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In recent years, the Financial Action Task Force (FATF), the global standard setter for anti-money laundering and counterterrorist finance (AML/CTF), has been increasingly deployed as a response to global threats. Barely a high-level summit passes without FATF being called upon to react to terrorist financing, financial inclusion, human trafficking and scandals such as the Panama Papers. For policymakers, FATF has become a sort of figurative sonic screwdriver' the tool to which Dr Who turns to deal with the toughest of challenges as they seek to strengthen the integrity of the financial system.

Perhaps the toughest of all challenges FATF has taken on thus far is seeking to foster conditions that encourage international financial institutions to re-engage with Iran following the lifting of nuclear-related sanctions in January 2016. In June last year, FATF entered into the spirit of the Joint Comprehensive Plan of Action (JCPOA) agreed between Iran and the five permanent members of the UN Security Council plus Germany (the P5+1). The JCPOA endeavoured to grant economic benefits to Iran in return for the suspension, control and monitoring of its nuclear programme by reintegrating its economy into the global financial system via the lifting of sanctions. Restoring banking relations severed for many years by the previous sanctions regimes is critical to Iran securing a tangible financial dividend in return for its respect of the JCPOA provisions.

Since Implementation Day on 16 January last year, the challenge of re-establishing these ties has been evident as banks, particularly the large global banks that facilitate international trade, have resisted political pressure to reintegrate Iran fully into the international financial system by providing financing and payment services to those international companies wishing to trade with the formerly sanctioned state.

While sanctions were clearly the major impediment to Irans economic activity, other barriers to reintegration remained, including the outdated nature of the governance and standards of Irans banks. But perhaps the most significant hurdle faced by Tehran was its standing with FATF, an organisation that continued to include Iran on its blacklist alongside North Korea. FATFs Public Statement following its February 2016 plenary noted that it remained particularly and exceptionally concerned about Irans failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. Irrespective of whether Iran is sanctioned, no credible financial institution would choose to deal with a country with such a record. As the International Monetary Fund had noted in December 2015 shortly before Implementation Day, bolstering the countrys AML/CTF framework would facilitate the re-integration of the domestic financial system into the global economy.

Nevertheless, and moving beyond its traditional technical work of raising standards and assessing effective implementation around the world, FATF chose in June last year to suspend counter-measures for example the need to conduct additional in-depth due diligence, limiting business relationships or prohibiting the establishment of financial subsidiaries in the country in question against Iran for twelve months despite AML/CTF deficiencies including continued concerns about terrorist financing risks emanating from the country. For some, this action was consistent with the spirit of the JCPOA; for others, it was a politically motivated move from a task force that should, at all costs, remain apolitical and objective in its efforts to maintain the integrity of the financial system.

Still, at the latest plenary meeting FATF decided that In light of Irans demonstration of its political commitment and the relevant steps it has taken in line with its Action Plan [it will] continue the suspension of counter-measures. Yet despite these encouraging words, Irans actions have not been sufficient to remove it from the blacklist alongside North Korea. Could FATF have done otherwise? Moving Iran off the blacklist while FATF remained concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system would have made a mockery of FATFs system. But, conversely, recommending the reimposition of countermeasures would have confirmed the suspicions of those in Tehran who criticise Iranian President Hassan Rouhanis governments engagement with FATF. One can only imagine how President Donald Trump would have exploited such a decision to support his hard-line rhetoric against Tehran; the perceived snapback of sanctions, FATF-style, is surely something the US president would have applauded.

So, where does this leave the prospect of further financial sector integration for the Iranian economy? FATF has wisely removed the time limit it applied in June last year on progress it expects Iran to make, an unhelpful deadline that only encouraged financial institutions to adopt a wait and see attitude to re-engagement with Iran and therefore served no constructive purpose. Still, the enduring double-speak in FATFs recent statement seems unlikely to enhance Irans access to the international financial system. It is hard to overlook the strong warnings FATF continues to make to states to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with Iran given the ongoing deficiencies in its AML/CTF framework.

