Financial Action Task Force Suspends the Membership of the Russian Federation, and Identifies Jurisdictions with Anti-Money Laundering and Combating the Financing of Terrorism and Counter-Proliferation Deficiencies

The Financial Crimes Enforcement Network (FinCEN) has published a press release relating to the recent statements by the Financial Action Task Force (FATF) regarding jurisdictions with Anti-Money Laundering (AML) and Combating the Financing of Terrorism and Counter-Proliferation (CFT) deficiencies. Specifically, FATF announced the following re-classification of jurisdictions in accordance with their deficiencies:
(1) Jurisdictions Under Increased Monitoring (Grey List): Cambodia and Morocco were removed from and South Africa and Nigeria added to the list.
(2) High-Risk Jurisdictions (Black List): No countries were removed from or added to the list, leaving Iran, the Democratic People’s Republic of Korea (DPRK), and Myanmar on the list.
In this context, FinCEN reminds institutions subject to Bank Secrecy Act requirements to adopt a risk-based approach towards the monitoring of accounts and account transactions relating to any such jurisdictions. Such risk-based approach must take into consideration the FATF statements regarding high-risk jurisdictions and jurisdictions under increased monitoring. In addition, FinCEN reminds firms of their obligations pursuant to Statutory Instrument 31 CFR Part 1010, § 1010.610 to establish similar monitoring processes for correspondent accounts of foreign financial institutions.
Finally, FinCEN refers to already existing U.S. sanctions imposed by the Office of Foreign Assets Control (OFAC) with regard to Iran. Corresponding regulation prohibits financial institutions in the U.S. to have correspondent account relationships with institutions in that country which goes beyond the requirements stipulated by FATF.
Also, FinCEN informs of the suspension of FATF membership of the Russian Federation as „the Russian Federation’s actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system“. At the same time, FATF has issued a warning to all jurisdictions calling on them to stay highly alert to any sanction evasion attempts by the Russian government or Russian entities and individuals.
In its conclusion FinCEN notes that institutions must ensure to comply with U.S. law and to report ANY suspicious activity as soon as possible.