On June 21, 2013, the Financial Action Task Force (FATF) updated its lists of jurisdictions with strategic AML/CFT deficiencies. These changes may affect U.S. financial institutions’ obligations and risk-based approaches with respect to relevant jurisdictions.
As part of the FATF’s listing and monitoring process to ensure compliance with the international Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) standards, the FATF identified certain jurisdictions as having strategic deficiencies in their AML/CFT regimes.1 The FATF updated its lists of jurisdictions that appear in two documents:2 (I) jurisdictions that are subject to the FATF’s call for countermeasures or aresubject to Enhanced Due Diligence (EDD) due to their AML/CFT deficiencies (referred to as the ‘FATF Public Statement’) and (II) jurisdictions identified by the FATF to have AML/CFT deficiencies (referred to by the FATF as ‘Improving Global AML/CFT Compliance: On-going Process’). Financial institutions should consider these changes when reviewing their obligations and risk-based approaches with respect to the jurisdictions noted below.
I. Jurisdictions that are subject to the FATF’s call for countermeasures or are subject to EDD due to their AML/CFT deficiencies
The FATF has indicated that the following jurisdictions have deficiencies in the their AML/CFT regimes and that they are (A) subject to the FATF’s call for countermeasures or (B) subject to the FATF’s call to consider the risk arising from each jurisdiction because they have not made sufficient progress in addressing their AML/CFT deficiencies. FinCEN is advising U.S. financialinstitutions to apply enhanced due diligence for countries in category (B) (for additional details,see the FinCEN Guidance section below). Accordingly, all these jurisdictions are included in theFATF Public Statement.
Please click on each jurisdiction for additional information.
B. Enhanced Due Diligence:
Summary of Changes to this List
Nigeria is now recognized as having madesignificant progress to address its FATFidentifiedAML/CFT regime deficiencies(see below). Consequently, the FATF hasnow included Nigeria in its ImprovingGlobal AML/CFT Compliance: On-goingProcess document (see below).
II. Jurisdictions identified by the FATF to have AML/CFT deficiencies
The FATF has identified the following jurisdictions as having deficiencies in their AML/CFTregimes for which they have developed an action plan with the FATF. Consequently, thesejurisdictions are included in the following list of jurisdictions with AML/CFT deficiencies (asdescribed in the FATF’s ImprovingGlobal AML/CFT Compliance: On-goingProcess document).
Please click on each jurisdiction for additional information.
Additionally, on June 21, 2013, the FATF acknowledged the following jurisdictions for theirsignificant progress warranting removal from the FATF listing and monitoring process. Thesejurisdictions will work with their respective FATF-Style Regional Bodies as they continue toaddress the full range of AML/CFT issues identified as part of the mutual evaluation process.
Summary of Changes to this List
- Due to their significant progress inaddressing all or nearly all of their AML/CFT deficiencies, Bolivia, Brunei Darussalam,Philippines, Sri Lanka, and Thailand havebeen removed from the FATF listing andmonitoring process.
- Lao PDR has also been identified on this listbecause of strategic deficiencies in its AML/CFT regime. Lao PDR has made a highlevelpolitical commitment to work with theFATF and the Asia/Pacific Group on MoneyLaundering to address its deficiencies.
- Nigeria has made significant AML/CFTprogress and is now identified on thislist, having moved from the FATF PublicStatement (see Section I above).
FinCEN Guidance regarding jurisdictions listed in Section I of this Advisory
Jurisdictions Subject to Countermeasures
Jurisdictions in this section (IranIran and DPRK) are subject to the FATF’s call on its members andother countries to apply countermeasures to protect the interna tional financial system fromAML/CFT risks. U.S. financial institutions should continue to c onsult existing FinCEN and U.S.Department of the Treasury (Treasury) guidance on engaging in fi nancial transactions with Iranand DPRK. Previous FinCEN advisories and guidance on Iran3 and DPRK4 remain in effect.
With respect to Iran, U.S. financial institutions are subject to a broad range of restrictionsand prohibitions due to a number of illicit financing risks, inc luding money laundering,terrorist financing, and weapons of mass destruction (WMDs) proliferation financing.Financial institutions are reminded of the existing U.S. sancti ons that are administered bythe Department of the Treasury’s Office of Foreign Assets Control (OFAC), including but notlimited to Iranian Government-owned banks and other entities, as well as Iranian entitiesthat have been linked to terrorist activity and the proliferation of WMDs. Information aboutthese sanctions is available on OFAC’s website http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx.Furthermore, on November 21, 2011, Treasury identified Iran as a jurisdiction of "primarymoney laundering concern" under Section 311 of the USA P ATRIOT Act.5
In addition, financial institutions should be familiar with the financial provisions andprohibitions contained in United Nations Security Council Resol utions (UNSCRs) againstIran6 and DPRK.7 In particular, UNSCRs 1929 and 1803 call on all states to exe rcise vigilanceover activities of financial institutions in their territories wit h all banks domiciled in Iran andtheir branches and subsidiaries abroad.