Any progress that Iran has made in improving the integrity of its financial system is to be welcomed. However, against a background of combative messages from Washington, continued concern of banks that they may inadvertently fall foul of remaining non-nuclear-related sanctions, the ongoing and largely unhelpful Iranian involvement in Syria and Tehrans decision to take sides in the current spat between Qatar and its neighbours, it seems doubtful that FATFs latest announcement will make any difference to the caution displayed by banks worldwide when faced with Iranian business opportunities.

BANNER IMAGE: Tehran's financial district. Courtesy of ninara/Flickr

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Judgement Postponed: The Financial Action Task Force Extends Iran's Lifeline - RUSI Analysis

Anti-Israel protesters in Iran unveiled a digital countdown showing 8,411 days to what they said would be the "destruction of Israel", as part of an annual rally in support of the Palestinian Territories.

The time frame appears to stem from comments made in 2015 by Iran's supreme leader, the Ayatollah Ali Khamenei, who said there would be "nothing" left of Israel by the year 2040.

Demonstrators chanted death to Israel as crowds assembled on Friday forAl-Quds day (Arabic for Jerusalem), whilepeople touted placards condemning Israel, Saudi Arabia and the US. The Revolutionary Guard took the opportunity to display its ballistic missiles, including the type which was used in Syria where the government claimed it killed a "large number of terrorists, although agencies could not verify the report.

The display was in Tehran's PalestineSquare, and state media claimed that more than one million people participated in the demonstrations.

Similar protests popped up across Iran, with protesters condemning Israelis occupation of Palestinian territories and burning the Israeli and American flags.

President Hassan Rouhani and Parliament Speaker Ali Larijani were amongst the officials who attended the demonstration.

In a speech to marching people who were going to Friday prayers at the Tehran University grounds, IranianTasnim News Agency reportsMr Larijani said: Israel is the most malignant terrorist in history.

Iranian Protesters unveil a digital countdown showing 8411 days until Israel is destroyed (AP Photo/Ebrahim Noroozi)

[Israel is the] mother of terrorism, he added.

Iran is fiercely critical of the country for its allegedhuman rights violations, and President Rouhani told the IRNA news agency that Israel supports terrorists in the region.

Tensions between Sunni Saudi Arabia and Shia Iran have intensified as of late, in part due to theological disagreements, as well as Donald Trump'sincreasing support of the former, and condemnation of the latter.

Last month Saudis King Salman called Iran the spearhead of global terrorism.

Continued here:
Iranian protesters unveil countdown showing 8411 days 'to the destruction of Israel' - The Independent

Pakistan's claim this week that it shot down an Iranian drone that had crossed into its airspace is heating up tensions already on the rise over cross-border skirmishes and diplomatic rifts over alleged militancy, analysts say.

"This is an unfortunate situation as it will only increase the mistrust which already exists between Pakistan and Iran," Zubair Iqbal, an analyst at the Washington-based Middle East Institute, told VOA.

Both sides of the porous 900-kilometer (560-mile) Pakistan-Iran border have long been rife with drug smugglers, separatists and militant movements. The drone apparently went down Tuesday in violence-racked Balochistan, Pakistan's southwestern province, where insurgents and nationalists are active in launching attacks against government interests and neighboring countries.

"The drone was hit by the Pakistan Air Force as it was unidentified and flying around 3-4 kilometers inside Pakistani territory," Pakistan's Foreign Ministry said in a statement.

No comment from Tehran

The Iranian government remained quiet about the incident, although some Iranian media outlets have quoted Pakistani newspapers on the drone claim.

An anti-Iran Sunni Muslim militant group Jaish al-Adl, or the Army of Justice claimed responsibility for an attack in Iran last month that killed 10 Iranian border guards.

Iran responded by warning Pakistan it would hit militant hideouts inside the fellow Muslim country if it failed to curb militancy. Consequently, Iran and Pakistan formed a joint commission in May to secure borders and control militancy.

Iran also beefed up security measures along the boundary with Pakistan and frequently has used drones to monitor the region since the attack.

The "IRGC [Islamic Revolutionary Guard Corps] Air and Space force has been using the early-generation drones to track drug traffickers and militant groups such as Jaish al-Adl on the eastern borders with Pakistan," Babak Taghvaee, a military expert based in Malta, told VOA.

Iqbal suggested the drone might have entered Pakistan by "mistake" because "there's a tension in the region, and all the countries are trying to enhance their intelligence capabilities."

