Iran at FATF
Members of the Iranian Revolutionary Guard listen to a speech in parliament in Tehran on October 7, 2018, over the a bill to counter terrorist financing. - The bill, one of four put forward by the government to meet demands set by the international Financial Action Task Force (FATF), was passed by 143 votes to 120, according to the semi-official ISNA news agency.ATTA KENARE/AFP/Getty Images

Iran has until June to strengthen its anti-money laundering legislation, or financial institutions operating there will face increased international scrutiny, a global watchdog said on Friday.

Last October, the Paris-based Financial Action Task Force (FATF) watchdog had given Iran until February to complete reforms that would bring it in line with global norms, or face consequences. Iran was earlier blacklisted by the FATF. This makes it difficult to receive monetary support from the IMF, which is a multilateral lender. 

Along with Iran, North Korea is also a blacklisted country. Pakistan was close to becoming blacklisted on Friday after pressure on the FATF by India but it remained on the grey list. 

The FATF concluded this week that "there are still items not completed" and said in a statement it "expects Iran to proceed swiftly in the reform path...If by June 2019, Iran does not enact the remaining legislation in line with FATF Standards, then the FATF will require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran," it said.

Foreign businesses say compliance and Iran's removal from the FATF's blacklist are key for making investments in the country, especially after the United States re-imposed sanctions on Iran.

Trump Hails Incredible Deal On A Call With Mexican President After Announcing Separate Trade Agreement

France, Britain and Germany have tied this compliance angle with the use of a new channel for non-dollar trade with Iran to avert US sanctions.

Those countries have said they expected Iran would swiftly put into place all elements of its FATF action plan.