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HM Treasury publishes AML and CTF advisory notice

  • United Kingdom
  • Financial services disputes and investigations
  • Fraud and financial crime
  • Litigation and dispute management

14-03-2018

HM Treasury has published an Advisory Notice on strategic deficiencies in the anti-money laundering (“AML”) and counter terrorist financing (“CTF”) controls in certain jurisdictions. The Advisory Notice has been issued following statements issued by the Financial Action Task Force on 23 February 2018.  In this context, Treasury notes that regulation 33 of the Money laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLR 2017”) require UK regulated firms to apply enhanced due diligence (“EDD”) to high risk countries (as defined by the European Commission).  However, Treasury goes onto note that when assessing geographical risks, regulated firms should take into account information published by FATF and as such the Advisory Notice is of relevance to all UK regulated firms. 

The Advisory Notice states the following:

  1. The Democratic People’s Republic of Korea  (“DPRK”) should be considered a high risk jurisdiction for the purposes of the MLR 2017 and counter measures and EDD should be applied.   In respect of counter measures, FATF has encouraged its members to take actions to protect the financial system from money laundering and terrorist financing threats emanating from the DPRK, including where required by UN Security Council Resolutions closing existing branches, subsidiaries and representative offices of DPRK banks and terminating correspondent relationships with DPRK banks, ensuring that financial sanctions are fully imposed and that enhanced scrutiny be applied to any business relationships with the DPRK.
  1. Iran is should be considered a high risk jurisdiction for the purposes of the MLRs 2017 and firms should apply EDD measures in accordance with the risks.
  • Ethiopia
  • Tunisia
  • Iraq
  • Trinidad and Tobago
  • Serbia
  • Vanuatu
  • Sri Lanka
  • Yemen
  • Syria

 

  1. The following jurisdictions have strategic AML/CTF deficiencies although they have developed action plans in conjunction with FATF to drive improvements.  regulated firms should, when doing business connected with these jurisdictions, consider appropriate actions (which may include EDD) in high risk situations to minimise the potential money laundering/terrorist financing risk:
  1. Following significant progress in improving its AML/CTF framework, Bosnia and Herzegovina is no longer subject to FATF’s on-going global AML/CTF compliance process. 

On 14 July 2016, the European Commission adopted a regulation which listed those jurisdictions which should be deemed high risk for the purposes of the Fourth Money Laundering Directive (and therefore regulation 33 MLR 2017).  This list of jurisdictions differs from that issued by FATF and contained within the HM Treasury Advisory Notice.  UK regulated firms should take note of both the European Commission regulation (which is likely to be amended in due course, once the Commission has established a new procedure for identifying such jurisdictions) and the notices issued by FATF and Treasury and adapt their AML/CTF procedures where necessary. 

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