Financial Action Task Force 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): Bulgaria was added to the list, and Albania, the Cayman Islands, Jordan, and Panama removed from that 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 (Burma) 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. Also, FinCEN reminds money services businesses (MSBs) of its interpretation under Statutory Instrument 31 CFR Part 103, namely FinCEN Interpretive Release 2004-1, „which clarifies that the AML program regulation requires MSBs to establish adequate and appropriate policies, procedures, and controls commensurate with the risk of money laundering and the financing of terrorism posed by their relationship with foreign agents or foreign counterparties“.
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.
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.