Congress Seeks to Ban Iran From International Financial System

Lawmakers encourage blacklist as a result of Iran's continued money laundering efforts and financial support to terror groups

President Hassan Rouhani in front of a portrait of Iran's Supreme Leader Ayatollah Ali Khamenei
President Hassan Rouhani in front of a portrait of Iran's Supreme Leader Ayatollah Ali Khamenei / Getty Images
June 21, 2018

Leading members of Congress are urging the Trump administration to pressure world leaders to ban Iran from accessing international financial systems following revelations the former Obama administration secretly helped Tehran skirt international sanctions to potentially access billions in hard currency, according to a letter sent Thursday to the Treasury Departments.

Sen. Rob Portman (R., Ohio) and Rep. Ed Royce (R., Calif.) are petitioning the Trump administration to urge members of the Financial Action Task Force (FATF), an international organization formed to combat money laundering, to put Iran back on its blacklist as a result of the country’s ongoing support for terrorism.

Iran was taken off the FATF blacklist as part of a package of incentives provided by the Obama administration to Iran in order to help pave the way for the landmark nuclear deal killed by President Trump earlier this year.

Lawmakers are demanding that Iran be put back on FATF's blacklist as a result of its continued money laundering efforts and financial support to terror groups across the Middle East, including Hamas, Hezbollah, and other militants operating in the region.

Portman and Royce—chair of the Senate Permanent Subcommittee on Investigations and chair of the House Foreign Affairs Committee, respectively—say that recent revelations from a congressional investigation into the Obama administration’s secret diplomacy on Iran's behalf make it all the more important for the current administration to take concrete action against Iran’s terror support networks.

FATF members will meet next week in Paris, where the lawmakers hope to see this issue raised by the Trump administration.

"This upcoming FATF session is particularly important following the recent release of the Senate Permanent Subcommittee on Investigations' report exposing new details about the previous administration's efforts to give Iran access to the U.S. financial system, including through consideration of a general license for the 'conversion of two non-USD currencies through the limited use of the USD as an intermediate currency,'" the lawmakers write in the letter, which was sent to Treasury Secretary Steven Mnuchin.

"In the push to save its deeply flawed nuclear deal, the Obama administration unwisely backed a wide range of economic relief for Iran—including through the FATF," the lawmakers note. "In June 2016, the administration supported the FATF’s decision to suspend 'counter-measures' against Iran for one year, following Tehran's submission of an Action Plan to the FATF to address deficiencies in its anti-money laundering/counter-terrorist financing policies."

Restrictions on Iran are still being lifted every six months by FATF, despite Trump's decision to abandon the deal and pursue tough new sanctions on Tehran. The lawmakers argue that Iran must be placed back on FATF’s blacklist due to its increasing support for terror groups.

"For the last two years, the FATF has continued to suspend these countermeasures at six-month intervals, despite the continued dangerous and belligerent actions of the Iranian regime," the lawmakers write. "Many reports have indicated the regime in Tehran actually increased financial support for its terror proxies in the wake of the nuclear deal."

Iran has skirted restrictions on terror financing by designating its cash for groups such as Hamas and Hezbollah as "legitimate popular resistance against colonial domination and foreign occupation," the lawmakers note.

This has allowed "Iran to continue financing terrorist organizations, including Hamas and Hezbollah," according to the letter.

"It's time to recognize that Iran has failed to take the necessary steps—despite its pledges two years ago—to be removed from the list of FATF’s high-risk and non-cooperative jurisdictions," the letter states. "The United States should now utilize its influence within the FATF to reimpose countermeasures against Iran and protect the international financial system."