The Financial Intelligence Centre (FIC) recently published two notices on their website from the Financial Action Task Force (FATF) namely:
- FATF public statement on jurisdictions with strategic anti-money laundering (AML)
- Counter-terror financing (CFT) deficiencies and the FATF ongoing process to improve global AML/CFT compliance
1. FATF public statement on jurisdictions with strategic AML/CFT deficiencies – October 2019
The FATF identifies jurisdictions that have strategic deficiencies in their measures against money laundering and terrorist financing. The FATF then advises on these jurisdictions in public statements in order to protect the international financial system from money laundering and terror financing risks and to encourage greater compliance with its international standards on combating money laundering and terror financing.
The FIC advises accountable institutions to take the public statements of the FATF into account when determining the factors relating to geographic areas that may be indicative of money laundering and terrorist financing risks.
In the October 2019 public statement, the FATF draws attention to AML/CFT 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 various risks. 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)
The FIC further advises accountable institutions 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) in this regard, especially where there may be an increased risk of terrorist financing. In particular, 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 ongoing process to improve global AML/CFT compliance – October 2019
The FATF engages in an on-going process with jurisdictions that have deficiencies in their measures against money laundering and terrorist financing and who have developed action plans with the FATF to address these. The FATF have recently updated the information relating to the jurisdictions in this process. These jurisdictions are The Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Pakistan, Panama, Syria, Trinidad and Tobago, Yemen and Zimbabwe.
The nature of the deficiencies differs among these jurisdictions with each jurisdiction having developed an action plan to address the deficiencies. The FATF will continue to work with the jurisdictions noted and regularly report on the progress made in addressing the identified deficiencies.
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 Ethiopia, Sri Lanka and Tunisia have made in strengthening the effectiveness of their regime against money laundering and terrorist financing and confirms that these jurisdictions are no longer subject to the FATF’s on-going global monitoring process.
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.