Amendments to the Iranian FATF (Financial Action Task Force) or, in Iran preferably known as CFT (Combating the Financing of Terrorism) Law of the I.R of Iran were finally approved by the “Guardian Council” on Aug. 1st, 2018 and have been notified by the president to the related ministries on Aug. 11th. Due to the importance of these actions for every economical and political active community (many of them being the users of this portal) PIMI has had an analysis in Persian and this is the English translation of the same, aiming to evaluate the new Iranian efforts verses the international standards on financing of terrorism activities.
After a great deal of tug of war, back and forth and Supreme Leader’s challenges, the Iranian Government administrative approved the bill for making amendments to the CFT law on Oct. 29, 2017, which then amendments to the CFT law were finalized and passed. Thanks to the “continuous efforts of the Government” that have been acknowledged by most members of the FATF, also reflected in FATF’s Public Statement.
These amendments were one of the main pillars of Iran’s Action Plan, followed by amendments to the AML (Anti Money Laundering) law and accession to Palermo and CFT conventions. The purpose of this article is to evaluate the new law vis-à-vis international standards on combating financing of terrorism. But beforehand, we may revise some facts about the approval pathways of the Iranian legislation.
Although the laws in Iran are not usually amended soon after their ratification, but, Iran’s CFT law was approved only after 1 year and 9 months before the start of amendment procedure by the Government, which is rather unprecedented in the history of the country’s legislation during 4 years after revolution. In order to show Iran’s good faith and determination in combating with the financing of terrorism, the Government and all responsible bodies acted as fast as possible. Because as an exceptional case the CFT law, covers sufficient and details that were included to ensure Iran’s CFT law is in compliance with international standards. Normally, the important and general points in other legislation are covered by the main law and details are left for executive regulations.
Though, it might be possible that there are still some details that are missing, which should be covered in the related implementing regulations. However, at this point, it should be noted that there are fewer countries whose CFT laws can get the “Compliant” rating in FATF’s assessment.
According to the latest available FATF assessment (July 2018) a revision indicates that out of 11/50 countries have been “compliant” with FATF recommendation 5, while the other 39/50 members of FATF and FSRBs (FATF- Style Regional Bodies) have only rates of “Partially Compliant” or “Largely Compliant”. The rec. no. 5 considers, criminalizing terrorist financing, and is one of the the main focal points of the CFT law.
The FATF’s R5 and its interpretative notes define that: “Terrorist financing offences should extend to any person who willfully provides or collects funds or other assets by any means, directly or indirectly, with the unlawful intention that they should be used, or in the knowledge that they are to be used, in full or in part: (a) to carry out a terrorist act(s); (b) by a terrorist organization; or (c) by an individual terrorist”.
It also adds: “Terrorist financing offences should extend to any funds or other assets, whether from a legitimate or illegitimate source”.
An unofficial translation of the article 1 of the the Iran’s amended CFT law shows that; The focal point of this article, which is to criminalize the financing of terrorism, is in line with FATF standards. The objection raised by FATF was that the body interpreted from the former law that only financing of terrorists who carry out terrorist activities was criminalized and so, they asked for financing of terrorism offence not to be linked to any specific terrorist acts. Specifying the three categories of “terrorist activities”, “terrorist individuals” and “terrorist organizations” has totally removed any ambiguity, which meets the requirement of the FATF Action Plan.
The article 1 says: “Providing or collecting funds or assets, by any means, whether from a legitimate or illegitimate source and or using financial resources derived from [some examples are mentioned here: author] in full or in part, for carrying out any economic activity by oneself or another to carry out the following activities [a list of terrorist activities are mentioned in the law: author], or to provide them to terrorist individuals or terrorist organizations is considered financing of terrorism and is a crime”. Of course some examples and a list of terrorist activities have been mentioned in the context of the above article.
Furthermore, FATF requests countries to criminalize financing of terrorism on the basis of Article 2 of the Terrorist Financing Convention that states:
“Any person commits an offence within the meaning of this Convention if that person by any means, directly or indirectly, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out:
(A) An act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex;
This item refers to nine conventions and each of these conventions reflects one category of terrorist activities (like hijacking of airlines, hostage activities, unlawful acts against the safety of maritime navigation, etc.). Though many countries have joined only to fewer conventions, Iran has already joined 8/9 of these conventions and has introduced these terrorist activities in paragraphs (b) and (c) of Article 1 of the CFT law.
(B) Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organization to do or to abstain from doing any act”.
