FATF identifies jurisdictions with AML shortcomings
Posted on 16 Nov 2022
The Financial Action Task Force (FATF), an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of weapons of mass destruction, has recently issued public statements identifying jurisdictions with AML/CFT/CPF deficiencies following its plenary meeting this month. Financial institutions should consider the FATF’s stance towards these jurisdictions when reviewing their risk-based policies and procedures.
In October, Myanmar become the latest country to be added to the FATF’s list of High-Risk Jurisdictions Subject to a Call for Action and called for enhanced due diligence. In June 2022, the FATF strongly urged Myanmar to complete its action plan by October 2022 or the FATF would call on its members and urge all jurisdictions to apply enhanced due diligence to business relations in the jurisdiction. Many of their action points have still not been addressed after a year beyond the action plan deadline, therefore the FATF decided that further action was necessary and the FATF called on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risk arising from Myanmar. The FATF has urged Myanmar to continue to work to fully address its AML/CFT deficiencies and Myanmar will remain on the list of countries subject to a call for action until its full action plan is completed.
Iran and the Democratic People’s Republic of Korea (DPRK) continue to remain on the list of High-Risk Jurisdictions Subject to a Call for Action and are still subject to the FATF’s countermeasures. The FATF has stated that they are concerned by the DPRK’s recurrent failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime, and raised concerns on the serious threats that the DPRK pose to the integrity of the international financial system. The FATF has urged the DPRK to immediately address its AML/CFT deficiencies. Further, the FATF has significant concerns with the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.
In February 2020, the FATF noted Iran has not completed their action plan and as a result, Iran will remain on the FATF statement on [High Risk Jurisdictions Subject to a Call for Action] until the full Action Plan has been completed. Further, the FCA indicated that they will potentially suspend these countermeasures if Iran ratifies the Palermo and Terrorist Financing Conventions, in line with the FATF standards. Until Iran implements the measures required to address the deficiencies identified, the FATF will remain concerned with the terrorist financing risk stemming from Iran and the risk they pose to the international financial system.
Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the “grey list”. The FATF has removed Nicaragua and Pakistan from its list of Jurisdictions under Increased Monitoring and added the Democratic Republic of the Congo, Mozambique, and Tanzania.