Iran Ratifies UN Anti-Terror Financing Treaty in Bid to Ease International Banking Restrictions

Iranian President Masoud Pezeshkian, who was elected on a platform promising improved Western relations, has taken a significant diplomatic step.

Iran has officially ratified legislation to join a United Nations convention against terrorism financing, according to local media reports on Wednesday. This move represents Tehran's hope to regain access to global banking systems, facilitate trade, and alleviate pressure on its sanctions-affected economy.

President Pezeshkian's administration is working to align the country with the requirements of the Financial Action Task Force (FATF), the international body responsible for monitoring money laundering and terrorist financing activities worldwide.

For years, Iran has provided support to organizations designated as "terrorist" groups by the United States, including Palestinian Hamas, Lebanon's Hezbollah, and Yemen's Houthis. The United States also classifies Iran's Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization.

Iran was placed back on the FATF blacklist of non-cooperative countries in 2020, joining North Korea and Myanmar. This designation, combined with severe international sanctions, particularly from the United States, has isolated Iran's financial sector and drastically limited its access to international banking.

"President Masoud Pezeshkian has proclaimed... the law on the Islamic Republic of Iran's accession to the International Convention for the Suppression of the Financing of Terrorism (CFT)," reported Tasnim news agency on Wednesday.

The decision to join the CFT treaty has sparked intense debate within Iran in recent weeks. Ultra-conservatives have expressed concerns that it could allow "enemy" countries to access sensitive economic and military information, particularly regarding Iran's support for Hamas, Hezbollah, and the Houthis.

The immediate economic impact of potential removal from the FATF blacklist remains unclear.

Iranian lawmaker Mahdi Shahriari recently acknowledged that Iran's non-membership in the FATF and CFT had "created difficulties" in trade, even affecting dealings with key allies Russia and China, according to the pro-labor news agency ILNA.

Reformists and moderates in Tehran view compliance with FATF standards as an essential step toward reconnecting with the international banking system and stabilizing the economy.

Nevertheless, international sanctions continue to be the primary obstacle to Iran's participation in global financial and trade activities.

Local media reported on Tuesday that an Iranian representative attended an FATF meeting in Paris for the first time in six years.

In September, the United Nations reimposed sanctions on Iran following months of tense diplomacy aimed at reviving nuclear talks. These negotiations had been derailed since June when Israeli and US forces conducted strikes on Iranian nuclear facilities.