Existing U.S. sanctions - in particular, those under the North Korea Sanctions Regulations8and Executive Orders 13570 and 13551 - create a legal framework that limits U.S. financialinstitutions’ direct exposure to the types of North Korean finan cial or commercial transactionscontributing to DPRK’s proliferation activities that are the fo cus of UNSCRs 2087 and 2094, aswell as UNSCRs 1718 and 1874.
In June 2013, the FATF issued updated guidance to assist States in implementing the irfinancial obligations for targeted financial sanctions and activi ty-based prohibitions pursuantto UNSCRs to address proliferation finance risks associated with Iran and DPRK.9
B. Jurisdictions Subject to Enhanced Due Diligence
Jurisdictions in this section (see below) have strategic AML/CFT deficiencies and have not madesufficient progress in addressing the deficiencies. In concurrence with the FATF’s decision,FinCEN is advising U.S. financial institutions of their increased obligations under Section 312 ofthe USA PATRIOT ACT, 31 USC § 5318(i). Accordingly, U.S. financial institutions should applyenhanced due diligence, as described under implementing regulations 31 CFR § 1010.610(b)and (c) when maintaining correspondent accounts for foreign banks operating under a bankinglicense issued byEcuador,Ethiopia,Indonesia,Kenya,Myanmar,Pakistan,São Tomé and Príncipe,Syria,10Tanzania,Turkey,Vietnamand Yemen
As required by the regulations implementing the Bank Secrecy Act (BSA),11 covered financialinstitutions should ensure that their enhanced due diligence programs include, at a minimum,steps to:
- Conduct enhanced scrutiny of correspondent accounts to guard against money launderingand to identify and report any suspicious transactions, in accordance with applicable lawand regulation;
- Determine whether the foreign bank for which the correspondent account is establishedor maintained in turn maintains correspondent accounts for other foreign banks that usethe foreign correspondent account established or maintained by the covered financialinstitution and, if so, take reasonable steps to obtain information relevant to assess andmitigate money laundering risks associated with the foreign bank’s correspondent accountsfor other foreign banks, including, as appropriate, the identity of those foreign banks; and
- Determine, for any correspondent account established or maintained for a foreign bankwhose shares are not publicly traded, the identity of each owner of the foreign bank andthe nature and extent of each owner ’s ownership interest.
FinCEN Guidance regarding jurisdictions listed in Section IIof this Advisory
U.S. financial institutions should consider the risks associated with the AML/CFT deficienciesof the countries identified under this section (Afghanistan,Albania,Algeria,Angola,Antigua and Barbuda,Argentina,Bangladesh,Cambodia,Cuba,Kuwait,Kyrgyzstan,Lao PDR,Mongolia,Morocco,Namibia,Nepal,Nicaragua,Nigeria,Sudan,Tajikistan,andZimbabwe).With respect to these jurisdictions, U.S. financial institutions are reminded of theirobligations to comply with the general due diligence obligation s under 31 CFR § 1010.610(a).As required under 31 CFR § 1010.610(a), cov ered financial institutions should ensure thattheir due diligence programs, which address correspondent accounts maintained for foreignfinancial institutions, include appropriate, specific, risk-based, and, where necessary, enhancedpolicies, procedures, and controls that are reasonably designed to detect and report knownor suspected money laundering activity conducted through or involving any correspondentaccount established, maintained, administered, or managed in the United States.
If a financial institution knows, suspects, or has reason to sus pect that a transaction involvesfunds derived from illegal activity or that a customer has otherwise engaged in activitiesindicative of money laundering, terrorist financing, or other violation o f federal law orregulation, the financial institution shall then file a Suspiciou s Activity Report.12
Additional questions or comments regarding the contents of this Advisory should be addressedto the FinCEN Regulatory Helpline at 800-949-2732. Financial institutions wanting to reportsuspicious transactions that may relate to terrorist activity should call the Financial InstitutionsToll-Free Hotline at (866) 556-3974 (7 days a week, 24 hours a day). The purpose of the hotlineis to expedite the delivery of this information to law enforcement. Financial institutions shouldimmediately report any imminent threat to local-area law enforcement officials.