On 6 July 2016, HM Treasury published an advisory note on money laundering and terrorist financing controls in overseas jurisdictions (the Advisory Note) which focuses on two statements published by the Financial Action Task Force (FATF) on 24 June 2016. These statements identify jurisdictions that have strategic deficiencies in terms of their anti-money laundering (AML) and counter terrorist financing (CTF) regimes. The statements are annexed to the Advisory Note.
The first statement is a public statement that addresses the AML and CTF regimes of two jurisdictions: Democratic People's Republic of Korea (DPRK) and Iran. In this statement, FATF called on its members and other jurisdictions to apply counter-measures to protect the international finance system from money laundering and terrorist financing risks that may be occurring in DPRK. It explained that it remains concerned that DPRK has not addressed deficiencies in its AML and CTF regime. FATF urged DPRK to address this immediately. FATF advised that its members and other jurisdictions alert financial institutions to give special attention to transactions with DPRK, including transactions with DPRK companies, financial institutions and those acting on their behalf. FATF also asked that enhanced scrutiny and effective counter-measures are put in place by all jurisdictions.
This statement also addressed the AML and CTF regimes of Iran. FATF positively recognised Iran's adoption of an Action Plan to address deficiencies in its AML and CTF regimes and its decision to accept technical assistance in implementing the Action Plan. FATF explained that it has suspended counter-measures for 12 months in order to monitor Iran's progress in implementing the Action Plan; but indicated that they may be re-imposed if sufficient progress is not made. FATF stated that Iran will remain
on this statement until the full Action Plan has been completed. FATF also stated that it is still concerned about the risk of terrorist financing emanating out of Iran and, accordingly, advised its members to inform their financial institutions to apply an enhanced due diligence process with regard to transactions with natural or legal persons from Iran. FATF concluded that it would monitor the progress of Iran.
On the basis of this statement, HM Treasury advised that financial institutions treat DPRK and Iran as high-risk jurisdictions for the purposes of the Money Laundering Regulations 2007 and, accordingly, that enhanced due diligence measures should be applied.
The second statement published by FATF focused on other jurisdictions that have strategic deficiencies in terms of their AML and CTF regimes. FATF notes that it has not reviewed all jurisdictions so the list provided in this statement is not exhaustive. The jurisdictions identified in this statement are Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu, and Yemen. Action Plans have been developed by these jurisdictions with FATF and each jurisdiction has provided a high-level political commitment to address the deficiencies in their AML and CTF regimes. FATF called on the jurisdictions listed in this statement to implement the Action Plans and stated that it would monitor their implementation.
On the basis of this statement, HM Treasury advised that financial institutions take appropriate actions in relation to the listed jurisdictions, which may include enhanced due diligence measures in high-risk situations.
FATF also identified jurisdictions in the second statement which are no longer subject to its ongoing global AML and CTF compliance process. These jurisdictions were Myanmar and Papua New Guinea.