This notice
constitutes advice issued by HM Treasury about risks posed by
unsatisfactory money laundering controls in a number of
jurisdictions. The Money Laundering Regulations 2007 require firms
to put in place policies, procedures or systems in order to
prevent money laundering or terrorist financing.
Regulated businesses are also required to apply enhanced customer
due diligence and enhanced ongoing monitoring on a risk-sensitive
basis in certain defined situations and in “any other situation
which by its nature can present a higher risk of money laundering
or terrorist financing”.
On 16th October 2009 the Financial Action Task Force (FATF)
issued a further statement drawing attention to deficiencies in
several jurisdictions of concern. The UK fully supports the work
of the FATF on these matters and HM Treasury agrees with the FATF
assessments.
The UK additionally draws attention to, and supports, the public
statements of MONEYVAL (a FATF style regional body under the
auspices of the Council of Europe) in respect of Azerbaijan in
December 2008, March 2009 and September 2009.
This advice is effective immediately.
The substance of the FATF statement is attached as an Annex.
Iran
The FATF is concerned about Iran’s lack of engagement with the
FATF and its failure to meaningfully address the ongoing and
substantial deficiencies in its AML/CFT regime.
The FATF has called on its members to apply effective
countermeasures to protect their financial sectors from risks
emanating from Iran, and to protect against the use of
correspondent banking relationships to bypass or evade
counter-measures and risk mitigation practices. The FATF has
further warned that it will call upon its members and other
jurisdictions to strengthen counter-measures at it’s next meeting
in February 2010 if Iran fails to take concrete steps to improve
the deficiencies in its AML/CFT regime.
All UK businesses regulated under the Money Laundering
Regulations 2007 whether financial institutions or other regulated
persons should treat transactions associated with Iran as
situations that by their nature can present a higher risk of money
laundering or terrorist financing, and which therefore require
increased scrutiny, enhanced due diligence, and ongoing
monitoring, particularly where correspondent relationships are
involved, which have been highlighted as a particular risk.
All other persons authorised by the Financial Services Authority
should also take this advice into account in respect of their
systems and controls to counter financial crime, and take
appropriate actions to minimise the associated risks.
Further to the call for countermeasures by the FATF, on the 12
October 2009, HM Treasury issued a direction under the Counter
Terrorism Act to the UK financial sector to cease all business
relationships and transactions with Bank Mellat and Islamic
Republic of Iran Shipping Lines (IRISL). For further information
on these directions, please see the HM Treasury website: http://www.hm-treasury.gov.uk/fin_crime_policy.htm
Pakistan
The FATF has expressed its concern at the approaching expiry of
Pakistan’s Anti-Money Laundering Ordinance, and has urged Pakistan
to implement a permanent AML/CFT framework before the Ordinance
expires. The FATF also noted that it would consider taking action
to protect the financial system from money laundering and
terrorist financing risk emanating from Pakistan in February 2010
if concrete progress has not been made by that date.
UK financial institutions regulated for money laundering purposes
should pay attention to the latest FATF statement in respect of
Pakistan and the risks it presents. Financial institutions should
take this advice into account in respect of their systems and
controls to counter financial crime, and take appropriate actions
to minimise the associated risks.
Uzbekistan, Turkmenistan and São Tomé and Príncipe
The FATF has also drawn attention to the continuing AML/CTF
deficiencies in Uzbekistan, Turkmenistan, and São Tomé and
Príncipe.
The attention of UK financial institutions regulated for money
laundering purposes is therefore drawn to the FATF statements in
respect of those jurisdictions, and the risks that they continue
to present. They should take this advice into account in respect
of their systems and controls to counter financial crime, and take
appropriate actions to minimise the associated risks.
Azerbaijan
MONEYVAL drew attention to deficiencies in the AML/CTF regime in
Azerbaijan through statements in December 2008, March 2009 and
September 2009.
The attention of UK financial institutions regulated for money
laundering purposes is therefore drawn to the latest MONEYVAL
statement in respect of this jurisdiction, and the risks that it
continues to present.
Notes for Editors
1. The Financial Action Task Force is an inter-governmental body
established by the G7 in 1989 and today includes as members 32
countries and territories and two regional organisations.
2. The Government’s strategy is to use financial tools to deter
crime and terrorism; detect it when it happens; and disrupt those
responsible and hold them to account for their actions. The FATF
is central to the UK's international objectives within
this strategy.
3. The Money Laundering Regulations 2007 require firms to put in
place policies, procedures or systems in order to prevent money
laundering or terrorist financing. Regulated businesses are also
required to apply enhanced customer due diligence and enhanced
ongoing monitoring on a risk-sensitive basis in certain defined
situations and in “any other situation which by its nature can
present a higher risk of money laundering or terrorist financing”.
