Iran is preparing to reassess its stance on international financial regulations as Supreme Leader Ayatollah Ali Khamenei has authorised a review of crucial anti-money laundering legislation, senior officials said on January 1.

Economy Minister Abdolnasser Hemmati announced through social media that Khamenei's approval enables the Expediency Discernment Council to reconsider two significant pieces of legislation: the Palermo Convention and the Combating the Financing of Terrorism (CFT) bill.

President Massoud Pezeshkian reinforced this development during discussions with the Iran Chamber of Commerce, indicating the move could help resolve international banking obstacles faced by Iranian businesses following decades of being on international blacklists.

The decision marks a potential turning point in Iran's relationship with the Paris-based Financial Action Task Force (FATF), the global financial crime watchdog.

Iran's decade-long effort to join FATF has been hindered by its incomplete implementation of required conventions, particularly regarding the Palermo and CFT protocols.

Iran remains on FATF's blacklist despite previous legislative reforms, including amendments to its Counter-Terrorism Financing Act and Anti-Money Laundering Act in 2019.

The country's support for regional groups such as Hezbollah and the Houthis in Yemen has complicated its compliance with FATF standards.

The journey has been fraught with challenges, primarily due to internal disagreements. The Iranian parliament has approved the conventions, but the Guardian Council refused to ratify them, citing the need for amendments.

The decision to revisit FATF compliance follows months of speculation and signals from prominent political and economic figures. Sadeq Amoli Larijani, head of the Expediency Council, previously described the FATF issue as a "technical matter" and indicated the Council’s willingness to review it.

However, concerns persist over whether FATF membership would effectively counteract the challenges posed by US sanctions or if the compromises involved would yield sufficient benefits.

Economic experts have highlighted the costs of non-membership. Reformist analyst Hamidreza Jalaeipour noted that Iran's exclusion from FATF hampers its ability to establish robust economic relations even with non-Western allies, such as members of BRICS and the Shanghai Cooperation Organisation. “The cost of non-compliance ultimately falls on the Iranian people,” Jalaeipour observed.

The FATF debate has long divided opinion within Iran. Critics argue that transparency requirements could undermine regional alliances and military strategies, but mounting domestic pressures and regional shifts appear to have softened opposition. Jalaeipour suggested that the Leader’s approval signals an acknowledgement of these challenges and a green light to meet international regulations. 

This move aligns with broader government efforts to stabilise Iran’s economy and address resource disparities. President Pezeshkian's administration faces significant internal and external challenges, including the issue of depreciating rial against a basket of currencies.