Financial Action Task Force — FATF: Jurisdictions under Increased Monitoring

By: Miguel Ortega from Wardenclyffe, Inc.

The FATF is an inter-governmental institution that establishes international standards with the objective to prevent illegal financial activities. The FATF identifies jurisdictions, on an on-going basis, that have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. Currently, there are 39 members of the FATF; 37 countries/jurisdictions and 2 regional organizations, the Gulf Cooperation Council (GCC) and the European Commission (EC). From the GCC, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates are not members of the FATF. The 37 counties/ jurisdictions members of the FATF are Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Hong Kong, Iceland, India, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Portugal, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom And United States Of America. There are also 31 international and regional organizations that are Associate Members or Observers of the FATF and participate in its work.

Although a number of jurisdictions have not yet been reviewed by the FATF. When a jurisdiction is under increased monitoring it means the country has committed to resolve its financial deficiencies listed above. The list of jurisdictions under increased monitoring is commonly referred to as “the grey list”. The FATF and institutions with similar objectives work and report on the progress made by countries in this list in addressing the deficiencies and promote the completion of the agreed action plans within the proposed timeframe.

As of February 21st, 2020, these are the jurisdiction under increased monitoring and their efforts to address their deficiencies:

Albania

· In-depth analysis to understand the money laundering and enhance institutional coordination and cooperation;

· Improve the handling of legal requests;

· Establish mechanisms to detect and prevent criminal infiltration in the economy;

· ensuring that accurate and up to date basic and beneficial ownership information is available on a timely basis;

· Improve the sophistication and increase the number of prosecutions and confiscations for money laundering; and

· Improving the implementation of targeted financial sanctions.

The Bahamas

· Develop and electronic case management system for international cooperation;

· Supervision of risks on non-bank financial institutions;

· Ensure access to adequate, accurate, current, and beneficial ownership information;

· Increasing the quality of the Financial Investigation Unit products to assist the Law Enforcement Agency in the pursuance of money laundering and terrorisms financing;

· Demonstrate that the authorities are investigating and prosecuting money laundering;

· Initiation of confiscations proceedings for money laundering;

Barbados

· Demonstrate it applies risk-based supervision for financial institutions and designated non-financial businesses and professions;

· Take measures to prevent legal persons and arrangements from being misused for criminal purposes, and ensure that ownership information is available on a timely basis;

· Increasing the capacity of the Financial Investigation Units to improve the quality of its financial information to further assist Law Enforcement Agencies in investigating money laundering or terrorism financing;

· Demonstrate that money laundering investigations and prosecutions are in line with the country’s risk profile and reduce the backlog to complete prosecutions that result in sanctions when appropriate;

· Pursue confiscation in money laundering, including by seeking assistance from foreign counterparts.

Botswana

· Assess the risks associated with legal persons, legal arrangements, and non-profit organizations;

· Implement risk-based anti-money laundering/ combat the financing of terrorism supervisory manuals;

· Improve its analysis and dissemination of financial intelligence by the Financial Investigation Unit;

· Implement combat the financing of terrorism strategy, and ensuring the terrorism financing investigation capacity of the law enforcement agencies;

· Ensure the implementation without delay of targeted financial sanctions measures related to terrorist financing and proliferation financing;

· Applying a risk-based approach to monitoring non-profit organizations.

Cambodia

· Provide a broad legal basis for anti-money laundering and conducting relevant training to Law Enforcement Agencies;

· Implement risk-based supervision for real estate and casinos;

· Implement the risk-based supervision to banks, including through prompt, proportionate, and dissuasive enforcement actions;

· Amending the anti-money laundering/ combat of financing the terrorism Law to address the remaining technical compliance deficiencies;

· Enhance its analysis of suspicious transactions reports and increasing disseminations to Law Enforcement Agencies;

· Demonstrate an increase in money laundering investigations and prosecutions;

· Demonstrate an increase in the freezing and confiscation of criminal proceeds, instrumentalities, and property of equivalent value;

· Establish and implement a legal framework for United Nations targeted financial sanctions related to proliferation financing and enhancing the understanding of sanctions evasion.

