On March 21, FinCEN issued an advisory on the Financial Action Task Force’s (FATF’s) updated list of jurisdictions with strategic AML/CFT deficiencies, which may affect U.S. financial institutions’ obligations and risk-based approaches to these jurisdictions.
As part of the FATF’s listing and monitoring process to ensure compliance with the international AML/CFT standards, the FATF identifies (i) jurisdictions that are subject to the FATF’s call for countermeasures or are subject to enhanced due diligence (EDD) due to their AML/CFT deficiencies and (ii) jurisdictions identified by the FATF to have AML/CFT deficiencies.
The FATF has indicated that Iran and the Democratic People’s Republic of Korea (DPRK) have strategic deficiencies in their AML/CFT regimes and has urged all jurisdictions to impose countermeasures in addressing AML/CFT deficiencies. At this time, FATF did not list any jurisdictions as needing enhanced due diligence. The FATF has previously identified the following jurisdictions as having deficiencies in their AML/CFT regimes, for which they have developed an action plan with the FATF: Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Myanmar (Burma), Papua New Guinea, Syria, Uganda, Vanuatu and Yemen.
Algeria, Angola, and Panama have been removed from the FATF listing and monitoring process due to their significant progress in establishing the legal and regulatory framework to address all or nearly all their strategic AML/CFT deficiencies on a technical level, according to FATF. These jurisdictions will work with their respective FATF-Style Regional Bodies as they continue to address the full range of AML/CFT issues identified as part of the mutual evaluation process.
U.S. financial institutions should continue to consult existing FinCEN and U.S. Department of the Treasury guidance on engaging in financial transactions with Iran and DPRK. Previous FinCEN advisories and guidance on DPRK remain in effect, according to the agency.
For jurisdictions that recently have been removed from the FATF listing and monitoring process, financial institutions should take the FATF’s decisions and the reasons behind the delisting into consideration when assessing risk, the agency recommends. 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, FinCEN advises.
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