The Financial Crimes Enforcement Network (FinCEN) is issuing this advisory to inform banks and other financial institutions operating in the United States of the money laundering and financing of terrorism (ML/FT) risks associated with jurisdictions identified by the Financial Action Task Force (FATF)1 on June 22, 2012, as having strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes, for which each jurisdiction has provided a high-level political commitment to address the strategic AML/CFT deficiencies.2 This advisory also includes information on the substantial AML/CFT improvements made by Turkmenistan and their subsequent removal from this FATF review process. Also, FinCEN is issuing a complementary advisory today, FIN-2012-A008,3 which addresses a separate but related FATF document identifying jurisdictions with strategic AML/CFT deficiencies that have either not made sufficient progress, not provided a political commitment to address AML/CFT deficiencies, or are subject to FATF's call for countermeasures.
The FATF publication comes in response to the G-20 leaders' call for the FATF to reinvigorate its process for assessing countries' compliance with international AML/CFT standards and to publicly identify high-risk jurisdictions.4 Also, the G-20 leaders have repeatedly called for FATF to issue regular updates on jurisdictions with strategic deficiencies.5 The text highlights jurisdictions with strategic AML/CFT deficiencies, for which each jurisdiction has provided a high-level political commitment to address the strategic AML/CFT deficiencies. FATF explains its specific concerns regarding each of the jurisdictions and notes it will continue to monitor the implementation of each jurisdiction's action plan for addressing the deficiencies. On an ongoing basis, FATF will continue to update information on these and other jurisdictions that pose a risk to the international financial system.
Please note that the countries on this advisory have changed since FinCEN's Advisory, dated March 6, 2012. In particular, Ecuador, Vietnam and Yemen have been downgraded to the FATF Public Statement and, consequently, are referenced in the separate, but related, FinCEN advisory, FIN-2012-A008.6 In addition, Afghanistan, Albania, and Kuwait have been added to this document. This advisory also includes FATF's update on the AML/CFT improvements in Turkmenistan, which has been removed from the FATF monitoring process.
Improving Global AML/CFT Compliance: on-going process - 22 June 20127
As part of its on-going review of compliance with the AML/CFT standards, the FATF has to date identified the following jurisdictions which have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. While the situations differ among each jurisdiction, each jurisdiction has provided a written high-level political commitment to address the identified deficiencies. The FATF welcomes these commitments.
A large number of jurisdictions have not yet been reviewed by the FATF. The FATF continues to identify additional jurisdictions, on an on-going basis, that pose a risk to the international financial system.
The FATF and the FSRBs will continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified deficiencies. The FATF calls on these jurisdictions to complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members to consider the information presented below.
Afghanistan
In June 2012, Afghanistan made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Afghanistan will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets: (3) implementing an adequate AML/CFT supervisory and oversight programme for all financial sectors; (4) establishing and implementing adequate procedures for the confiscation of assets related to money laundering; (5) establishing a fully operational and effectively functioning Financial Intelligence Unit; and (6) establishing and implementing effective controls for cross-border cash transactions. The FATF encourages Afghanistan to address its remaining deficiencies and continue the process of implementing its action plan.
Albania
In June 2012, Albania made a high-level political commitment to work with the FATF and MONEYVAL to address its strategic AML/CFT deficiencies. Albania has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Albania will work on implementing its action plan to address these deficiencies, including by: (1) implementing adequate customer due diligence provisions; (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets; and (3) enhancing the framework for international co-operation related to terrorist financing. The FATF encourages Albania to address its remaining deficiencies and continue the process of implementing its action plan.
Algeria
In October 2011, Algeria made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. The FATF has concerns that strategic AML/CFT deficiencies remain and, therefore, further engagement with Algeria is needed to clarify whether these deficiencies have been addressed. Algeria should continue to work on implementing its action plan, including by: (1) adequately criminalising terrorist financing; (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets; (3) improving and broadening customer due diligence measures; and (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (FIU). The FATF encourages Algeria to address its deficiencies and continue the process of implementing its action plan.