Ghana

· Implement a comprehensive national anti-money laundering/ combat of financing the terrorism Policy based on the risks identified in the non-resident alien, including measures to mitigate money laundering/ terrorism financing risks associated with the legal persons;

· Improve risk-based supervision, by enhancing the capacity of the regulators and the awareness of the private sector;

· Ensure the timely access to adequate, accurate, and current basic and beneficial ownership information;

· Ensure that the Financial Investigations Unit is focusing its activities on the risks identified in the non-resident alien, and adequately resourced;

· Apply a risk-based approach for monitoring non-profit organizations.

Iceland

· Increase Financial Investigation Units human resource to address suspicious transactions reports;

· Introduce an automated system for suspicious transactions reports filing and enhancing the financial investigation units capacity in its strategic and operational analysis;

· Strengthen strategic analysis as well as ensuring effective supervision for targeted financial sanctions compliance;

· Ensure implementation of targeted financial sanctions requirements among financial institutions and designated non-financial businesses and professions through effective supervision;

· Finalize the collection of accurate beneficial ownership information and demonstrate the imposition of appropriate sanctions for non-compliance;

· Ensure the access to accurate basic and beneficial ownership information for legal persons by competent authorities in a timely manner;

· Enable effective oversight and monitoring of non-profit organizations with adequate resources and in line with the identified terrorism financing risks.

Jamaica

· Develop a more comprehensive understanding of its money laundering/ terrorism financing risk;

· Include all financial institutions and designated non-financial businesses and professions in the anti-money laundering/ combat of financing to the terrorism regime and ensuring adequate risk-based supervision in all sectors;

· Take appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes;

· Ensure that accurate and up to date basic and beneficial ownership information is available on a timely basis;

· Take proper measures to increase the use of financial information and to increase money laundering investigations and prosecutions;

· Ensure the implementation of targeted financial sanctions for terrorist financing without delay;

· Implement a risk-based approach for the supervision of its non-profit organization sector to prevent abuse for terrorism financing purposes.

Mauritius

· Demonstrate that the supervisors of its global business sector and designated non-financial businesses and professions implement risk-based supervision;

· Ensure the access to accurate basic and beneficial ownership information by competent authorities in a timely manner;

· Demonstrate that Law Enforcement Agencies have the capacity to conduct money laundering investigations, including parallel financial investigations and complex cases;

· Implement a risk-based approach for the supervision of its non-profit organization sector to prevent abuse for terrorism financing purposes;

· Demonstrate the adequate implementation of targeted financial sanctions through outreach and supervision.

Mongolia

· Improve sectoral money laundering/ terrorism financing risk understanding by designated non-financial businesses and professions supervisors, applying a risk-based approach to supervision, particularly in relation to dealers in precious metals and stones;

· Demonstrate increased investigations and prosecutions of different types of money laundering activity in line with identified risks;

· Demonstrate further seizure and confiscation of falsely/non-declared currency and applying effective, proportionate, and dissuasive sanctions;

· Demonstrate cooperation and coordination between authorities to prevent sanctions evasion;

· Monitor compliance by financial institutions and designated non-financial businesses and professions with their proliferation financing-related targeted financial sanctions obligations, including the application of proportionate and dissuasive sanctions.

Myanmar

· Demonstrate an improved understanding of money laundering risks in key areas;

· Ensure the supervisory body for designated non-financial businesses and professions is sufficiently resourced, onsite/offsite inspections are risk-based, and hundi operators are registered and supervised;

· Demonstrate enhances in the use of financial intelligence in Law Enforcement Agencies investigations, and increasing operational analysis and disseminations by the Financial Investigation Units;

· Ensure that money laundering is investigated/prosecuted in line with risks;

· Demonstrate investigation of transnational money laundering cases with international cooperation;

· Demonstrate an increase in the freezing/seizing and confiscation of criminal proceeds, instrumentalities, and/or property of equivalent value;

· Managing seized assets to preserve the value of seized goods until confiscation;

· Demonstrating implementation of targeted financial sanctions related to proliferation financing, including training on proliferation financing sanctions evasion.

Nicaragua

· Develop a more comprehensive understanding of its money laundering/ terrorism financing risk;

· More proactively seeking international cooperation to support money laundering investigation, especially with the aim of identifying and tracing assets with confiscation and repatriation purposes;

· Conduct effective risk-based supervision;

· Take appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes;

· Ensure that accurate and up to date basic and beneficial ownership information is available on a timely basis.

