The Activities of Iranian Supreme Audit Court in Confronting Money Laundering Emanating from INTOSAI's Strategies

The initial results deriving from the Iranian membership in the taskforce in addressing corruption and money laundering are participation in the formulation of instructions to fight corruption by the INTOSAI followed by other countries, participation at the INTOSAI meetings and utilization of other countries' experiences in dealing with corruption, formation of a taskforce to fight money laundering in the national court of account and formulation and communication of the audit framework for the auditors of other countries to control and fight corruption and money laundering. Also, the Islamic Republic of Iran (National court of account), applying international experiences and in order to confront corruption and money laundering as well as financial crimes has embarked on promoting its technicalspecialized knowledge of which one can refer to adopting a performance audit approach, reviewing the instructions, formulating the audit instructions, promoting the quality, implementing the electronic supervision, pathology of rules and regulations, supervising privatization in order to prevent the inflow of money with suspicious origin towards the economy. Furthermore, the national court of account, while prosecuting and punishing law and financial instructions violators, facilitating money laundering, presents the report on the budget bill followed with its views to the Islamic council parliament including an assessment of the impacts of the law on different related and interested groups, and attempts to provide some financial discipline. In fact supervision procedures of this organization in terms of the broad discretion in the field of financial supervision, contribute highly to the accomplishment of the financial transparency and some other networks in particular like banking, custom and tax networks. Especially, the supreme coordination council of the national supervision branches is chaired by the head of the court of account.


INTRODUCTION
Of the international specialized organizations that has been dealing w3ith money laundering in recent years, is the international organization of the supreme audit institution (INTOSAI) that follows the expansion of the activities in confronting money laundering through designing and establishing policies and enacting instructions. A quick look at the INTOSAI's instructions in relation with money laundering and corruption indicates that these instructions include such requirements as formulating a comprehensive strategy in fighting corruption and money laundering, enhancing systems to fight money laundering, fighting corruption in government organizations, creating internal control mechanisms, preventing the excessive discretion of the public authorities, public provision transparency, and bolstering the educational and counseling role of the nations' supreme audit institutions. These are the elements regarded that necessitate "good governance". Making this pattern operational by the INTOSAI thorough the supreme audit institutions of the member states, possessing legal and effective discretions in the financial supervision over the authority is achieved. The Islamic Republic of Iran (National court of account) as a member of this international organization plays a key role in its specialized taskforces As the global community struggles to fight money laundering in the twentieth century, bearing in mind its destructive effects on the governments; financial systems health , this century is the century of international organizations. Today, the variety and scope of the specialized international operations is in such a way that their role in dealing with decision making processes within the global community and in dealing with harmful and crimes and phenomena cannot be denied. Of these organizations in recent years, is the international organization of supreme audit institutions known as INTOSAI. This international organization emerged during an international conference in Havana with 34 member states in 1953. As per article (1) of its statute the INTOSAI is an independent, free and nonpolitical entity formed as a permanent institution in order to exchange views and opinions and experiences in the government auditing process among the supreme auditing institutions. INTOSAI based on the professional powers originating from then statute, possesses specialized-technical taskforces and committees peculiar in their activities branches. Governments 'supreme auditing institutions enjoy a special status in the authority aspect of the financial supervision.
INTOSAI based on its professional powers deriving from the statute , has technical and specialized committees and taskforces with regards to its own branches of activities.
The supreme audit institutions of the countries have commonly a special place in terms of financial supervision. In Iran, it is the national court f account that is responsible for this task that under the legal system chart of the Islamic Republic of Iran, two principles of the constitution have been dedicated to it. This professional organization, in line with imposing control and consistent financial supervision, and in order to safeguard the treasury and to prevent financial crimes and money laundering in particular can be described as the quasi judicial. Hence, INTOSAI's instructions and strategies with regards to public auditing have added to the important role of this international organization in directing countries' supreme audit institutions in terms of controlling money. Of the INTOSAI's special taskforces are the taskforce of fighting money laundering and corruption with 22 members founded by the INTOSAI in 2007 and Iran joined the organization in 2012. Thus, Iran's activities due to its membership in the taskforce and its measures emanating from the INTOSAI's strategies as the world leader of the supreme audit institutions in preventing supranational organized crimes represents the necessity of this research. This research while looking at this organized crime and political, social and economic negative consequences attempts to determine the Islamic Republic of Iran (National court of account) activities deriving from international instructions in dealing with money laundering that will remove some of the legal vacuums in relation with the tasks of ten auditors. Although research conducted with regards to money laundering and the measures of the administrative branches in this regard, no research has ever been performed with respect to the activities of Iran utilizing the INTOSAI's strategies in confronting money laundering. This research is bifurcated. In the first section , we will have a quick look at the history, definition and impacts of money laundering. Then, in the second section, we will International Letters of Social and Humanistic Sciences Vol. 18 briefly introduce the INTOSAI and its legal position in the Iranian court of account and then, national and international efforts by the Islamic Republic of Iran (National court of account) in the area of fighting corruption and money laundering will be investigated.

