One way or another, you will hear about the latest FATF advisories in Canada

Both FINTRAC and OSFI posted copies of the latest FATF pronouncements about deficient jurisdictions (OSFI links to FINTRAC's advisory). Here's the meat of the advisory – kind of lengthy, but that's because there are a significant number of short sections:

Financial transactions related to countries identified by the Financial Action Task Force (FATF)

In order to protect the international financial system from money laundering and terrorist financing risks, the Financial Action Task Force (FATF) issued two statements on October 23, 2015.

Islamic Republic of Iran and the Democratic People’s Republic of Korea

In its October 23, 2015 public statement, FATF reaffirmed its particular and exceptional concerns 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. FATF also reaffirmed its concerns about the Democratic People’s Republic of Korea’s (DPRK) failure to address the significant deficiencies in its anti-money laundering and combatting the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. FATF reaffirmed the call on its members to apply effective preventive measures to protect their financial sectors from such risks.

Accordingly, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is reiterating to all reporting entities subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) the risks of doing business with individuals and entities based in, or connected to, Iran and the DPRK.

FINTRAC is advising that reporting entities should consider the above when deciding whether to file a suspicious transaction report in respect of financial transactions or attempted financial transactions emanating from, or destined to, Iran or the DPRK. Reporting entities are also encouraged to undertake enhanced customer due diligence with respect to clients and beneficiaries involved in such financial transactions or attempted financial transactions.

Jurisdictions representing a risk arising from deficiencies

In its October 23, 2015 public statement, FATF calls on its members to consider the risks arising from the strategic AML/CFT deficiencies associated with the following jurisdiction that has not made sufficient progress in addressing the deficiencies: Burma (Myanmar).

FINTRAC is advising that reporting entities should consider giving special attention to financial transactions or attempted financial transactions related to Burma (Myanmar).

Other jurisdictions

In its October 23, 2015 compliance document, FATF brought to the attention of its members several jurisdictions that have strategic AML/CFT deficiencies. The following jurisdictions have developed an action plan with FATF to address identified deficiencies and demonstrated some progress with the execution of their plans: Afghanistan, Algeria, Angola, Bosnia and Herzegovina, Guyana, Iraq, Panama, Papua New Guinea, Syria, Uganda and Yemen.

FATF is not yet satisfied that Lao PDR has made sufficient progress on its action plan agreed upon with FATF. If this jurisdiction does not take sufficient action to implement significant components of its action plan by February 2016, then FATF will identify Lao PDR as being out of compliance with its agreed action plan and will take the additional step of calling upon its members to consider the risks arising from the deficiencies associated with Lao PDR.

Ecuador and Sudan no longer subject to FATF monitoring process

FATF welcomed the significant progress of Ecuador and Sudan in improving their AML/CFT regimes. The jurisdictions have met their commitments in their action plans regarding the strategic deficiencies that FATF had identified. Ecuador and Sudan are therefore no longer subject to FATF’s monitoring process.

The FATF October 23, 2015 statements can be found at the following website: http://www.fatf-gafi.org/

Caribbean Financial Action Task Force (CFATF) public statement

Reporting entities should take note that, on November 26, 2015, the Caribbean Financial Action Task Force (CFATF), under a process that is separate and distinct from the FATF monitoring process, issued for the first time a public statement regarding the strategic AML/CFT deficiencies of Suriname.

Suriname has not made sufficient progress in addressing their significant AML/CFT deficiencies, including making certain legislative reforms. If specific steps have not been made by May 2016, then CFATF will identify Suriname as not taking sufficient steps to address its AML/CFT deficiencies. CFATF members will then be called upon to consider implementing counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Suriname. Further, CFATF will consider referring Suriname to the FATF International Cooperation Review Group (ICRG).

FATF action on the terrorist group Islamic State Footnote 1

FINTRAC would like to reiterate the preceding statements issued by FATF, expressing its deep concern with the financing generated by, and provided to, the terrorist group the Islamic State (IS).

