Review of high risk countries for money laundering

By Christine Duhaime | June 21st, 2013

By Christine Duhaime


The Financial Action Task Force (“FATF“) has released its list of high risk jurisdictions for money laundering and counter terrorist financing. Reporting entities are generally required to apply enhanced due diligence when dealing with funds from jurisdictions that are high risk. The high risk countries are:

  • Vietnam
  • Syria
  • Iran
  • Kenya
  • Ecuador
  • Korea
  • Ethiopia
  • Indonesia
  • Myanmar
  • Pakistan
  • Sao Tome
  • Tanzania
  • Turkey
  • Yemen

With respect to Vietnam, Iran and Syria, the FATF recommends as follows:

Vietnam
Vietnam needs to undertake the following anti-money laundering and counter terrorist financing (“AML“) corrections: (1) establish and implement adequate procedures to identify and freeze terrorist assets; (2) make legal persons subject to criminal liability in line with international standards; and (3) strengthen international co-operation.

Syria
Syria needs to address deficiencies by: (1) providing sufficient legal basis for implementing the obligations under UN Security Council Resolution 1373; (2) implementing adequate procedures for identifying and freezing terrorist assets; and (3) ensuring that appropriate laws and procedures are in place to provide mutual legal assistance.

UN Security Council Resolution 1373  requires member states implement measures  to enhance their legal and institutional ability to counter terrorist activities, including taking steps to:

  • Criminalize the financing of terrorism.
  • Freeze without delay any funds related to persons involved in acts of terrorism.
  • Deny all forms of financial support for terrorist groups.
  • Suppress the provision of safe haven, sustenance or support for terrorists.
  • Share information with other governments on any groups practicing or planning terrorist acts.
  • Cooperate with other governments in the investigation, detection, arrest, extradition and prosecution of those involved in such acts.
  • Criminalize active and passive assistance for terrorism in domestic law and bring violators to justice.

Iran

With respect to Iran, the FATF requires that reporting entities pay special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions, and to apply effective counter-measures to protect  financial sectors from money laundering and financing of terrorism risks emanating from Iran. Further, states are required to ensure correspondent relationships are not used to bypass or evade counter-measures and risk mitigation practices. The FATF has effectively given Iran until October 2013 to come into compliance in respect of AML or face stringent treatment from other countries in respect of the flow of funds in and out of Iran.

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