entry should have been uncontroversial, as almost every country – with the exception of Iran, Somalia and Tuvalu – is a signatory.

In 2018, when Iran’s Parliament was for the most part in political congruence with Mr Rouhani, it voted to ratify the conventions. But the Guardian Council, a body loyal to the country’s supreme leader, Ayatollah Ali Khamenei, vetoed both bills, with Mr Khamenei himself saying that Iran’s attempts to placate the FATF were “unacceptable”. As he has the final voice, this seemed to have put the issue to rest. In 2020, Iran was put back on the blacklist, having been suspended from it in 2015.

However, Iranian politics has shifted in the past few months – and so has Mr Khamenei. President Masoud Pezeshkian ran in last year’s election on a pledge to get Iran off the blacklist, and he clearly sees this as a matter of high priority – as do key members of his Cabinet.

With Mr Khamenei recently allowing the matter to be re-visited, the first step is for the Expediency Council, a body tasked with adjudicating policy disagreements between Parliament and the Guardian Council, to deliberate on it. Legally, the EC can overrule the Guardian Council’s 2018 objections and pave the way for Iran to join the conventions, but only after its own members cast their vote.

There is, of course, plenty of opposition to Iran re-engaging with the FATF. This much was evident when the hardliner-dominated Parliament debated the issue in a closed session last week. The heads of national security and legal committees reportedly opposed acceding to the FATF’s demands.

According to one hardline MP, even deputies in the Ministry of Intelligence who attended the parliamentary proceedings were opposed. Abbas Goudarzi, an MP with influence, said that Iran’s financial problems were due to US-led sanctions and joining the conventions wouldn’t solve them. He also accused the FATF of “wanting to disrupt the strategic will of the Islamic Republic”.

However, there is also a broad coalition that favours engagement.

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The centrist newspaper Jomhouri Eslami has strongly endorsed Dr Pezeshkian’s position and noted that it has the support of much of the business and banking sectors. The economy-focused website Eco Iran has long been heavily critical of the establishment’s refusal to accede to the FATF’s demands, calling it a “self-sanction”. It points out that “many entrepreneurs, manufacturers, merchants and exporters” believe joining the two conventions would be necessary for solving Iran’s economic problems.

Many prominent figures from the private sector have spoken to the media to support this position. If the FATF issue is resolved, Iran’s efforts to export petrochemical products would get a significant boost, said Vahdat Shabazi, a member of Iran’s union of oil and gas exporters.

Even a number of conservatives know that this is the way the wind is blowing. Speaker Mohammad Bagher Ghalibaf spoke alarmingly this week about Iran’s economic malaise, pointing out that its military capabilities “will not be sustainable” unless its economy is turned around.

For his part, National Security Adviser Ali Akbar Ahmadian urged his compatriots against “falling into dichotomies, such as opposing or supporting the negotiations, or supporting or opposing the FATF”. Mr Ahmadian, who also claimed that Iran has never wanted to destroy Israel or go to war with it, was striking an old tune – that accepting negotiations shouldn’t be seen as treason or defeat.

The re-opening of the FATF debate is one of the many signs that Iran is getting ready to talk to the US. It knows that, ultimately, this is what it needs to do. And whenever the country appears ready to give in to western demands, its high-ranking officials start airing such positions.

Earlier this week, Mr Trump signed a memorandum restoring his policy of “maximum pressure” against Iran, yet he also made it clear that he is willing to talk to Dr Pezeshkian and that he wants a deal with Tehran. In other words, both sides are getting into position for negotiations.