(AML-ATF Ministerial Advisory 2/2017)
Attorney General and Minister of Legal Affairs Hon. Trevor Moniz, JP, MP, today issued the following advisory about the risks in a number of jurisdictions arising from inadequate systems and controls to combat money laundering and terrorist financing. Details on these risks were provided by the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF) in statements which were released following their respective Plenaries held in June and May 2017. The Minister noted that the advice is especially relevant to those entities that have or are considering any business relationships with the specified jurisdictions or persons (individuals or corporate entities) in such jurisdictions.
The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 (the Regulations) require AML/ATF regulated financial institutions and other relevant persons to have policies, procedures or systems in place to prevent money laundering or terrorist financing. Under the Regulations, relevant persons are also required, under certain specified situations and also in those situations which are deemed to present a higher risk of money laundering or terrorist financing, to apply enhanced customer due diligence measures and/or on-going monitoring on a risk-sensitive basis.
Advisory
1. FATF Public Statement
On 23 June 2017, the FATF issued a public statement (Annex A) drawing attention to serious deficiencies in the Democratic People’s Republic of Korea (DPRK), which has been identified in previous FATF public statements but continues to raise concerns for the FATF by its continued failure to adequately address on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF is particularly and exceptionally concerned about the threat posed by DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMD) and its financing. The FATF therefore reaffirmed its call on its members and other jurisdictions to apply counter-measures, and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions, to protect their financial sectors from money laundering, financing of terrorism and WMD proliferation financing (ML/FT/PF) against DPRK.
In addition, the FATF separately drew attention in the public statement to Iran, and in June 2016 the FATF welcomed Iran’s adoption of, and high-level political commitment to, an Action Plan to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. In light of Iran’s demonstration of its political commitment and the relevant steps it has taken in line with its Action Plan, the FATF has decided to continue the suspension of counter-measures. The FATF will keep monitoring progress in the implementation of the Action Plan and consider next steps.
Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19. The FATF urges Iran to fully address its AML/CFT deficiencies, in particular those related to terrorist financing.
The FATF will continue to engage with Iran and closely monitor its progress.
2. FATF document on its ‘On-going process to improve global AML/CFT compliance’
In a separate publication on its on-going process to improve global AML/CFT compliance (Annex B), the FATF once again highlighted a number of jurisdictions with strategic deficiencies in their AML/CFT regimes and provided information on these deficiencies. These jurisdictions were previously identified by the FATF as working with the FATF and relevant regional bodies to address those deficiencies. However the FATF has now called for the expeditious implementation of their agreed action plans. The jurisdictions listed in this category are: Bosnia and Herzegovina, Ethiopia, Iraq, Syria, Uganda, Vanuatu and Yemen.
The FATF welcomed the significant progress of Afghanistan and Lao PDR in improving their AML/CFT regime. These jurisdictions are therefore no longer subject to monitoring under the FATF’s on-going global AML/CFT compliance process, but they will each work with their relevant FATF-style regional body, as they continue to address the issues identified in their Mutual Evaluation Reports to further strengthen their AML/CFT regimes.
3. CFATF Public Statement
Jurisdiction with strategic AML/CFT deficiencies
On 31 May 2017, the CFATF issued a public statement (Annex C) drawing attention to serious deficiencies in Haiti, which underwent a High Level Mission by the CFATF in April 2015. The CFATF acknowledges the significant progress made by Haiti in improving its AML/CFT regime since the CFATF Plenary held in November 2016. Haiti has substantially improved its Core and Key Recommendations and its legal and regulatory framework to meet its commitments in its agreed Action Plan regarding the strategic deficiencies identified by the CFATF. Haiti’s report to the CFATF Plenary, held in May 2017, indicated significant legislative and other relevant progress including the enactment and bringing into force of amendments to the 2013 law sanctioning money laundering and terrorist financing and the organic law of UCREF; the issuance of the UCREF guidelines and the conducting of training and sensitization for the relevant reporting entities in relation to those guidelines.
Haiti is encouraged to continue the reform process to address its AML/CFT deficiencies and to demonstrate at the CFATF’s November 2017 Plenary further progress in addressing the outstanding deficiencies.
Haiti and the CFATF should continue to work together to ensure its Action Plan is fully implemented.
Jurisdictions no longer subject to the CFATF-ICRG review process
Suriname
Suriname was placed in the CFATF’s ICRG process in 2012 and was publicly listed by the CFATF. Since the FATF’s adoption of Suriname’s Action Plan Suriname has established the legal and regulatory framework to meet its commitments in its agreed Action Plan regarding the strategic deficiencies identified by the CFATF.
Having made significant progress in improving its AML/CFT regime and adequately addressing the key AML/CFT deficiencies identified, the CFATF at the Plenary of May 2017 agreed that Suriname be removed from the CFATF ICRG process and is therefore no longer subject to monitoring by CFATF ICRG.
To ensure that an appropriate determination of the risks relating to these jurisdictions can be carried out, it is important that the annexed statements are read in their entirety. All financial institutions and other relevant persons, in the implementation of their systems and controls to combat financial crime, should give consideration to the FATF assessments and take appropriate actions in light of the associated risks.
It should be noted that a large number of jurisdictions have not yet been reviewed by the FATF, therefore the jurisdictions included in the FATF public statement and ‘ongoing compliance’ document are not intended to provide an exhaustive list of jurisdictions that should be considered by relevant persons to present a higher risk of money laundering or terrorist financing.
This advisory supersedes all previous advice issued by the Minister in connection with deficiencies in the AML/ATF systems and controls in the specified jurisdictions. It should be noted that the previous such advisory (AML-ATF Ministerial Advisory 1/2017) was issued in March 2017.