As usual, Tehran will make surface-level concessions and play for time. But it will never commit to genuine counter-terrorism regulation.

The Islamic Republic of Iran is touting its decision to conditionally ratify the United Nations Convention for the Suppression of the Financing of Terrorism (CFT) as a diplomatic breakthrough and a signal that Tehran is finally ready to cooperate with the Financial Action Task Force (FATF). In doing so, it may regain access to the global financial system. The move is nothing of the sort, and no one should buy it.

Tehran’s move is a calculated deception. By ratifying the CFT only, as its statement says, “in accordance with the Constitution” and “[Irans’s] domestic laws,” the regime has effectively exempted itself from the treaty’s core obligations. That caveat allows Tehran to keep financing the same groups and militias that have made it the world’s foremost state sponsor of terrorism.

Under FATF standards, accession to the CFT must be unconditional. Iran’s self-declared reservation guts the convention’s central requirement: to criminalize the financing of terrorism “by any means, directly or indirectly.”

The Islamic Republic insists that organizations such as Hezbollah, Hamas, and Palestinian Islamic Jihad are not terrorists but “resistance movements.” Its conditional ratification formalizes that double standard. Iran claims compliance on paper while continuing to bankroll these groups in practice, a violation not just of the treaty’s spirit but of its plain text.

For more than four decades, Tehran has treated terrorism as a core instrument of its statecraft. The Quds Force of the Islamic Revolutionary Guard Corps (IRGC) runs an extensive global network that illicitly moves money, weapons, and personnel to its proxies in Lebanon, Syria, Iraq, Gaza, and Yemen. Hezbollah alone receives hundreds of millions of dollars annually from Iran.

FATF must judge Iran not by symbolic gestures but by measurable change: shutting down illicit money laundering channels, prosecuting their facilitators, and cutting off the IRGC from the international financial system. So far, Tehran has done none of that. Instead, it has refined its sanctions-evasion playbook through front companies, barter trade, and cryptocurrency transactions, all designed to keep the money flowing to its militias abroad.

The US Treasury has recognized Iran’s modus operandi for years under both Democratic and Republican administrations. As recently as July, the Treasury sanctioned illicit networks headed up by Hossein Shamkhani, son of the advisor to the Supreme Leader, Ali Shamkhani. Hossein’s networks control a large share of Iran’s crude oil exports. The Iranian population is the victim of his schemes. The profits substantially benefit his family and the regime, wealth used to buy exclusive properties around the world using purchased foreign passports that “allow them to travel undetected and hide their connections to Iran when conducting business overseas in furtherance of their corrupt schemes,” the Treasury noted.

Iran’s non-compliance extends beyond its Shia proxies. Documents seized from Osama bin Laden’s Pakistani compound in 2011 and declassified by US intelligence describe a pragmatic relationship between Tehran and Al Qaeda.

“Iran is our main artery for funds, personnel, and communication,” Osama bin Laden wrote in one note.

Al Qaeda operatives and family members moved through or resided in Iran under restrictive conditions, while the regime used them as bargaining chips and sources of leverage. These arrangements contradict the CFT’s central premise: that state parties must prevent and suppress the financing and facilitation of terrorist groups of any kind.

A government that has hosted or tolerated Al Qaeda affiliates cannot plausibly claim to be implementing international counter-terrorism finance standards.

The United Nations’ reimposition of snapback sanctions on Iran in September makes Tehran’s claims of meeting FATF’s requirements even more indefensible. By restoring the arms embargo, asset freezes, and financial restrictions suspended under Resolution 2231, the UN has legally re-imposed the obligations Iran sought to escape.

FATF requires jurisdictions to comply with UN sanctions regimes as a matter of course. Yet Tehran rejects the legitimacy of those sanctions, calling them “illegal.” It openly refuses to implement them. Iran cannot credibly claim FATF compliance.

The contradiction is structural: Becoming a FATF member presupposes adherence to multilateral rules, while Iran’s revolutionary ideology depends on violating them. The same government that funds Hamas and Hezbollah cannot simultaneously commit to suppressing terror financing.

Tehran’s strategy is obvious: make a superficial concession to buy time, ease financial pressure, and seek to build a reputation as a responsible actor that cares about terrorism financing. Its goal is to persuade foreign banks and international financial institutions to resume cooperation. While most banks with strong due diligence and compliance departments will see through the deception and understand that doing business with Iran remains far too risky, others may use conditional ratification to cover those in Europe and Asia eager to reopen business with Iran.

FATF and its members should resist that temptation. They should maintain Iran’s blacklist status until it removes all reservations to the CFT and recognizes all UN-designated terrorist groups; dismantles the IRGC’s terror-finance network and stops funding militias abroad; prosecutes officials and bankers involved in financing terrorism; and accepts and implements UN sanctions in full or takes actions that the UN decides to lift them.

Anything less rewards deception and undermines the credibility of the global financial crime regime.

Iran’s ratification of the CFT is not reform; it is rhetoric. It changes nothing about how the regime funds, equips, and coordinates terrorist organizations across the Middle East. FATF’s mandate is to ensure that the international banking system cannot be exploited for such purposes. If FATF allows Tehran’s conditional compliance to stand, it will signal that political convenience outweighs enforcement, that even the world’s leading state sponsor of terrorism can buy legitimacy with a footnote.

FATF must keep the Islamist regime in Iran where it belongs: on the blacklist.

About the Authors: Saeed Ghasseminejad and Toby Dershowitz

Saeed Ghasseminejad and Toby Dershowitz are senior advisors at the Foundation for Defense of Democracies (FDD). FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy. Follow the authors on X @tobydersh and @SGhasseminejad.

Image: Noam Galai / Shutterstock.com.

The post Why Iran Won’t Follow FATF Counter-Terrorism Rules appeared first on The National Interest.