The Financial Action Task Force (FATF) has once again placed the Islamic Republic on its blacklist for money laundering and terrorist financing. This decision is expected to worsen Iran's economic situation, particularly following the activation of the “snapback” mechanism.

The international group, based in Paris, stated that since 2016, Iran has largely failed to fulfill its commitments under its action plan. Although Iran reported progress regarding the United Nations Convention against Transnational Organized Crime (Palermo) in September 2025, extensive reservations raised by Iran do not align with FATF standards and do not alleviate concerns.

FATF highlighted ongoing threats from Iran regarding terrorism financing and the proliferation of weapons of mass destruction, urging all countries to implement effective countermeasures against the regime. These measures include preventing the establishment of branches or representative offices of Iranian financial institutions abroad and limiting the operations of foreign financial institutions in Iran.

The FATF encouraged Iran to expedite efforts to fully criminalize terrorism financing, identify and block terrorist assets, enhance customer identification systems, and implement the Palermo and terrorism financing conventions according to global standards.

Previously, the Expediency Discernment Council in Iran conditionally accepted joining the Palermo Convention and the Combatting the Financing of Terrorism (CFT) agreement. The FATF noted that Iran has repeatedly reported progress over the years without making significant changes to its action plan.

The FATF emphasized that if Iran fully complies with its commitments, there may be a possibility of suspending countermeasures. However, if the current situation persists, more severe actions will be instituted.

Being placed on FATF's blacklist deals another blow to Iran's ailing economy following the reactivation of sanctions. Experts believe that Iran's reluctance to join FATF stems from concerns that complying would hinder its ability to provide financial support to allied militias like Hezbollah in Lebanon and the Houthis in Yemen.