1. History of money laundering
Money laundering has been mentioned as illegitimate money, evil money, black money, unlawful money, stained money and dirty money. Talks as to the formation origin of the term money laundering reveal that there is no consensus among researchers with respect to the first time the term was used and disseminated.
Most believe the root of the term can be sought in the Mafia's proprietorship over the laundry machines in the United states of America in the 1930s. In this year, gangsters had begun widespread criminal activities in some cities of America like New York, earning hefty sums through crimes of blackmailing, prostitution, and alcoholic drinking smugglings. Hence, it was quite necessary that their origin be regarded as lawful. With respect to the elimination of tis need, houses' laundry machines were among the business that could help the felons due to the fact that they were capable of being converted to cash as well as high number of customers (Abasi, 2012:22).
Of course, there is another theory that says the term money laundering was for the first time used in the Watergate scandal in the 1980s by the researchers, hence, it became prominent internationally (Mosavi Moghadam, 2007:12). It seems, the sheer similarity of the term money laundering with washing clothes that removes its staining cannot be an origin of the term money laundering rather its existential philosophy should be regarded: this indicates a process with which the origin of revenues deriving from criminal activities fade away.

Definition of money laundering
As of yet, numerous definitions of money laundering under international documents have been provided and the similar points of the definition is: "acquiring revenues from an act or a criminal and illegal omission, a plan to act to hide revenue sources mentioned with the perpetrator's knowing of the revenue sources". Palermo's convention is the last global determination in defining money laundering that has regarded the following acts as examples of money laundering, calling for them to be considered as crimes by the countries: -Conversion or transfer of assets knowing the fact that assets derive from crime, in order to hide or change the origin of the illegitimate property or to help anyone having a role on the commitment of the crime for his escaping of his legal consequences of his acts -Concealment or change of the true nature, place, origin, displacement, ownership or rights belonging to properties, knowing that these properties are returns of crime -Acquisition, ownership or use of property, provided that the perpetrator knows by the time of receiving that such assets are criminal assets -Participation, collusion for the perpetration, planning to perpetrate or collaborate (with presence at the crime scene or without presence at the crime scene) that results in facilitation and implication of the perpetration of each crime specified in accordance with this article 46 Volume 18

3. Money laundering impacts
Money laundering hurts the social, economic and political order, because this phenomenon has negative substantial effects on the free competition and stability as well as financial system health. Thus, we refer to economic, political and social impacts of money laundering.

Economic impacts
Most important economic effects are as follow:

Weakening the private sector
Companies having access to considerable illegal sums, these sums will help them to supply their products and services with prices lower than those of the market. On this basis , this will make competition difficult for legal companies and force them to be out of the market, hence, undermining the private sector (Center for the Islamic parliament researches, 2003:7).