On September 22, 2014, the Government of Canada updated the Criminal Code list of terrorist entities to include the IS, which was previously listed as Al Qaeda in Iraq.

Accordingly, FINTRAC is reminding all reporting entities subject to the requirements of the PCMLTFA, of their obligations

Footnote

2 to submit a terrorist property report if:

    • they know of the existence of property in their possession or control that is owned or controlled by or on behalf of a terrorist or terrorist group; and
    • they have information about a transaction or proposed transaction in respect of property referred to above.

In this context, property includes any type of real or personal property. This also includes any deed or instrument giving title or right to property, or giving right to money or goods. A terrorist property report includes information about the property as well as any transaction or proposed transaction relating to that property.

FINTRAC is advising that reporting entities should consider the above when deciding whether to file a suspicious transaction report in respect of financial transactions or attempted financial transactions emanating from, or destined to, the jurisdictions under IS control and the surrounding jurisdictions. Reporting entities are also encouraged to undertake enhanced customer due diligence with respect to clients and beneficiaries involved in such financial transactions or attempted financial transactions.

On October 23, 2015, FATF also noted that terrorists financing remains a top priority given the terrorist threats posed most notably by IS and foreign terrorist fighters.

Links:

OSFI Notice

FINTRAC Notice

 

November 9, 2015: HK SFC issues circular of updates from FATF & APG

On November 9th, the Hong Kong Securities and Futures Commission issued the following circular to its members:

Circular to Licensed Corporations and Associated Entities – Anti-Money Laundering / Counter-Terrorist Financing
(1) FATF Statement on Iran, Democratic People's Republic of Korea and Myanmar
(2) FATF Statement on Improving Global AML/CFT Compliance: On-Going Process
(3) Outcomes from the Meeting of the FATF Plenary, 21-23 October 2015
(4) APG Public Statement on Vanuatu

6 Nov 2015



Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Terrorist Financing

(1) FATF Statement on Iran, Democratic People's Republic of Korea and Myanmar

(2) FATF Statement on Improving Global AML/CFT Compliance: On-Going Process

(3) Outcomes from the Meeting of the FATF Plenary, 21-23 October 2015

(4) APG Public Statement on Vanuatu

(1) FATF Statement on Iran, Democratic People's Republic of Korea and Myanmar

Further to our circular issued on 10 July 2015, this is to inform you that the Financial Action Task Force (“FATF”) issued an updated statement on 23 October 2015 identifying a number of jurisdictions that have strategic deficiencies in their anti-money laundering and combating the financing of terrorism (“AML/CFT”) regimes.

The statement Note 1 has been separated into two sections.

(i) Jurisdictions subject to a call on its members and other jurisdictions to apply counter-measures

Iran

The FATF remains particularly and exceptionally 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 calls on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing risks emanating from the jurisdiction.

Democratic People’s Republic of Korea (“DPRK”)

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its AML/CFT regime and the serious threat this poses to the integrity of the international financial system. The FATF calls on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing risks emanating from the jurisdiction.

Licensed corporations (“LCs”) and associated entities (“AEs”) should continue to apply the measures specified in our circulars of 31 March 2009 and 15 April 2011(http://www.sfc.hk/edistributionWeb/gateway/EN/circular/openFile?refNo=H545 & http://www.sfc.hk/edistributionWeb/gateway/EN/circular/openFile?refNo=H628) in relation to transactions associated with Iran and DPRK respectively. LCs and AEs are also reminded to apply relevant guidance as specified in the FATF statement Note 1 and implement appropriate measures and safeguards accordingly.

(ii) Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies

Myanmar

This jurisdiction was listed by the FATF as jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies as of October 2015. The FATF calls on its members to consider the risks arising from the deficiencies associated with this jurisdiction as described in the FATF statement Note 1.

