Watchdog hails Iran's fight on terror financing

But Financial Action Task Force still warns that gaps in Iranian law cause "significant vulnerability" in global financial system.

Ahmadinejad smiles 224.8 (photo credit: AP)
Ahmadinejad smiles 224.8
(photo credit: AP)
The US and other countries welcomed efforts made by Iran to better fight money laundering and the financing of terrorism, a Paris-based task agency said Thursday. But the Financial Action Task Force, against the backdrop of intense pressure from some Western nations on Tehran over its nuclear program, did not give Iran a clean bill of health. It said legal loopholes still make the Islamic republic a risk. But it acknowledged that Iran has sought its advice on improving its laws. The 34-member financial watchdog judges how countries fare in combating terror financing and money laundering. The US, China, Russia and much of Europe are members. The task force said in a statement that it "has engaged with Iran and welcomes the commitment made" to improve its laws to fight terror financing and money laundering. "Iran has, to our knowledge, no law in place at the moment dealing with terrorist financing," task force executive secretary Rick McDonell told The Associated Press. "It has one in relation to money laundering - very recently - but that's deficient." The task force stood by a warning in October that gaps in Iranian law cause a "significant vulnerability" in the global financial system, which also urged banks to use extra caution in dealing with Iran's financial institutions. Also Thursday, the group said it was worried about Uzbekistan. It said the central Asian country risks becoming a channel for money laundering and terror financing, and warned that a governmental decision there last week effectively repealed its reporting of suspicious financial transactions. "Suddenly, they seem to have taken a very big step backward," McDonell said.