Angola
In June 2010, Angola made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since February 2012, Angola has taken steps towards improving its AML/CFT regime, including by issuing customer due diligence regulations. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Angola should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit; and (3) establishing and implementing an adequate legal framework to identify and freeze terrorist assets without delay. The FATF encourages Angola to address its remaining deficiencies and continue the process of implementing its action plan.
Antigua and Barbuda
In February 2010, Antigua and Barbuda made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Antigua and Barbuda should continue to work on implementing its action plan to address these deficiencies, including by continuing to improve the overall supervisory framework and to work with the Organisation of Eastern Caribbean States to this end. The FATF encourages Antigua and Barbuda to address its remaining deficiencies and continue the process of implementing its action plan.
Argentina
In June 2011, Argentina made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since February 2012, Argentina has taken substantial steps towards improving its AML/CFT regime, including by issuing a Presidential Decree creating a framework for freezing terrorist-related assets and issuing further FIU resolutions to reporting parties. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Argentina should continue to work on implementing its action plan to address these deficiencies, including by: (1) addressing the remaining deficiencies with regard to the criminalisation of money laundering; (2) further improving procedures for the confiscation of funds related to money laundering and freezing terrorist assets; (3) enhancing financial transparency; (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements; (5) further enhancing the AML/CFT supervisory programme for all financial sectors; (6) further improving and broadening customer due diligence measures; and (7) establishing appropriate channels for international co-operation and ensuring effective implementation. The FATF encourages Argentina to address its remaining deficiencies and continue the process of implementing its action plan.
Bangladesh
In October 2010, Bangladesh made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February 2012, Bangladesh has taken steps towards improving its AML/CFT regime, including by enacting a Mutual Legal Assistance Act. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Bangladesh should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit; (4) improving international co-operation; and (5) issuing guidance to capital markets intermediaries to ensure their AML/CFT obligations are complied with. The FATF encourages Bangladesh to address its remaining deficiencies and continue the process of implementing its action plan.
Brunei Darussalam
In June 2011, Brunei Darussalam made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February 2012, Brunei Darussalam has taken steps towards improving its AML/CFT regime, including by issuing the Criminal Asset Recovery Order, 2012 and the Anti-Terrorism Order (Amendment) Order, 2012. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Brunei Darussalam should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing and implementing adequate procedures to identify and freeze terrorist assets; (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit; and (3) enacting and implementing appropriate mutual legal assistance legislation. The FATF encourages Brunei Darussalam to address its remaining deficiencies and continue the process of implementing its action plan.
Cambodia
In June 2011, Cambodia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Cambodia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) establishing and implementing adequate procedures for the confiscation of funds related to money laundering; (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit; and (5) establishing and implementing effective controls for cross-border cash transactions. The FATF encourages Cambodia to address its remaining deficiencies and continue the process of implementing its action plan.
Kuwait
In June 2012, Kuwait made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Kuwait will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing; (2) implementing the 1999 International Convention for the Suppression of Financing of Terrorism; (3) establishing and implementing adequate procedures to identify and freeze terrorist assets; (4) ensuring that appropriate laws and procedures are in place to provide mutual legal assistance; (5) establishing effective customer due diligence measures; (6) ensuring a fully operational and effectively functioning Financial Intelligence Unit (FIU), in particular addressing the operational autonomy of the FIU; and (7) ensuring that financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to money laundering and terrorist financing. The FATF encourages Kuwait to address its remaining deficiencies and continue the process of implementing its action plan.
Kyrgyzstan
In October 2011, Kyrgyzstan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. Since February 2012, Kyrgyzstan has taken steps towards improving its AML/CFT regime, including by establishing an AML/CFT Commission. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Kyrgyzstan should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets; (3) establishing and implementing adequate measures for the confiscation of funds related to money laundering; (4) establishing effective customer due diligence measures for all financial institutions; and (5) implementing an adequate and effective AML/CFT supervisory programme for all financial sectors. The FATF encourages Kyrgyzstan to address its deficiencies and continue the process of implementing its action plan, specifically enacting the necessary AML/CFT amendments.