LCs and AEs should therefore consider applying increased scrutiny to transactions associated with this jurisdiction, including enhanced due diligence and ongoing monitoring.

(2) FATF Statement on Improving Global AML/CFT Compliance: On-Going Process

In addition, please be informed that in a separate statement as part of the on-going process to improve global AML/CFT compliance, the FATF has set out an updated list of jurisdictions that have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. The FATF will closely monitor the implementation of those action plans and encourage its members to consider the information presented in the statement which can be found on the website of the FATF (http://www.fatf-gafi.org/documents/documents/fatf-compliance-october-2015.html).

As the FATF will continue to assess the progress made by these jurisdictions in addressing the deficiencies in their AML/CFT systems and issue updated statements from time to time, LCs and AEs are reminded to browse the website of the FATF for the latest information.

(3) Outcomes from the Meeting of the FATF Plenary, 21-23 October 2015

In addition to the statements in (1) and (2) above, the FATF has also published various other outcomes of its recent Plenary Meeting which may be of interest to LCs and AEs. They include, for example, (i) a statement on FATF action regarding de-risking and (ii) the adoption of “Guidance for a Risk-Based Approach: Effective Supervision and Enforcement by AML/CFT Supervisors of the Financial Sector and Law Enforcement”. Further information can be found on the website of FATF (http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-plenary-october-2015.html).

(4) APG Public Statement on Vanuatu

In light of APG’s Note 2 concern about the serious deficiencies in Vanuatu’s AML/CFT system, the APG has updated a public statement in September 2015 Note 3 following the adoption of Vanuatu’s latest mutual evaluation report, to call upon Vanuatu to expeditiously address the remaining deficiencies that have not yet been adequately addressed in its AML/CFT system and to enhance the effectiveness of its AML/CFT system. LCs and AEs are encouraged to consider pertinent information in the statement which can be found on the website of APG (http://www.apgml.org/about-us/page.aspx?p=fe4fce1a-2579-49f3-be93-598430e1b08a). As APG may issue similar statements from time to time, LCs and AEs are reminded to browse the website of the APG for the latest information.

Link:

HK SFC Circular

 

February 27, 2014: OSFI issues updated guidance on FATF and CFATF designations

Some excerpts:

In order to protect the international financial system from money laundering and terrorist financing risks, the FATF issued statements on February 14, 2014. Links to the full texts of these statements can be found at http://www.fatf-gafi.org. The following is a summary of the statements and OSFI’s expectations with respect to them:

Islamic Republic of Iran

…OSFI is again reminding all FRFIs of the risk of doing business with individuals and entities based in or connected to Iran, including the risk of correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices. OSFI requests that FRFIs that are subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act continue totake the following measures:

    • Classify clients, banks and other financial institutions based in or connected to Iran as high risk;
    • Apply enhanced customer due diligence measures with respect to such clients and entities; and
    • Take the FATF’s concerns into account when deciding whether to file a suspicious transaction report in respect of financial transactions emanating from, or destined to Iran.

Additionally, OSFI requests that FRFIs: review their internal processes relating to relationship management of such clients and beneficiaries in order to ensure that prescribed sanctions against Iran (see below) are implemented effectively; continue to treat all other clients, banks and other financial institutions based in or connected to Iran as high risk; and have processes in place to escalate the relationship to more senior levels of management under appropriate circumstances.

Democratic People's Republic of Korea (DPRK)

…OSFI is again reminding all FRFIs of the risk of doing business with individuals and entities based in or connected to the DPRK, including the risk of correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices. …

Countries Representing a Risk Arising from Deficiencies

The FATF has determined that the following countries remain out of compliance with their action plans previously agreed with the FATF to address identified strategic deficiencies: Algeria, Burma (Myanmar), Ecuador, Ethiopia, Indonesia, Pakistan, Syria, Turkey, and Yemen.

Accordingly, OSFI expects FRFIs to consider as high the risks associated with financial transactions emanating from, destined to or connected to these countries.

