THE VIEW FROM TEHRANS TWILIGHT ZONE In Seif’s alternative reality, sanctions no longer exist so there is no risk to doing business in Iran. We now live in a “post-sanctions environment,” he said, ignoring the terrorism, ballistic missile, and human rights sanctions that remain in place. As for the claim that it is Iran’s own actions—executing 9 10 11 12 minors, persecuting religious minorities, sponsoring terrorism, testing ballistic missiles —that create the kind of risk and uncertainty that keep banks from doing business with Iran, Seif argued that’s nothing new. “If, according to our partners, it is our conduct which prevents international banks from engaging in business with us, they were fully aware of our conduct before singing the 13 [Iran deal]. We have not changed [these actions].” Far from denying the illicit conduct, Seif argued it is old news. Arguing that Iran is responsible to change that behavior “is not correct. This 14 is a misstatement of fact.” Iranian misconduct notwithstanding, Tehran’s Western negotiating 15 partners need to do “whatever is needed to honor their commitments.” Then, as if he had not just conceded that Iran’s illicit conduct continues, he touted Iran’s anti- money laundering (AML) and counter-terror finance (CFT) efforts. “We attach high priority to enhancing the AML/CFT framework, through improvement of KYC [“Know Your Customer”] policies and procedures to ensure prevention of financial crime and facilitate the reintegration of 16 the Iranian banking system into the global economy.” Noting Financial Action Task Force AML/CFT standards, he conveniently failed to note the group’s repeated calls for Iran “to 17 immediately and meaningfully address its AML/CFT deficiencies.” Asked about the risks of unwittingly doing business with the still-sanctioned Islamic Revolutionary Guard Corps, Seif pointed to the ability of investors to utilize the services of Iranian companies who 18 run checks so investors can try to know with whom they are truly doing business. But this not only neglects Iran’s documented history of using front companies to hide the IRGC’s business 19 fingerprint, it also promotes a practice known to facilitate money laundering. The FATF, whose Eurasia body Iran hopes to join, warns that risk-mitigating efforts in high-risk jurisdictions like Iran 20 should include a prohibition on using in-country third-parties to perform customer due diligence. As governor of Iran’s central bank, Mr. Seif is surely aware of the inconsistencies in his CFR lecture. But as the former head of no less than six Iranian banks that were hit by sanctions, he is no stranger 21 to the intricacies of money laundering and illicit finance. 9 Gladstone, R., ‘Iran Still a Leading Executioner of Minors, Report Says’, The New York Times, 25 January 2016, available at: http://www.nytimes.com/2016/01/26/world/middleeast/iran-still-a-leading-executioner-of-minors-report-says.html?_r=1, last visited: 11 May 2016. 10 ‘Iranian Judiciary Took No Action despite Formal Complaint Detailing Torture of Baha’is in Prison’, International Campaign for Human Rights in Iran, 27 March 2016, available at: https://www.iranhumanrights.org/2016/03/twelve-bahais-allege-torture-in-detention/, last visited: 11 May 2016. 11 Levitt, M & Segawa, K., ‘Findings from the State Department's Annual Terrorism Report (Part 1): Hezbollah and Iran’, The Washington Institute, 19 June 2016, available at: http://www.washingtoninstitute.org/policy-analysis/view/findings-from-the-state-departments-annual-terrorism-report-part-1- hezbolla, last visited: 11 May 2016. 12 ‘Treasury Sanctions Those Involved in Ballistic Missile Procurement for Iran’, US Treasury, 17 January 2016, available at: https://www.treasury.gov/press-center/press-releases/Pages/jl0322.aspx, last visited: 11 May 2016. 13 ‘A Conversation with Valiollah Seif’, Council on Foreign Relations, 15 April 2016, available at: http://www.cfr.org/global/conversation-valiollah- seif/p37733, last visited: 11 May 2016. 14 Ibid. 15 Ibid. 16 Ibid. 17 Ibid. 18 Ibid. 19 ‘Sanctions relief increases risk of IRGC front companies concealing illegal shipments in legitimate Iranian maritime cargo’, IHS Janes 360, 17 March 2016, available at: http://www.janes.com/article/58859/sanctions-relief-increases-risk-of-irgc-front-companies-concealing-illegal-shipments-in-legitimate- iranian-maritime-cargo, last visited: 11 May 2016. 20 Bauer, K, ‘Iran's Long Road to Reintegrating With the World Financial System’, The Washington Institute, 29 February 2016, available at: http://www.washingtoninstitute.org/policy-analysis/view/irans-long-road-to-reintegrating-with-the-world-financial-system, last visited: 11 May 2016. 21 Dubovitz, M & Fixler, A, ‘Iran’s Center for Illicit Finance’, Foundation for Defense of Democracies’, 15 April 2016, available at: http://www.defenddemocracy.org/media-hit/dubowitz-mark-irans-center-for-illicit-finance/, last visited: 11 May 2016. 2