4. The FSA requires firms to take reasonable care to establish
and maintain systems and controls for countering the risk that the
firm might be used to further financial crime.
5. For further information about what the Treasury is doing to
combat financial crime, and how to subscribe to financial crime
alerts, visit: Financial crime and terrorist financing .
ANNEX
This reproduces all the relevant material of the FATF statement
dated 16 October 2009.
IRAN
The FATF is concerned by Iran’s lack of engagement with the FATF
and its failure to meaningfully address the ongoing and
substantial deficiencies in its anti-money laundering and
combating the financing of terrorism (AML/CFT) regime. The FATF
remains particularly concerned about Iran’s failure to address the
risk of terrorist financing and the serious threat this poses to
the integrity of the international financial system. The FATF
urges Iran to immediately and meaningfully address its AML/CFT
deficiencies, in particular by criminalising terrorist financing
and effectively implementing suspicious transaction reporting
(STR) requirements.
The FATF reaffirms its call on members and urges all
jurisdictions to advise their financial institutions to give
special attention to business relationships and transactions with
Iran, including Iranian companies and financial institutions. In
addition to enhanced scrutiny, the FATF reaffirms its 25 February
2009 call on its members and urges all jurisdictions to apply
effective counter-measures to protect their financial sectors from
money laundering and financing of terrorism (ML/FT) risks
emanating from Iran. FATF continues to urge jurisdictions to
protect against correspondent relationships being used to bypass
or evade counter-measures and risk mitigation practices, and to
take into account ML/FT risks when considering requests by Iranian
financial institutions to open branches and subsidiaries in their
jurisdiction. If Iran fails to take concrete steps to improve its
AML/CFT regime, the FATF will consider calling on its members and
urging all jurisdictions to strengthen counter-measures in
February 2010.
UZBEKISTAN
The FATF welcomes the significant steps that Uzbekistan has taken
to establish the necessary AML/CFT framework and urges Uzbekistan
to continue its progress towards implementing effective AML/CFT
measures. The FATF welcomes Uzbekistan’s upcoming mutual
evaluation by the EAG that will be finalized in spring 2010. The
FATF will continue to monitor the progress being made in
Uzbekistan and will reconsider in February 2010 the measures that
are currently in place to protect jurisdictions’ financial sectors
from ML/FT risks emanating from Uzbekistan.
TURKMENISTAN
The FATF welcomes Turkmenistan’s progress in adopting AML/CFT
legislation and secondary legislation that aims to implement the
AML/CFT law. However, deficiencies remain in Turkmenistan’s
AML/CFT regime, including the absence of a Financial Intelligence
Unit (FIU). Consequently, the FATF reiterates its 25 February 2009
statement informing financial institutions that these deficiencies
constitute an ML/FT vulnerability in the international financial
system and that they should take appropriate measures to address
this risk. Turkmenistan is urged to continue to take steps to
implement an AML/CFT regime that meets international AML/CFT
standards. Turkmenistan is encouraged to continue to work closely
with the Eurasian Group and the International Monetary Fund to
achieve this.
PAKISTAN
The FATF welcomes the close co-operation between Pakistan and the
Asia/Pacific Group on Money Laundering (APG), but remains
concerned regarding the ML/FT risks posed by Pakistan and
reaffirms its public statement of 28 February 2008 regarding these
risks. In particular, the FATF expresses concern that Pakistan’s
Anti-Money Laundering Ordinance (AMLO) will expire on 28 November
2009. The FATF notes that Pakistan has initiated a legislative
process to address this. The FATF strongly urges Pakistan to
implement a permanent AML/CFT framework before the expiration of
the AMLO and strongly encourages Pakistan to establish a
comprehensive AML/CFT framework. Failing concrete progress, the
FATF will consider taking action in February 2010 to protect the
financial system from the ML/FT risks emanating from Pakistan.
SÃO TOMÉ AND PRÍNCIPE
The FATF welcomes São Tomé and Príncipe’s continuing efforts to
implement its AML law, including the development of an action plan
with the Inter Governmental Action Group against Money Laundering
in West Africa (GIABA). However, the FATF remains concerned about
the deficiencies in São Tomé and Príncipe’s AML/CFT regime,
particularly relating to terrorist financing. The FATF urges São
Tomé and Príncipe to work with GIABA to address the remaining
AML/CFT deficiencies.
Contacts:
HM Treasury Press Office
Phone: 020 7270 5238
NDS.HMT@coi.gsi.gov.uk