Reduced government revenues
Another harmful effect of money laundering is the reduction in the government's revenues hurting indirectly the people paying their own taxes frankly . Besides, money laundering will make tax collection difficult (Ibid:8).

Creating obstacles for privatization
Although privatization involves substantial economic benefits, it can be used as a tool for money laundering. Criminal organizations have more financial affluence to buy other government companies. In fact, they can through purchasing their favorite companies and institutions like banks, hide the returns deriving from criminal activities and expand their illegal activities (Ibid: 8).

4. Social impact
Money laundering incurs considerable social costs. This phenomenon is a vital process for conducting major crimes, paving the way for the narcotic smugglers to expand their scope of illegal activities. This phenomenon will increase the government's costs as to formulating and implementing costs for the health care -like treatment of addicts-in order to fight serious consequences of money laundering (Ibid: 9).

5. Political impacts
The scope of money laundering in the world is so great that it is considered as the main security and political concern of the countries and the span of the interests of this crime specially in the supranational level because of disorder in the economic system and distortion in the independence and equality -seeking objectives of the governments have made them be categorized as crimes against national security. Not only from a point of view of nature, but also from the point of view of perpetration methods and the goals of perpetrators, money laundering has large political and security impacts.

1. International organization of then supreme audit institutions (INTOSAI)
INTOSAI emerged as an initiative by KamoImilio Fernandez, the then Cuban president during an international conference in Havana with 34 member states in 1953. The root cause of the foundation of the INTOSAI dates back to the after world war two and before 1953. This organization was held in an international conference in the city of Bern m, Switzerland with a lot of representatives of the supreme auditing institutions from all over the world in attendance.
There, organization and integration of the government's auditing in the world and transfer of knowledge and experiences among the members' institutions was discussed.
INTOSAI, on the basis of the statute, has delineated all of its programs and projects and professional decision making processes with the fame work of four major objectives including determining professional auditing standards, capacity -building, exchange of knowledge and promoting the organization as an international organization (WWW.INTOSAI.org/last visited on June 2013).
INTOSAI has different taskforces of which one can refer to the taskforce that has three guidelines that are as fallow: -The guideline of "increasing integrity, transparency, and suitable management of the general assets" -The guideline of "preventing corruption" -The guideline of "existing challenges for the supreme auditing institutions to fight corruption and money laundering".
A quick look at the INTOSAI's instructions in relation with money laundering and corruption indicates that these instructions include such requirements as formulating a comprehensive strategy in fighting corruption and money laundering, enhancing systems to fight money laundering, fighting corruption in government organizations, creating internal control mechanisms, preventing the excessive discretion of the public authorities, public provision transparency, and bolstering the educational and counseling role of the nations' supreme audit institutions. These are the elements regarded that necessitate "good governance" 1 . Through its committees and taskforces, in order to promote coordination and collaboration among the 1. Since the advent of economics of development, decision making in the developing countries can be divided into three eras; a) the era of great government, b) minimum government and c) good government. In the first era, from 1929 to the mid-1970s, the government played a pivotal role and the intervention by the government was allowable in most sectors. In the end of the 70s, this thinking model was replaced by the model of the minimum government. This model led by Regan and Thatcher was regarded as the guideline of development and survival, little intervention by the government and privatization of the affairs. Since the end of the 1990s due to dissatisfactions, the good governance approach was welcomed. In other words, contrary to the previous eras, what is here important is quality not quantity and the intervention by the government. The purpose of this theory is "exerting economic, political and administrative powers, accountability and efficacy". The motto of this theory is there is no "unified rule for all" and the way of governance differs from one government to another. However, its standards while being made indigenous should be observed. In the INTOSAI' s guidelines, the good governance means working transparently, efficiently, comprehensively, respecting the law, managing the interests well and justly, accountability to the needs of the people an minimizing opportunities for the occurrence of corruption and money laundering.

