Perception versus reality: Iranian banks and international anti-money laundering expectations
| Pages | 63-76 |
| Date | 22 July 2020 |
| DOI | https://doi.org/10.1108/JMLC-06-2020-0064 |
| Published date | 22 July 2020 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Vahid Molla Imeny,Simon D. Norton,Mahdi Salehi,Mahdi Moradi |
Perception versus reality: Iranian
banks and international anti-
money laundering expectations
Vahid Molla Imeny
Department of Economics and Administrative Sciences,
Ferdowsi University of Mashhad, Mashhad, Iran
Simon D. Norton
Department of Accounting and Finance, Cardiff Business School,
Cardiff University, Cardiff, UK
Mahdi Salehi
Department of Economics and Administrative Sciences,
Ferdowsi University of Mashhad, Mashhad, Iran, and
Mahdi Moradi
Department of Economics and Administrative Sciences, Faculty of Economics and
Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran
Abstract
Purpose –Iran has been rankedby the Basel Committee on Banking Supervision andthe Financial Action
Task Force (FATF) as one of the foremost countries in the world for money laundering. However, Iranian
banks claim that they comply with international standards for reporting suspicious activity, risk
managementand training. This paper aims to investigatethis dichotomy between perception and reality.
Design/methodology/approach –A Wolfsberg-style questionnaire was sent to partners in Iranian
accounting firms, whichhave audited domestic banks over the past five years to investigate the adequacy of
risk managementsystems.
Findings –Most Iranian banks have anti-money laundering (AML) systems, which compare favourably
with those of internationalcounterparties. Banks take a risk-based approach to potentialcriminal behaviour.
The negative perception of Iranian banks is principally attributable to the government’s unwillingness to
accede to “touchstone”international conventions.In spite of having in place AML laws, which are comparable
in intent with those of the UK and the United States of America (USA), weak enforcement remains a
significantimpediment of which the political establishmentis aware.
Practical implications –Measures required to bring Iranian banks into compliance with international
standards may be less extensivethan perceptions suggest. However, failure of the governmentto accede to
conventions stipulated by the FATFmeans that banks may remain ostracised by foreign counterparties for
the foreseeablefuture.
This research was assisted by Vania Nic Tadbir Co. (an Iranian accountancy firm). The authors
would like to thank all the Certified Public Accountants who participated in this research by
completing the questionnaire and providing insight and expertise. The authors especially thank Dr.
Khaleghi for his support and encouragement.
The authors confirm that they have no competing interests to declare.
This research did not receive any specific grant from funding agencies in the public, commercial or
not-for-profit sectors.
Perception
versus reality
63
Journalof Money Laundering
Control
Vol.24 No. 1, 2021
pp. 63-76
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2020-0064
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