International agencies identify jurisdictions at high risk of corruption
At its mid-year meeting in Paris on 25-27 June 2014, the Financial Action Task Force ("FATF"), an international money laundering watchdog, updated its list identifying jurisdictions with strategic anti-money laundering and countering the financing of terrorism ("AML/CFT") deficiencies.
Iran and the Democratic People's Republic of Korea remain at the top of FATF's list, which considers them to pose "on-going and substantial money laundering and terrorist financing (“ML/FT”) risks". Algeria, Ecuador, Indonesia and Myanmar are considered to have strategic AML/CFT deficiencies, having failed to address deficiencies or to commit to a plan to address them.
However, Ethiopia, Pakistan, Syria, Turkey and Yemen are now identified as having made progress in substantially addressing the action plan agreed upon with FATF and have been removed from the watchlist. In addition, Kenya, Kyrgyzstan, Mongolia, Nepal and Tanzania are no longer subject to the FATF's on-going global AML/CFT compliance process. 22 further jurisdictions have agreed an action plan with FATF which FATF will continue to monitor.
Following the publication by FATF of the revised list of high risk jurisdictions, a number of other agencies published their own lists of countries they consider to pose a particular risk of financial crime.
On 8 July 2014, HM Treasury (“HMT”) published an advisory notice advising firms to consider certain specified jurisdictions as posing a high risk for the purposes of ML/TF issues and repeating the FAFT list. The Treasury recommends enhanced due diligence measures are undertaken in these jurisdictions.
Additionally, on 10 July 2014, the UK’s Financial Conduct Authority (“FCA”) published a list of the countries it considers to pose a high risk to its financial crime objectives, such as tackling money laundering, sanctions systems and controls, terrorist financing, and bribery and corruption. As well as the "usual suspects", the list includes two European Union member states, Bulgaria and Latvia.
For more information on FATF and its watchlist, click here.
HMT's Advisory Notice is accessible here.