48
Volume 18 member states, the INTOSAI plans to formulate international standards for the supreme auditing institutions so that these institutions could operate those standards within the scope of objectives and duties in the respective countries. Supreme auditing institutions are professional institutions whose main duty is to audit government's budget, report auditing findings and provide advices to fight any illegalities and misuse. Also, the Islamic Republic of Iran (National court of account), applying international experiences and in order to confront corruption and money laundering as well as financial crimes has embarked on promoting its technical-specialized knowledge of which one can refer to adopting a performance audit approach, reviewing the instructions, formulating the audit instructions, promoting the quality, implementing the electronic supervision, pathology of rules and regulations, supervising privatization in order to prevent the inflow of money with suspicious origin towards the economy. Furthermore, the national court of account, while prosecuting and punishing law and financial instructions violators, facilitating money laundering, presents the report on the budget bill followed with its views to the Islamic council parliament including an assessment of the impacts of the law on different related and interested groups , and attempts to provide some financial discipline.
Thus, the role of INTOSAI in directing the supreme auditing institutions which is very determinative in the integrity of government's elements in order to fight money laundering is of high importance. With 50 years of experience with 190 member states the INTOSAI has seven regional organizations including, ASOSAI, ARABSAI, OLACEF, EUROSAI, AFROSAI, CAROSAI and PASAI. (WWW.INTOSAI.org/last visited on June 2013).

2. Legal status of the national court of account
The Under the Iranian constitution , two principles (articles) have been dedicated to the court of account in such a way, the 54 th principle of the constitution stipulates "The national court of account is directly dependant on the supervision of the Islamic parliament" and the 55 th principle provides that" The national court of account investigates all the accounts of the ministries, institutions, public entities and other systems, using the total budget of the country as the law has provided in order that no expenditure exceeds from the place of credits and each sum is spent in its own place. The national court of account collects related accounts, documents in accordance with the law and submits the report of the budget bill attached with its own views to the parliament. This report must be available to the public".
In addition to this, the most important legal discretions of this organization in line with imposing control and coherent financial supervision in order to safe guard the treasury in accordance with the law of the court of account enacted in 1982 by the parliament are as follow:

1. Interanational activities
The Islamic Republic of Iran (National court of account), became a member to the INTOSAI in 2012in order to utilize the technical and scientific findings of other countries as well as to transfer national accomplishments in the area of auditing and fighting corruption and money laundering. It also became a member to the special taskforce of the INTOSAI that deals with money laundering corruption. This taskforce is one of the most important groups of this global organizations. The Iranian government has been attending in the joint technical and specialized seminars and has played key roles in educational courses and meetings in such a way it has shared experiences at two meetings of this taskforce in Poland and Namibia. In this regard, in line with the decision of the taskforce, during the sixth meeting of the taskforce held in the city of Sopot in Poland with the participation of 22 countries, it was provided that, in order to adopt preemptive measures to prevent corruption and money laundering in the public organizations, a committee to formulate the audit guidelines preventing corruption and money laundering in the public organizations be formed".
Iran is currently a member to this taskforce and countries like Malaysia, Indonesia, Poland, Iraq are members too (Hasib Monthly Journal, 2012:2).
During the seventh meeting of the members, the subject of taskforces and future programs (2014-2016) of the INTOSAI's taskforce dealing with corruption and money laundering were approved in the framework of four fold objectives and Islamic Republic of Iran was selected as the member of the taskforce of the fifth objective of the first strategy with respect to fight with corruption and money laundering titled as "development of guidelines for public provisions" in 2014. The Iranian mission's recommendation in terms of the subject of se3llibng the public assets to other sectors in the economy with respect to the mentioned guideline was welcomed by the German mission as the head of the second taskforce (Ibid, 17).