With respect to this item, the item (a) of the Article 1 of Iran’s CFT Law could be read as follow:
“Committing or threatening to commit any violent act, including murder, violent act causing serious body injuries, unlawful hijacking and taking hostages and/or knowingly committing a violent act against the communities or endangering their lives or freedom in order to influence the policies, decisions and measures of the Islamic Republic of Iran, other countries and or international organizations”.
Financing such measures are considered financing of terrorism. In the former law, reference was made to international organizations that had an office in Iran. This limitation has now been removed. Therefore, this requirement of the FATF Action Plan has also been met.
FATF’s interpretive note to Recommendation 5 stipulates that:
“It should also be an offence to attempt to commit the offence of terrorist financing … Terrorist financing offences should not require that the funds or other assets were actually used to carry out or attempt a terrorist act(s)”.
Notes 1 and 2 of Article 1 of the CFT law cover these issues, which state that any person who collects or provides funds or assets for the purposes mentioned at the outset of the article, and before these funds and assets are put to use or presented to terrorist individual/s and organization/s, the intention is suspended due to factors beyond one’s control [that person] is considered the financier of terrorism. Note 2 determines the punishment for such a person.
Besides, it should be noted that the issue of attempting a crime has been extensively covered by Iran’s Penal Code, Section Three (Crimes), Chapter 1 (Attempting Crimes) and this chapter applies to all crimes defined in all other laws, including the CFT law.
Furthermore, the interpretive note to Recommendation 5 could be read as follow:
“Terrorist financing offences should apply, regardless of whether the person alleged to have committed the offence(s) is in the same country or a different country from the one in which the terrorist(s)/terrorist organization(s) is located or the terrorist act(s) occurred/will occur.”
This has been covered in note 3 of Article 1 of CFT law, which states: Prosecution under the title of financing of terrorism against any person will be carried out based on this law, regardless of the place where the crime is committed or where the offender is located and what his/her nationality is.
In the former law, note 2 of Article 1 stated that the acts of liberation groups fighting against foreign occupation, etc. are not considered financing of terrorism. In the amended law, the focus is on introducing terrorists rather than the exceptions.
Based on United Nations Resolution 1373, a national committee shall be established, which will publish the national list of terrorists and decide about related details. The national committees of each country have their own criteria for their designations at the national level and Iran’s Supreme National Security Council will act accordingly based on the Iranian Constitution and its Article 154.
The interpretive note to Recommendation 5 asserts that:
“Effective, proportionate and dissuasive criminal sanctions should apply to natural persons convicted of terrorist financing.”
Article 2 of Iran’s CFT law introduces a range of punishments starting from the harshest penalty to imprisonment, fines and confiscation of funds and assets. An important point is that as per the FATF Action Plan, “confiscation of the property of corresponding value” has also been covered in this article, which meets one of the items of the Action Plan.
The interpretive note to Recommendation 5 also points out that:
“Criminal liability and sanctions, and, where that is not possible …, civil or administrative liability and sanctions, should apply to legal persons. Such measures should be without prejudice to the criminal liability of natural persons.”
Article 4 of the CFT law mentions that legal persons who commit these crimes will be punished as per the Penal Code. In the Penal Code, there is a thorough range of punishments, including dissolution, confiscation of property, lifetime prohibition on pursuing certain occupational and social activities, fines, etc. for legal persons. It has also been expressly mentioned that this does not preclude punishment of natural persons.
Freezing, seizure and confiscation are very important issues for a successful combating financing of terrorism regime. These are mainly covered in Recommendation 4 and its interpretive note.
The quotations, reproduced below from Recommendation 4 (and other recommendations), are based on the latest version of FATF recommendations (2012). It should be pointed out that Iran’s Action Plan is based on the older version of recommendations. So complying with the former “special recommendations” should be technically adequate for Iran to claim it has met the requirements.
However, in order to have a more powerful and strong CFT law, Iran has attempted to align its CFT law with the latest version of standards. The former generation of recommendations included fewer details in this respect. For example, the Special Recommendation 3 asserted that:
“Each country should adopt and implement measures, including legislative ones, which would enable the competent authorities to seize and confiscate property that is the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organizations.”
Recommendation 4 (2012) asks countries to adopt legislative measures “to enable their competent authorities to freeze or seize and confiscate the following, …: (a) property laundered, (b) proceeds from, or instrumentality used in or intended for use in money laundering or predicate offences, (c) property that is the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organizations, or (d) property of corresponding value.”
Pointing to above examples and its interpretations show that the Iranian Government is trying to show its obligations to the international laws and requirements and so the Iranian trade counterparts in any countries of the world should be satisfied that their business with the private sector of Iran does not necessarily mean cooperation with a terrorism supportive community.
In the whole globe, many nations are thinking different from their Governments.
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