FinCEN Issues Advisory Regarding the FATF’s Updated List of Jurisdictions with AML/CTF Strategic Deficiencies

FinCEN issued an advisory (the “Advisory”) regarding the issuance by the Financial Action Task Force (the “FATF”) of an updated list of jurisdictions that the FATF has identified as having strategic deficiencies in their anti-money laundering and counter-terrorist financing (“AML/CTF”) regimes.  In its updated categorization of jurisdictions, the FATF has issued two documents:

  1. a statement regarding those jurisdictions that are subject to the FATF’s call for countermeasures or are subject to enhanced due diligence (“EDD” ) due to their AML/CTF deficiencies; and
  2. a list of jurisdictions that have improved their AML/CTF compliance process, but continue to have AML/CTF deficiencies. 

The FATF is an intergovernmental policy-making body with 36 member nations (including the U.S.) that “establishes international standards to combat money laundering and counter the financing of terrorism and proliferation of weapons of mass destruction.” 

In the Advisory, FinCEN reminds financial institutions that they are expected to consider the changes reflected in the FATF’s updated lists “when reviewing their obligations and risk-based approaches with respect to [those] jurisdictions.”

JURISDICTIONS SUBJECT TO THE FATF’S CALL FOR COUNTERMEASURES OR SUBJECT TO EDD BECAUSE OF THEIR AML/CTF DEFICIENCIES

As updated, the FATF calls upon its member nations (and urges all jurisdictions) to impose countermeasures on (1) Iran and (2) the Democratic People’s Republic of Korea.

The FATF lists nine additional jurisdictions as posing significant AML/CTF compliance risk because they have failed to make sufficient progress in addressing their AML/CTF deficiencies.  These jurisdictions are:

  • Algeria
  • Ecuador
  • Ethiopia
  • Indonesia
  • Myanmar
  • Pakistan
  • Syria
  • Turkey
  • Yemen

FinCEN states in the Advisory that it expects U.S. banks and other U.S. financial institutions to apply EDD with respect to these nine jurisdictions.

In updating the list, the FATF removed Kenya and Tanzania from the group of jurisdictions requiring EDD, because the FATF has concluded that Kenya and Tanzania (although they still have AML/CTF deficiencies) have made significant progress in addressing those deficiencies.

JURISDICTIONS IDENTIFIED BY THE FAFT FATF AS HAVING AML/CTF DEFICIENCIES, BUT WHICH HAVE DEVELOPED ACTION PLANS WITH THE FATF

As noted in the Advisory, the FATF has identified 21 jurisdictions which have deficiencies in their AML/CTF compliance regime, but which have developed an action plan with the FATF to address those deficiencies.  The jurisdictions named under this Section II cause the FATF a lower level of AML/CTF concern than those identified in Section I.  The 21 jurisdictions are:

  • Afghanistan
  • Albania
  • Angola
  • Argentina
  • Cambodia
  • Cuba
  • Iraq
  • Kenya
  • Kuwait
  • Kyrgyzstan
  • Lao PDR
  • Mongolia
  • Namibia
  • Nepal
  • Nicaragua
  • Papua New Guinea
  • Sudan
  • Tajikistan
  • Tanzania
  • Uganda
  • Zimbabwe

Because the FATF has concluded that Kenya and Tanzania each made significant progress in addressing their strategic AML/CTF deficiencies, they have been moved from Section I to Section II.  Moreover, the FATF concluded that Antigua and Barbuda, Bangladesh and Vietnam (which were formerly listed in Section II) have made significant progress “in addressing all or nearly all of their strategic AML/CTF deficiencies,” and the FATF has removed those jurisdictions from the FATF’s listing and monitoring process.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Topics:  Anti-Money Laundering, FATF, FinCEN, Terrorism Funding

Published In: Criminal Law Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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