ERBIL, Kurdistan Region - The Financial Action Task Force (FATF), a Paris-based intergovernmental watchdog that sets global standards for combating financial crime, said on Friday that Iran would remain on its blacklist over persistent shortcomings in tackling money laundering and terrorist financing, urging countries to maintain countermeasures against Tehran amid mounting economic pressure.
FATF said in a report that Iran had failed to address most of the deficiencies identified in an action plan agreed in 2016.
Iran has been subject to FATF countermeasures since February 2020, restricting its access to international financial services and complicating transactions with foreign banks.
In its latest assessment, the watchdog called on countries to maintain measures against Iran, including restricting financial transactions, limiting business relationships and preventing the establishment of new correspondent banking relationships.
The FATF also urged countries to restrict the establishment of branches and subsidiaries of Iranian financial institutions, while ensuring that legitimate humanitarian assistance, food and medical supplies, and personal remittances are appropriately handled.
Despite the continued restrictions, the watchdog acknowledged some progress by Tehran.
"Iran has made limited progress on technical compliance by developing a framework to receive international asset freezing requests," the FATF said.
However, it warned that Iran's financial regulatory framework continued to have “fundamental deficiencies,” particularly in criminalizing terrorist financing and establishing mechanisms to freeze assets linked to terrorism.
The watchdog also raised concerns over Iran's implementation of international conventions against transnational organized crime and terrorist financing, saying several reservations adopted by Tehran were inconsistent with FATF standards.
It further highlighted financial risks associated with Iran's nuclear activities, citing United Nations Security Council resolutions concerning Tehran's compliance with its nuclear non-proliferation obligations.
Nevertheless, the organization acknowledged Tehran's renewed engagement with the international body.
"The FATF acknowledges Iran’s re-engagement with the FATF as Iran aims to address deficiencies in its AML/CFT regime and calls on Iran to make more progress to address these deficiencies," it said.
The watchdog warned that Iran would remain on its list of high-risk jurisdictions until it completed its action plan, adding that further steps could be considered if Tehran failed to demonstrate additional progress.
The announcement comes as Iran faces mounting economic pressure from its ongoing conflict with the United States and a US naval blockade affecting its oil exports.
A Reuters investigation published on Thursday reported that Iranian military agencies had used complex procurement networks to acquire equipment despite US restrictions.
According to the investigation, at least $2 billion worth of military equipment had entered Iran since January 2025, with 97 percent of the transactions reviewed by Reuters settled "without currency transfer."
The findings highlighted Tehran's use of alternative payment arrangements and overseas financial networks to obtain military supplies despite restrictions on conventional banking channels.
Iranian President Masoud Pezeshkian has repeatedly advocated greater cooperation with the FATF, arguing that unresolved financial restrictions are damaging the country's economy.
His position has faced opposition from hardline political figures who have resisted concessions over Iran's financial policies and international commitments.
Pezeshkian has also called for an end to the country's prolonged uncertainty over its relations with the international community.
He was recently quoted by Iranian media as saying that Iran must escape its indefinite “neither war nor peace” condition because “in uncertainty, you cannot plan.”
The president has also emphasized the need for economic reforms and changes to the distribution of government assistance based on households' financial circumstances.
Iran's economic difficulties have deepened amid rising inflation, international sanctions and disruptions to oil exports.
Earlier this month, Iranian authorities planned to remove around 15 million people from the country's food subsidy program as part of efforts to redirect government assistance.
Greater compliance with FATF standards could help Iran improve access to international financial services, although it would not automatically remove US sanctions or other restrictions imposed on Tehran.