FRFIs are reminded about the sanctions imposed on Burma and Syria by Canada. Please refer to the previous Notices on these sanctions for more detailed information.

Other Countries

The following countries have developed action plans with the FATF to address identified deficiencies and are demonstrating progress with the execution of those plans: Afghanistan*, Albania, Angola, Argentina, Cambodia*, Cuba, Iraq, Kenya, Kuwait, Kyrgyzstan, Lao People's Democratic Republic, Mongolia, Namibia, Nepal, Nicaragua, Papua New Guinea, Sudan, Tajikistan, Tanzania, Uganda and Zimbabwe (note).

Note: FRFIs are reminded about the sanctions imposed on Zimbabwe by Canada. Please refer to the previous Notice on these sanctions for more detailed information.

*The FATF is not yet satisfied that Afghanistan and Cambodia are making sufficient progress on their action plans agreed with the FATF. If Afghanistan and Cambodia do not take sufficient action to implement significant components of their action plan by June 2014, the FATF will identify Afghanistan and Cambodia as being out of compliance with their action plans, and will take the additional step of calling upon FATF members to consider the risks arising from the deficiencies associated with Afghanistan and Cambodia.

Accordingly, OSFI expects that FRFIs will take these deficiencies into account as appropriate when transacting business emanating from, destined to, or connected to these countries. More detailed information on the strategic deficiencies is contained in the FATF statement.

Jurisdictions no longer subject to FATF monitoring

Please note that Antigua and Barbuda, Bangladesh and Vietnam have met their commitments to remedy strategic AML/ATF deficiencies that the FATF had previously identified, and are no longer subject to the FATF’s monitoring process.

The Caribbean Financial Action Task Force (CFATF)

CFATF has a similar but separate process of identifying jurisdictions in the Caribbean area with strategic deficiencies that pose a risk to the international financial system, as defined by CFATF. Currently, two jurisdictions have been identified by CFATF as posing a risk: Belize and Guyana. More information can be found in the CFATF public statement on their web site at https://www.cfatf-gafic.org/

Accordingly, OSFI expects that FRFIs will take these deficiencies into account as appropriate when transacting business emanating from, destined to, or connected to these countries.


Canada is a founding member of the FATF and strongly supports its international standards for combating money laundering and terrorist financing.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has also issued an Advisory, which can be viewed at http://www.fintrac.gc.ca/

If you have questions on any of the matters outlined in this Notice, please e-mail information@osfi-bsif.gc.ca

Link:

OSFI Notice

 

Yesterday’s News: MAS Publicizes June 21 FATF Statement

As FinCEN and OSFI have done, the Monetary Authority of Singapore Issued the following statement on its website:

4 July 2013 FATF Statement

On 21 June 2013, the Financial Action Task Force (FATF), of which Singapore is a member, issued an updated statement that highlighted the strategic deficiencies in the anti-money laundering/combating the financing of terrorism (AML/CFT) regimes of 2 groups of jurisdictions:

– Democratic People’s Republic of Korea (DPRK) and Iran which have shown no commitment to address their AML/CFT deficiencies.

– Jurisdictions such as Ecuador, Ethiopia, Indonesia, Kenya, Myanmar, Pakistan, Sao Tome and Principe, Syria, Tanzania, Turkey, Vietnam and Yemen, which have not made sufficient progress in addressing their strategic deficiencies.

Details of the FATF statement can be found at:

http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/public-statement-june-2013.html

Financial institutions are advised to accord due consideration to the above FATF statement and take the appropriate action(s) as recommended by the FATF with respect to the named jurisdictions.

Separately, FATF has issued an updated statement on its on-going process to improve global AML/CFT compliance. This statement provides information on a list of jurisdictions that have committed to action plans to address and strengthen their respective AML/CFT deficiencies. The second FATF statement can be found at:

http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/documents/compliance-june-2013.html

Link:

MAS Notice