Mongolia
In June 2011, Mongolia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February 2012, Mongolia has taken steps towards improving its AML/CFT regime, including by strengthening operational coordination between the FIU and law enforcement. However, the FATF has determined that strategic AML/CFT deficiencies remain. Mongolia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) establishing adequate procedures for the confiscation of funds related to money laundering; (4) establishing suspicious transaction reporting requirements; and (5) demonstrating effective regulation of money service providers. The FATF encourages Mongolia to address its remaining deficiencies and continue the process of implementing its action plan.
Morocco
In February 2010, Morocco made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Since then, Morocco has demonstrated progress in improving its AML/CFT regime, including by adopting amendments to extend the scope of the money laundering and terrorist financing offences, to broaden customer due diligence requirements and taking steps to operationalise the Financial Intelligence Unit. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Morocco should continue to work on implementing its action plan to address these deficiencies, including by adequately criminalising terrorist financing.
Namibia
In June 2011, Namibia made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. Namibia has taken steps towards improving its AML/CFT regime, including ratifying the International Convention for the Suppression of Financing of Terrorism. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Namibia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) implementing an adequate AML/CFT supervisory programme with sufficient powers; (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (FIU), in particular addressing the operational autonomy of the FIU; and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with non-compliance with the national AML/CFT requirements. The FATF encourages Namibia to address its remaining deficiencies and continue the process of implementing its action plan.
Nepal
In February 2010, Nepal made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February 2012, Nepal enacted Mutual Legal Assistance and Extradition Ordinances and issued directives related to the freezing of terrorist assets and to financial institutions on customer due diligence. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Nepal should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) implementing adequate procedures for the confiscation of funds related to money laundering; (4) enacting and implementing appropriate mutual legal assistance legislation; (5) ensuring a fully operational and effectively functioning Financial Intelligence Unit; and (6) establishing adequate STR reporting obligations for ML and FT. The FATF encourages Nepal to address its remaining deficiencies and continue the process of implementing its action plan.
Nicaragua
In June 2011, Nicaragua made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Nicaragua should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing effective customer due diligence measures and record-keeping requirements, in particular entities not currently regulated by the supervisory authority; (2) establishing adequate STR reporting obligations for ML and FT; (3) implementing an adequate AML/CFT supervisory programme for all financial sectors; (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit; and (5) establishing adequate procedures for identifying and freezing terrorist assets. The FATF encourages Nicaragua to address its remaining deficiencies, to continue the process of implementing its action plan.
Philippines
In October 2010, the Philippines made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February 2012, the Philippines has taken significant steps to improve its AML/CFT system, including by enacting one of the amendments to the AML Act and enacting a CFT Law. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. The Philippines should continue to work on implementing its action plan to address these deficiencies, including by: (1) taking additional measures to adequately criminalise money laundering; (2) ensuring adequate procedures to identify and freeze terrorist assets and further expanding provisions regarding confiscation of funds related to money laundering; and (3) extending coverage of reporting entities. The FATF encourages the Philippines to address its remaining deficiencies and continue the process of implementing its action plan. In particular, the FATF strongly encourages the Philippines to enact the pending legislative amendment on AML.
Sudan
In February 2010, Sudan made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Sudan should continue to work on implementing its action plan to address these deficiencies, including by: (1) implementing adequate procedures for identifying and freezing terrorist assets; (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit; and (3) ensuring an effective supervisory programme for AML/CFT compliance. The FATF encourages Sudan to address its remaining deficiencies and continue the process of implementing its action plan.
Tajikistan
In June 2011, Tajikistan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. Since February 2012, Tajikistan has taken steps towards improving its AML/CFT regime, including enhancing its financial intelligence unit and amending its Criminal Code to improve its criminalisation of money laundering and terrorist financing. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Tajikistan should continue to work on implementing its action plan to address these deficiencies, including by: (1) addressing remaining issues regarding criminalisation of money laundering and terrorist financing; (2) establishing and implementing adequate procedures for the confiscation of funds related to money laundering and identifying and freezing terrorist assets; (3) ensuring a fully operational, and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements; and (4) improving and broadening customer due diligence measures. The FATF encourages Tajikistan to address its remaining deficiencies and continue the process of implementing its action plan.