Iran-India ties

Geopolitical developments in the region also have strained relations.

Iran's robust ties with India make Pakistan uncomfortable. Islamabad accuses Iran of allowing its soil to be used by Indian spy agency RAW to sponsor, recruit and arm separatists and insurgents in Balochistan and infiltrate Pakistan with Indian spies via the border with Iran.

Iran seems exasperated about Jaish al-Adl's alleged hideouts in Balochistan and about Pakistan's alleged role in promoting Sunni-Shi'ite proxy wars in the region.

The diplomatic rift seemed to widen further after Pakistan accepted a role in the 39-nation Islamic Military Alliance to Fight Terrorism initiated by Iran's regional rival, Saudi Arabia. Pakistan's former army chief, General Raheel Sharif, was named to lead the alliance, which Iran sees as a move against it.

While Pakistan has tried to remain neutral in the recent dispute between Qatar and Saudi Arabia, and even ventured into an unsuccessful effort to negotiate a settlement, the country is seen to be leaning toward Riyadh. Security analysts point out that Pakistan didn't hesitate to gun down the Iranian drone.

"Pakistan never seemed to have any issues with Iranian drones [in the past]. Gunning down an Iranian drone might be an effort to prove loyalty to Riyadh," Taghvaee said.

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Will Downing of Tehran Drone Hurt Pakistan-Iran Relations Further? - Voice of America

House Speaker Paul Ryan of Wis., right, and House Majority Leader Kevin McCarthy of Calif. walk to a security briefing for lawmakers on Capitol Hill in Washington on June 14, 2017, after a gunman opened fire wounding House Majority Whip Rep. Steve Scalise of La., and others during a Congressional baseball practice in Alexandria, Va. J. Scott ApplewhiteAP

(WASHINGTON) House Republicans are stalling a hugely popular bill to slap Iran and Russia with economic sanctions over a procedural issue that they're blaming the Senate for creating.

"The problem is the Senate screwed up," Majority Leader Kevin McCarthy told reporters Wednesday.

At issue is a constitutional requirement that legislative measures involving revenue originate in the House. The sanctions bill was crafted by the Senate, which passed the measure overwhelmingly last week 98-2 and then sent it to the House for action.

McCarthy said the Senate can repair the bill or the House can write its own sanctions legislation. But he didn't provide a timetable for either pathway or specify the provisions in the Senate bill that caused the breach.

Democratic lawmakers and aides are mystified over the delay. They fear the House is seeking to water down the Russia-related portions of the bill at the Trump administration's behest. The sanctions aimed at Russia are intended to punish Moscow for meddling in the presidential election and for its aggressive actions in Ukraine and Syria.

Secretary of State Rex Tillerson has offered only lukewarm support for the Russia sanctions. He said during congressional testimony that President Donald Trump needs to have "the flexibility to adjust sanctions to meet the needs of what is always an evolving diplomatic situation" with Russia. An overly aggressive sanctions bill, Tillerson has suggested, could lead Moscow to shut off potentially promising talks with Washington.

Senate Minority Leader Chuck Schumer, D-N.Y., accused House Republicans of dredging up the procedural issue, known in bureaucratese as a "blue slip," to provide cover for a president who has been far too soft on Russia and its president, Vladimir Putin.

"What has Russia concluded from all this?" Schumer said. "Putin now knows that he will not suffer any consequences for disinformation campaigns, buzzing our ships and planes, for threatening our European allies, for cyberattacks, energy coercion, or his ongoing support for Russian separatists in Ukraine."

In addition to hitting Russia and Iran with additional financial penalties, the bill would give Congress a much stronger hand in determining Russia sanctions policy. The bill would require a 30-day congressional review period if Trump attempts to ease or end penalties against Moscow.

The Senate bill also would impose mandatory sanctions on people involved in Iran's ballistic missile program and anyone who does business with them. The measure would apply terrorism sanctions to the country's Revolutionary Guards and enforce an arms embargo.

Sen. Bob Corker of Tennessee, the Republican chairman of the Foreign Relations Committee and one of the bill's primary authors, cast the party differences over the sanctions bill as minor and easily fixable.

