On 2 March 2020 the Financial Intelligence Centre (FIC) published two public statements on their website from the Financial Action Task Force (FATF). The public statements relate to jurisdictions under increased monitoring and high-risk jurisdictions that are subject to a call for action.
1. FATF public statement on high-risk jurisdictions that are subject to a call for action – February 2020
The FATF identifies high-risk jurisdictions that have significant strategic deficiencies in their measures against money laundering, terrorist financing, and proliferation financing (ML/TF/PF). The FATF then advises on these jurisdictions in public statements in order to protect the international financial system from ML/TF/PF risks and to encourage greater compliance with its international standards on combating money laundering, terror and proliferation financing.
In the February 2020 public statement, the FATF draws attention to deficiencies in the Democratic People’s Republic of Korea (DPRK) and the Islamic Republic of Iran (Iran).
Democratic People’s Republic of Korea (DPRK)
The FIC advises accountable institutions that deficiencies in respect of the DPRK expose institutions engaging with counterparts in the DPRK to the risk of involvement in transactions that may relate to money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction. With these risks in mind, accountable institutions are advised to apply enhanced due diligence to business relationships and transactions with entities in the DPRK and to terminate correspondent relationships with DPRK banks where this is required by relevant UNSC Resolutions.
Islamic Republic of Iran (Iran)
In June 2016 Iran started a process to address strategic deficiencies in its measures against money laundering and terrorist financing according to an agreed action plan however in February 2020, the FATF noted Iran has not completed the action plan.
The FIC advises accountable institutions in this regard, to consider the risks identified by the FATF in relation to Iran when entering into business relationships, or conducting transactions with persons and entities in Iran and to apply enhanced due diligence (including those suggested by the FATF), especially where there may be an increased risk of terrorist financing. The FIC further advises accountable institutions to limit engagements in new business relationships or transactions with persons and entities in Iran to those where institutions are confident that they can manage the attendant money laundering and terrorist financing risks. The FIC also advises accountable institutions not to rely on third parties located in Iran to provide information they require in conducting customer due diligence. In addition, the FIC advises accountable institutions and all businesses to enhance their reporting mechanisms to take account of the abovementioned risks with a view to identifying transactions or actions that may be reportable under section 29 (suspicious and unusual transactions) of the FIC Act.
The FATF’s statement and the FIC’s advisory do not imply that institutions are prohibited from engaging in transactions involving financial institutions domiciled in Iran, but when they do so they should ensure that the due diligence applied is proportionate with the risks posed by above-mentioned strategic deficiencies and that they are able to meet the reporting requirements of the FIC Act.
2. FATF public statement on jurisdictions under increased monitoring – February 2020
The FATF engages in an on-going process to monitor jurisdictions that have strategic deficiencies in their regimes against money laundering, terrorist and proliferation financing. Jurisdictions under increased monitoring are actively working with the FATF to address these strategic deficiencies. When the FATF places a jurisdiction under increased monitoring, it means the jurisdiction has committed to resolve the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. The FATF reports on the progress of these jurisdictions and have recently updated the information relating to the jurisdictions in this process. These jurisdictions are Albania, The Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Pakistan, Panama, Syria, Uganda, Yemen and Zimbabwe.
The FIC advises accountable institutions to take this statement into account when determining the factors relating to each of the jurisdictions mentioned, that may be indicative of money laundering and terrorist financing risks.
In the same statement the FATF also welcomes the progress that Trinidad and Tobago have made in strengthening the effectiveness of their regime against money laundering, terrorist and proliferation financing and confirmed that this jurisdiction is no longer subject to monitoring.
FSPs that have dealings with any of the jurisdictions mentioned in either of the publications above need to take this information into consideration and where necessary, review the money laundering and terrorist financing risks to which they are exposed and update their Risk Management and Compliance Programme accordingly.