Pakistan

· Demonstrate that remedial actions and sanctions are applied in cases of anti-money laundering/combat of financing the terrorism violations, relating to terrorism financing risk management and targeted financial sanctions obligations;

· Demonstrate that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS);

· Demonstrate the implementation of cross-border currency and BNI controls at all ports of entry, including applying effective, proportionate, and dissuasive sanctions;

· Demonstrate that law enforcement agencies are identifying and investigating the widest range of terrorism financing activity and that terrorism financing investigations and prosecutions target designated persons and entities, and those acting on behalf or at the direction of the designated persons or entities;

· Demonstrate that terrorism financing prosecutions result in effective, proportionate, and dissuasive sanctions;

· Demonstrate effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets, and prohibiting access to funds and financial services;

· Demonstrate enforcement against targeted financial sanctions violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases;

· Demonstrate that facilities and services owned or controlled by a designated person are deprived of their resources and the usage of the resources.

Panama

· Strengthen its understanding of the national and sectoral money laundering/ terrorism financing risk and informing findings to its national policies to mitigate the identified risks;

· Proactively taking action to identify unlicensed money remitters, applying a risk-based approach to supervision of the designated non-financial businesses and professions sector and ensuring effective, proportionate, and dissuasive sanctions again anti-money laundering/combat of financing the terrorism violations;

· Ensure adequate verification and update of beneficial ownership information by obliged entities, establishing effective mechanisms to monitor the activities of offshore entities, assessing the existing risks of misuse of legal persons and arrangements to define and implement specific measures to prevent the misuse of nominee shareholders and directors, and ensuring timely access to adequate and accurate beneficial ownership information;

· Ensure effective use of financial investigations unit products for money laundering investigations, demonstrating its ability to investigate and prosecute money laundering involving foreign tax crimes and to provide constructive and timely international cooperation with such offense, and continuing to focus on money laundering investigations in relation to high-risk areas.

Syria

· Address its strategic anti-money laundering/combat of financing the terrorism deficiencies and has made progress to improve its anti-money laundering/combat of financing the terrorism regime.

· Criminalize terrorist financing and establishing procedures for freezing terrorist assets.

Uganda

· Adopt a national anti-money laundering/combat of financing the terrorism strategy;

· Seek international cooperation in line with the country’s risk profile;

· Developing and implementing risk-based supervision to financial institutions and designated non-financial businesses and professions;

· Ensure that competent authorities have timely access to accurate basic and beneficial ownership information for legal entities;

· Demonstrate Law Enforcement Agencies and judicial authorities apply the money laundering offense consistent with the identified risks;

· Establish and implementing policies and procedures for identifying, tracing, seizing, and confiscating proceeds and instrumentalities of crime;

· Demonstrate that Law Enforcement Agencies conduct terrorism financing investigations and pursue prosecutions commensurate with Uganda’s terrorism financing risk profile;

· Address the technical deficiencies in the legal framework to implement proliferation financing-related targeted financial sanctions and implementing a risk-based approach for the supervision of its non-profit organizations' sector to prevent abuse for terrorism financing purposes.

Yemen

· Adequately criminalizing money laundering and terrorist financing;

· Establish procedures to identify and freeze terrorist assets;

· Improve its customer due diligence and suspicious transaction reporting requirements;

· Develop the monitoring and supervisory capacity of the financial sector supervisory authorities and the financial intelligence unit;

· Establish a fully operational and effectively functioning financial intelligence unit.

Zimbabwe

· Improve understanding of the key money laundering/ terrorism financing risks among the relevant stakeholders and implementing the national anti-money laundering/ combat of financing the terrorism policy base on the identified risks;

· Implement risk-based supervision for financial institutions and designated non-financial businesses and professions including through capacity building among the supervisory authority;

· Ensure development of adequate risk mitigation measures among financial institutions and designated non-financial businesses and professions, including by applying proportionate and dissuasive sanctions to breaches;

· Develop a comprehensive legal framework and mechanism to collect and maintain accurate and updated beneficial ownership information for legal persons and arrangements, and ensure timely assess by the competent authorities;

· Addressing remaining gaps in terrorism financing and proliferation financing-related targeted financial sanctions frameworks and demonstrating implementation.

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