On 20 September 2016, the European Commission Delegated Regulation (EU) 2016/1675 supplementing the Fourth Money Laundering Directive ((EU) 2015/849) (4MLD) was published in the Official Journal of the European Union (EU).
The EU aims to ensure efficient protection mechanisms for the internal market and to increase legal certainty for economic operators and stakeholders in their relationships with third-country jurisdictions. According to the Delegated Regulation, some jurisdictions have in place deficient legal and institutional frameworks with poor standards for controlling money flows. These deficiencies threaten the financial system of the EU. All EU obliged entities the 4MLD should therefore apply enhanced due diligence measures in their relationship to natural persons or legal entities established in high-risk third countries in order to ensure equivalent requirements for market participants across the EU.
The Regulation identified high-risk third countries with strategic anti-money laundering (AML) and counterterrorist financing (CTF) deficiencies. The identification was based on an assessment of the compliance with the criteria laid down in the 4MLD regarding its legal and institutional AML and CTF framework, the powers and procedures of its competent authorities and the effectiveness of the AML and CTF system.
According to the European Commission's analysis:
Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu and Yemen are high-risk third countries that have strategicdeficiencies in their AML and CTF regimes. They have provided a written high-level political commitment to address the identified issues and accordingly develop an action plan with the Financial Action Task Force (FATF).
Iran is a high-risk third country that has strategic deficiencies in its AML and CTF regimes. Iran has provided a high-level political commitment to address the identified deficiencies and has decided to seek technical assistance in the implementation of the FATF Action Plan.
The Democratic People's Republic of Korea (DPRK) is a high-risk third country that has strategic deficiencies in its AML and CTF regime. This country identified by a FAFT Public Statement presents ongoing and substantial money-laundering and terrorist financing regimes.
The European Commission will permanently monitor the developments in the assessment of legal and institutional frameworks in place in third countries, the powers and procedures of competent authorities and the effectiveness of their AML and CTF regimes, in order to keep the list of high-risk third countries with strategic deficiencies up to date.