"I see no reason to believe that this is anything other than a parliamentary issue that needs to be resolved," Corker said. "The whole issue is so minute."

Rep. Eliot Engel of New York, the top Democrat on the Foreign Affairs Committee, has called for the House to immediately hold an up-or-down vote on the sanctions legislation.

Engel's staff on Wednesday posted on Twitter a recounting of a similar "blue slip" situation in 2014 that was handled speedily by the House. The Senate passed a sanctions bill to punish Russia for its invasion of Ukraine. The legislation arrived in the GOP-led House and hit the same procedural snag. But instead of stalling the bill, the House simply introduced identical legislation that fixed the problem and passed it the same day.

"Republican leadership shouldn't allow this bill to fade into history," the staff wrote of the new sanctions legislation. "A blue slip problem is a procedural hiccup, not an excuse for delaying a critical piece of legislation."

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'The Problem Is the Senate Screwed Up.' House Stalls Russia-Iran Sanctions Bill - TIME

Hailed as a diplomatic breakthrough at its signing in July 2015, Irans nuclear agreement with leading members of the international communityformally known as the Joint Comprehensive Plan of Action (JCPOA)has achieved some notable short-term successes, many in Irans favor. Most, not all, of Irans nuclear activities are either frozen or highly circumscribed. In exchange, Iran is reaping the benefit of receipt of billions of dollars in previously frozen assets as well as a return to international commerce where Europe and China, among others, are seeking to invigorate trade and investment with the theocratic regime. This will be a boon for Irans chronically mismanaged and struggling economy.

The bad news is that it is misleading to conclude that Irans nuclear ambitions have been shuttered or that those ambitions will no longer pose a threat to the security and stability of the Middle East or beyond. This is because the agreement has finite limits, ranging from 10 years to 15 years depending on the issue.

For the time being, Iran has incentives to abide by the agreements terms, beginning with its financial windfall and reintegration into the international community. None of that has lessened Irans fervor for supporting terrorism or the murderous regime of Syrian President Bashar al-Assad.

A recent report from the highly credible Institute for Science and International Security takes note of a statement from Ali Akbar Salehi, the director of the Atomic Energy Organization of Iran. According to the Institute report and quoting Salehi, Iran has the capability to initiate mass production of advanced centrifuges on short notice. Centrifuges are the machinery that enriches uranium and creates the fissile material needed to make a nuclear weapon.

While Iran may make the specious claim it has the right to do so in coming years, on practical grounds there should be no reason for Iran to devote resources to this activity if it does not intend, as it so claims, to pursue a nuclear weapons capability. Mass production of advanced centrifuges, if carried out, would give Iran a decided advantage if it wanted to shorten a rush to a nuclear weapon.

Similarly, Iran continues to develop its ballistic missile program, an element of its defense regime that was left unhindered in the nuclear negotiations except for the fact that existing United Nations sanctions on the missile program are to be lifted in about six years.

The capability to deliver nuclear weapons to targets is all important; Iran recognizes this requirement and makes no secret of its commitment to maintaining and advancing its program. At present, Iran has ballistic missiles capable of attacking targets throughout the Middle East and probably beyond.

In addition, Iran also continues to defy repeated international requests to come clean on suspect activities at the Parchin military facility where suspicions for years have been high that Iran carried out high explosives testing that can only be useful in developing a nuclear weapon.

Much of the international community would be pleased to see these and related questions not resurface but they are inconvenient truths that if left unaddressed may well lead to a future crisis.

The mechanism to take up these issues is the Vienna-based International Atomic Energy Agency. Most nations around the globe are IAEA members and they merit a clear understanding of Irans activities, in no small measure to convince them that the international community can deal with Iran successfully and that Iranian actions can be monitored credibly.

That conclusion cannot be reached with credibility until much more is known about the pace and scope of Irans nuclear and missile activities. Until those questions are resolved it is fair to conclude that Irans actions since the signing of the JCPOA are troubling and raise new suspicions.

Jack Caravelli served on the White House National Security Council staff from 1999-2000.Sebastian Maier is an associate with the London-based corporate intelligence firm GMTL.

The views expressed by contributors are their own and are not the views of The Hill.

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Has Iran laid the groundwork to develop nuclear weapons on a moment's notice? - The Hill (blog)