Trinidad and Tobago
In February 2010, Trinidad and Tobago made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since February 2012, Trinidad and Tobago demonstrated progress in improving its AML/CFT regime, including by appointing a permanent director for its financial intelligence unit and adopting procedures to identify and freeze terrorist assets. The FATF will conduct an on-site visit to confirm that the process of implementing the required reforms and actions is underway to address deficiencies previously identified by the FATF.
Venezuela
In October 2010, Venezuela made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since then, Venezuela has taken steps towards improving its AML/CFT regime, including by enacting AML/CFT legislation that criminalises terrorist financing and establishes suspicious transaction reporting (STR) obligations for money laundering and financing of terrorism, and issuing a new resolution aimed at addressing deficiencies in the terrorist asset freezing regime. However, the FATF has determined that a strategic deficiency remains. Venezuela should continue to work on implementing its action plan to address the remaining strategic deficiency, primarily by establishing and implementing adequate procedures to identify and freeze terrorist assets. The FATF encourages Venezuela to address its remaining deficiencies and continue the process of implementing its action plan.
Zimbabwe
In June 2011, Zimbabwe made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. The FATF has determined that strategic AML/CFT deficiencies remain. Zimbabwe should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit; (4) ensuring that financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to money laundering and the financing of terrorism; (5) enacting and implementing appropriate mutual legal assistance legislation; and (6) implementing the 1999 International Convention for the Suppression of Financing of Terrorism. The FATF encourages Zimbabwe to address its remaining deficiencies and continue the process of implementing its action plan.
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JURISDICTION BEING REMOVED FROM THE FATF MONITORING PROCESS Turkmenistan The FATF welcomes Turkmenistan's significant progress in improving its AML/CFT regime and notes that Turkmenistan has largely met its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified. Turkmenistan is therefore no longer subject to FATF's monitoring process under its on-going global AML/CFT compliance process. Turkmenistan will work with EAG as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report, and further strengthen its AML/CFT regime. |
In addition to issuing the above document, the "Outcomes of FATF Plenary meeting Rome, 20-22 June 2012" states that "the FATF welcomed the continued progress made by Argentina and the substantial steps taken in addressing its AML/CFT deficiencies identified in the mutual evaluation in October 2010, in particular the new Presidential Decree creating a framework for freezing of terrorist-related assets. The FATF also welcomed Argentina's updated action plan on measures and milestones to assess Argentina's effective implementation of its money laundering offence, and urges Argentina's continued progress in this area for October 2012. The FATF will continue to work with Argentina in the follow-up process and encourages Argentina to continue addressing its remaining AML/CFT deficiencies."8
FinCEN Guidance
U.S. financial institutions should consider the risks associated with the AML/CFT deficiencies of jurisdictions in the FATF publication entitled, "Improving Global AML/CFT Compliance: on-going process:" Afghanistan, Albania, Algeria, Angola, Antigua, and Barbuda, Argentina, Bangladesh, Brunei Darussalam, Cambodia, Kuwait, Kyrgyzstan, Mongolia, Morocco, Namibia, Nepal, Nicaragua, Philippines, Sudan, Tajikistan, Trinidad and Tobago, Venezuela, and Zimbabwe. With respect to these jurisdictions, U.S. financial institutions are reminded of their obligations to comply with the general due diligence obligations under 31 CFR § 1010.610(a).
As required under 31 CFR § 1010.610(a), covered financial institutions should ensure that their due diligence programs, which address correspondent accounts maintained for foreign financial institutions, include appropriate, specific, risk-based, and, where necessary, enhanced policies, procedures, and controls that are reasonably designed to detect and report known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered, or managed in the United States.
Additionally, as required under 31 CFR § 1024.320, 31 CFR § 1025.320, 31 CFR § 1026.320, 31 CFR § 1020.320, 31 CFR § 1023.320, 31 CFR § 1022.320, 31 CFR § 1021.320, if a financial institution knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity or that a customer has otherwise engaged in activities indicative of money laundering, terrorist financing, or other violation of federal law or regulation, the financial institution shall then file a Suspicious Activity Report.