Financial Action Task Force Identifies Jurisdictions with Insufficient Measures to Combat Money Laundering, Terrorist Financing
On 17 June 2022, the Financial Action Task Force (FATF) issued its updated lists of jurisdictions that have strategic deficiencies in their regimes for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF).
The FATF added Gibraltar to its list of Jurisdictions under Increasing Monitoring and removed Malta therefrom. The FATF's list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran and the Democratic People's Republic of Korea (i.e. North Korea) thereon.
The FATF is an intergovernmental body that was founded in 1989 on the initiative of the G7 countries to establish international standards for AML/CFT/CPF. It publicly identifies:
- Jurisdictions under Increased Monitoring, which refer to jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed-upon timeline; and
- High-Risk Jurisdictions Subject to a Call for Action, which refer to jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes to which enhanced due diligence, or in the most serious case, countermeasures must be applied.
The US Financial Crimes Enforcement Network (FinCEN) announced the update in its 23 June 2022 news release, urging US financial institutions to consider the FATF's stance toward the listed jurisdictions when reviewing their obligations (including the due diligence obligations) and risk-based policies, procedures and practices.
The FinCEN noted that US financial institutions must comply with the extensive US restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions.