Jurisdictions that have strategic deficiencies with the AML/CFT standards as identified by the FATF and measures to be taken towards these jurisdictions

27 June 2014

This communication replaces the previous communication of 14 February 2014.

I. FATF Public Statement – 27 June 2014

In its public statement of 27 June 2014 the FATF identified 6 jurisdictions that pose a significant risk to the international financial system due to their lack of a comprehensive AML/CFT regime, among which two jurisdictions for which the FATF furthermore requires taking countermeasures.

Taking into account the FATF’s public statement, and the ML/TF risks emanating from these jurisdictions, the persons and individuals subject to the Law of 11 January 1993 must apply enhanced customer due diligence measures for occasional transactions they carry out, or when entering into or maintaining a business relationship, with their customers when persons domiciled or established in one of these 6 jurisdictions or with any other links to these jurisdictions are involved in a transaction or a business relationship in whatever capacity (as a customer, proxy holder or beneficial owner).

This list will be updated after each FATF plenary meeting, which usually takes place in October, February and June each year. It is therefore advisable to regularly check CTIF-CFI’s website, especially in October, February and June, to make sure one has the new updated list of non-cooperative jurisdictions and territories.
 

1. Jurisdictions subject to a FATF call on its members and other jurisdictions to apply countermeasures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions

1.1. Iran

The FATF remains particularly and exceptionally concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, despite Iran’s previous engagement with the FATF and recent submission of information.

The FATF urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective countermeasures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. The FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade countermeasures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. Due to the continuing terrorist financing threat emanating from Iran, jurisdictions should consider the steps already taken and possible additional safeguards or strengthen existing ones.

The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements. If Iran fails to take concrete steps to continue to improve its CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen these countermeasures in October 2014.

In this respect CTIF-CFI also refers to the directly applicable restrictive measures, as well as the directly applicable countermeasures, imposed by the Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran and repealing Regulation (EU) No 961/2010 (consolidated version).
 

1.2. Democratic People's Republic of Korea

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies.

The FATF reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies and financial institutions.

In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective countermeasures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the DPRK.

Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and take into account ML/FT risks when considering requests by DPRK financial institutions to open branches and subsidiaries in their jurisdiction.

In this respect, CTIF-CFI also refers to the directly applicable restrictive measures, imposed by the Council Regulation (EC) No 329/2007 of 27 March 2007 concerning restrictive measures against the Democratic People's Republic of Korea.

CTIF-CFI also points out that the EU restrictive measures against other countries (consolidated list of countries to which restrictive measures apply) remain applicable.
 

2. Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies. The FATF calls on its members to consider the risks arising from the deficiencies associated with following jurisdictions

As mentioned above, the persons and individuals subject to the Law of 11 January 1993 must apply enhanced customer due diligence measures for occasional transactions they carry out, or when entering into or maintaining a business relationship, with their customers when persons domiciled or established in one of these jurisdictions or with any other links to these jurisdictions are involved in a transaction or a business relationship in whatever capacity (as a customer, proxy holder or beneficial owner).

Algeria
Ecuador
Indonesia
Myanmar

In this respect, CTIF-CFI also refers to the directly applicable EU restrictive measures, as well as the directly applicable EU countermeasures.

II. Improving Global AML/CFT Compliance: on-going process - 27 June 2014

As part of its ongoing 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. FATF welcomes these commitments. The FATF will continue to identify additional jurisdictions, on an ongoing basis, that pose a risk in the international financial system.

Taking into account this information, and the ML/TF risks emanating from these jurisdictions, it is recommended that as part of their risk assessment system the persons and individuals subject to the Law of 11 January 1993 take into account the specific risks linked to the following jurisdictions:
 

Afghanistan
Albania
Angola
Argentina
Cambodia
Cuba
Ethiopia
Iraq
Kuwait
Laos
Namibia
Nicaragua
Pakistan
Panama
Papua New Guinea
Sudan
Syria
Tajikistan
Turkey
Uganda
Yemen
Zimbabwe

For further details on the deficiencies of each of these jurisdictions, please refer to the document “Improving Global AML/CFT Compliance: on-going process - 27 June 2014”.