Jurisdictions with Strategic Deficiencies Identified by FATF

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As part of its ongoing review of compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) standards, the Financial Action Task Force (FATF) has recently published two documents – ‘FATF Public Statement’ and ‘Improving Global AML/CFT Compliance: on-going process’ (14 February 2014) – identifying the countries which are considered to have strategic deficiencies in view of AML/CFT. The FATF works alongside these jurisdictions to address the deficiencies that pose a risk to the international financial system. Additionally, the FATF advises its members to consider the risks arising from the deficiencies associated with each jurisdiction.

On the one hand are certain jurisdictions which are subject to an FATF call on its members to apply counter measures to safeguard their financial system from the constant and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdiction. These include jurisdictions such as Iran and the Democratic People’s Republic of Korea (DPRK). Jurisdictions which have not made any sufficient progress in addressing the AML/CFT deficiencies or have not introduced an action plan developed with the FATF to address these deficiencies include the following: Algeria, Ecuador, Ethiopia, Indonesia, Myanmar, Pakistan, Syria, Turkey and Yemen.

On the other side of the spectrum, a number of jurisdictions have presented a high-level political commitment and developed an action plan with the FATF to address their AML/CFT deficiencies. Although each jurisdiction presents different levels of ML/FT risks, each jurisdiction has provided a written commitment to identify them and the FATF welcomes these commitments.

The FATF started reviewing such issues in October 2001 when it expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering. The FATF and the FATF-style regional bodies (FSRBs) will continue to work with the jurisdictions and report on the progress made in addressing such deficiencies. Furthermore, the FATF will closely monitor the implementation of such action plans. A large number of jurisdictions have not yet been reviewed by the FATF but its objective is to maintain the system of identifying additional jurisdictions that pose a risk to the international financial system.

For more information in relation to the above kindly contact Mr. Dunstan Magro, Managing Partner at WDM International.