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Iran Poses Multiple Risks


Iran’s clerical regime has been criticized by the Paris-based Financial Action Task Force, or F.A.T.F., a 32-nation international organization which develops standards for combating money-laundering and terrorist financing. The group issued a statement saying that Iran has failed to combat money laundering or counter the financing of terrorism. That failure, said the task force, “represents a significant vulnerability within the international financial system.”

U.S. Treasury Secretary Henry Paulson called the action by the task force “a dramatic step” that highlights “the significant threat Iran poses to the international financial system.” Mr. Paulson said, “As the premier standard-setting body for countering terrorist financing and money laundering, the F.A.T.F.’s expression of concern toward Iran speaks volumes. . . .In the wake of two unanimous U.N. Security Council resolutions addressing Iran’s nuclear and ballistic missile programs,” said Mr. Paulson, “Iran’s extensive deceptive financial conduct, and the statements issued by the F.A.T.F., financial institutions should be mindful of the extraordinary risks that accompany doing business with Iran.”

U.S. Secretary of State Condoleezza Rice also commented on the financial consequences of Iran’s destructive policies:

“The fact that Iran is under Chapter Seven [Security Council] resolutions means that there are those who are making decisions based on reputational risk and investment risk to stop doing business with Iran. And it is also the case the United States does not intend to allow Iran to use the international financial system to pursue ill-gotten gains from proliferation and/or terrorism. Therefore, under American law, when we find that Iranian entities or individuals are engaging in such activities, we will sanction them.”

Secretary of State Rice says that the Iranian government has a “well-established history” of deceit and is pursuing technologies that could give it the ability to make nuclear weapons.

In the wake of the statement, some governments are consulting with their financial institutions and considering follow-up advisories on the money-laundering risks posed by Iranian banks. Those actions could have a chilling effect on financial links to Iran. These developments are yet another indication of Iran’s increasing financial isolation, and the escalating risks of doing business with Iran.

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