2. Measures at the national level
The Islamic Republic of Iran (National court of account), with its active presence at the INTOSAI's meetings and the taskforce of fighting corruption and money laundering, while

50
Volume 18 applying the international experiences and guidelines, has adopted measures to promote technical and specialized knowledge along with its own experiences, some of which are as follow:

2. 1. Formation a taskforce to address corruption and money laundering
The first advantage of the Iranian membership in the taskforce of fighting corruption and money laundering of the INTOSAI is the formation of a taskforce to deal with money laundering in the national court of account. This taskforce is constituted by the auditing missions, general managers of the interested units and related deputies that adopt necessary decisions with respect to auditing units established in the systems and the way this subject is dealt with(Abolghasem Eskandarai and Morteza Ghasemian, October, 2014: 14).

2. 2. Formuolartion and communication of the auditing framework in fighting money laundering
Of other measures by the Islamic Republic of Iran (National court of account), after the membership in the taskforce, is the formulation and communication of auditing framework to deal with money laundering and utilize international experiences. In fact, through this, the auditor should in the process of auditing make sure whether controlled procedures defined in this law, are established properly and fully or not or whether they work appropriately and effectively or not. The auditor should investigate the requirements and regulations of this law in their own auditing agenda while formulating an auditing plan and auditing planning of each system. Before doing anything, auditors should exactly study the law and administrative regulations and administrative guidelines while recognizing money laundering as a crime and take measures to examine them.
Some of the administrative systems like the economic and financial affairs ministry, banks, customs, and insurance systems are the systems whose special assignments have been defined for them and separate regulations and guidelines have been enacted for them. As a result, the auditors of these systems should deal with these systems and include special programs in this regard in their own auditing programs.

2. 3. Pathology of tax system
Concentration on tax revenues following macro targeting in reducing dependence of the total national budget on oil has been considered more than ever before , because stability and increased tax revenues result in the accomplishment of this goal . "The tax affairs department as a one of the elements of achieving the government income sources, is supervised by the supreme court of account of the country.
However, since money launderers try to evade tax payments and to hide their money origin, thus, the project of tax revenue pathology of the country is on the national court of account's agenda. In other words, the creation of financial discipline the requires the stability of costs and income, has been intensively considered by the Iranian court of account. An example of this issue can be referred to in the increased tax statements of the year 2012"(Abolghasem Eskandarai and Morteza Ghasemian, October, 2014: 14).

2. Adopting an approach of performance auditing, reviewing guidelines and formulating auditing guidelines and promoting quality
One of the expectations of the activists in different economic sectors and even the society as a whole is the creation of a healthy competitive environment based on healthy and strong business. Thus, given the message of the court of account in the area of accountability and r4eporting to the nation the approach of performance auditing, reviewing guidelines and formulating auditing guidelines and promoting quality has been under way that has been provided and available based on formulated standards followed with economic reports in two theoretical and practical aspects in the area of money laundering (Ibid, 14).

2. 5. Supervising privatization transactions in order to prevent the flow of money with suspicious origin to the economy
The Iranian court of account, utilizing international experiences in the area of money laundering knows very well that one of the entrances of the money launderers throughout the world is the processes of privatizations. In fact, the richest people of the world are engaged in activities in countries where they are experiencing some aspects of privatization. Countries like Mexico, India, Spain, and Brazil and Hong Kong are among the nations that are making privatization operational. Thus, the Iranian court of account, using the auditing capacity and related devices supervises the way privatization processes are conducted and trace any suspicious transactions with the collaboration of other interested systems (Ibid).

