Iran’s Palermo approval ...
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The banking sector and industries dependent on foreign trade, such as petrochemicals and steel, stand to see the biggest gains. The reason is clear: with Palermo’s passage, hopes have risen for improved banking ties and lower transaction risk.
In recent years, many foreign banks and financial institutions, even when primary sanctions had been lifted, refused to work with Iran because it remained on the FATF blacklist. Palermo’s approval marks a step towards removing that roadblock. While other bills, like the Counter-Terrorism Financing Convention (CFT), still need to be passed, the shift has already sent the message to international institutions that Iran’s credit risk is easing.
Foreign investors, when assessing projects in Iran, focus on two key factors: political-economic stability and the secure transfer of funds. With Palermo’s approval, hopes for improvement on both counts have grown. Iranian banks can also seize this moment to kick off talks for connecting to regional financial messaging systems or even parts of SWIFT — a path that was effectively blocked without these conventions in place.
Message to global stage, FATF invitation
One of Palermo’s most significant outcomes is Iran’s re-entry into dialogue with international bodies. After years on the FATF blacklist and under severe banking restrictions, the group has, according to Economy Minister Ali Madanizadeh, extended an official invitation to Iran — for the first time in six years — to start face-to-face negotiations.
This invitation is a clear sign of shifting international attitudes toward Iran and recognition of the country’s reform efforts. As a global standard-setter for financial transparency, the FATF assesses practical measures taken by countries, and such invitations are generally extended only to those that have already set out on the path of reform.
Palermo’s approval has also sent a strong political message to Iran’s partner countries and trading allies: a commitment to fighting financial crimes and money laundering, and readiness to align with international financial transparency rules. The message could carry real weight in upcoming talks to improve banking and trade relations.
CFT outlook, Palermo’s path
While Palermo’s passage was a major step, it does not complete the FATF engagement process. The CFT still awaits approval, and without it, Iran’s cooperation with the FATF will remain unfinished.
The Palermo experience has shown that, with decisions grounded in national interest and today’s realities, political and legal barriers can be cleared, paving the way for international engagement. Once the CFT is approved, Iran could move its FATF cooperation into a new phase and break down many of the remaining banking and financial barriers.
In the current climate, passing the CFT is expected to replicate Palermo’s psychological and economic effects — perhaps even more strongly — since a major share of foreign banks and partners’ concerns relate specifically to counter-terrorism financing.
The FATF’s invitation after six years, the boost in hopes for improved banking relations, and Iran’s strengthened hand in economic talks are just part of the event’s positive fallout. The road ahead — with CFT approval and the completion of international cooperation — could solidify and expand Palermo’s gains.
The Islamic Republic of Iran is serious about managing financial risks and economic security, and is employing both legal and political tools to meet that goal. This combination of measures, at both domestic and international levels, is painting a new picture of Iran as a responsible player in the global financial system.