2. 6. Elevtronic supervision
The Iranian court of account, in recent years, in order to use the computer capabilities in the area of electronic supervision, has planned to create an electronic supervision system which is one of the biggest system evolution programs based on IT and information in the country. This system has far reaching implications in all the administrative systems as a whole as well as the issue related to financial sources costs and public sector liquidity. This plan has been implemented at a large network in the country and through which over 3700 active points of administrative and office sources in all ministries, entities, departments and public companies dependant on the government or national and public users are connected together. This system has far reaching implications in all the administrative systems as a whole as well as the issue related to financial sources costs and public sector liquidity.
Of the most important macro objectives of this plan are as follow:

2. 7. Pathology of financial rules and regulations an presenting educational and counsel services
In this area based on a five year old program of the Iranian court of account's improvement have been achieved like the following:

52
Volume 18 A) In line with the effective supervision improvements and preventing financial crimes, taskforces have been formed based on n the pathology of financial rules and regulations so that items recommended are modified by the Islamic Parliament advisably. B) In order to promote the awareness level of the administrative system under the supervision, to promote the security level and to reduce financial crimes and that class of financial wrongdoing resulting in the facilitation of money laundering, educational class and journals have been provided. Of the released journals, one can refer to the INTOSAI's guidelines for the internal control standards in the public section, auditing in the area of the IT in Chine and the guideline of investigating the issue of tenders and income.
C) The court of account, in line with the accomplishment of achieving financial discipline rendering in the crime reduction and financial wrongdoing, in addition to presenting counseling services to the managers of the present effective administrative systems in the commissions and specialized committees of the parliament. expediency counsel have expressed views in line with articles 85 and 138 of the constitution.

2. 8. Institutionalizing financial and auditing policies of the country
Through communicating the overall policies of article 44 of the constitution based on article 110 of the Islamic Parliament by the Supreme leader followed by the approval of the law of administering the overall policies of article 44 by the parliament, special objectives have been predicted at the micro and macro-economic level.
An optimal combination of the presence of the government and market requires the implementation of the privatization policy as one of the main modifying plans in the economic structure of the Iranian economy. Thus, based on the enforceable rules and regulations, it is inevitable that this sort of economic structure reform be operational and implemented in the yearly budget laws and this very important task itself has convergence with the formulation of proper strategies resulting in the financial supervision accomplishments and financial discipline by the court of account. On this basis, we will have a reference to the instances of the results of the suitable programs related to the modern financial indices:

CONCLUSIONS
Of the international specialized organizations that has been dealing w3ith money laundering in recent years, is the international organization of the supreme audit institution (INTOSAI) that follows the expansion of the activities in confronting money laundering through designing and establishing policies and enacting instructions. A quick look at the INTOSAI's instructions in relation with money laundering and corruption indicates that these instructions include such requirements as formulating a comprehensive strategy in fighting corruption and money laundering, enhancing systems to fight money laundering, fighting corruption in government organizations, creating internal control mechanisms, preventing the excessive discretion of the public authorities, public provision transparency, and bolstering the educational and counseling role of the nations' supreme audit institutions. The Islamic Republic of Iran (National court of account) as a member of this international organization plays a key role in its specialized taskforces. The initial results deriving from the Iranian membership in the taskforce in addressing corruption and money laundering are participation in the formulation of instructions to fight corruption by the INTOSAI followed by other countries, participation at the INTOSAI meetings and utilization of other countries' experiences in dealing with corruption, formation of a taskforce to fight money laundering in the national court of account and formulation and communication of the audit framework for the auditors of other countries to control and fight corruption and money laundering. INTOSAI based on the professional powers originating from then statute, possesses specialized-technical taskforces and committees peculiar in their activities branches. Governments 'supreme auditing institutions enjoy a special status in the authority aspect of the financial supervision.
INTOSAI based on its professional powers deriving from the statute , has technical and specialized committees and taskforces with regards to its own branches of activities . In fact supervision procedures of this organization in terms of the broad discretion in the field of financial supervision, contribute highly to the accomplishment of the financial transparency and some other networks in particular like banking, custom and tax networks. Especially, the supreme coordination council of the national supervision branches is chaired by the head of the court of account. Hence, the impact of the court of account in dealing with financial crimes and money laundering will be increased because, the supervision realm of this court on the other systems will result in the more integrity of the system and supreme counsels that fight in the area of such crimes and eventually more transparency will be created.