Circular No. 5/2025: High-Risk Countries and Countries Under Enhanced Monitoring

[Page 1]

Palestine Monetary Authority PALESTINE MONETARY AUTHORITY

Circular No. (5/2025) To all payment service companies operating in Palestine Date: Thursday, February 27, 2025

Subject: High-Risk Countries and Countries Under Enhanced Monitoring

Attached is a copy of the decision issued by the Financial Follow-Up Unit No. (2025/1) dated 2025/02/23 regarding high-risk countries and countries under enhanced monitoring in accordance with the list issued by the Financial Action Task Force (FATF). Accordingly, the necessary legal measures are requested to implement the requirements of the aforementioned decision and the measures to be taken specifically, emphasizing the necessity to comply with the following:

1. Take into account concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems in countries classified within the "Grey List" (Countries Under Enhanced Monitoring), when conducting and updating the self-assessment of money laundering and terrorist financing risks.
2. Apply the Risk-Based Approach (RBA), such that the application of due diligence procedures is proportional to (risk analysis results, nature of the financial transaction risks, customer risks, and country classification), with enhanced due diligence measures to be taken when high risks are perceived.

Supervision Group Palestine Monetary Authority

Copy: To the esteemed gentlemen / Financial Follow-Up Unit

---

[Page 2]

Financial Follow-Up Unit State of Palestine وحدة المتابعة المالية دولة فلسطين

Decision No. (2025/1) Issued by the Financial Follow-Up Unit Dated 2025/02/23

Regarding lists of high-risk countries and countries under enhanced monitoring

Based on the provisions of Law No. (39) of 2022 regarding the prevention of money laundering and terrorist financing and its amendments, particularly the provisions of Article (20) and paragraphs (3, 4) of Article (30), and based on the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (8/J/2016) issued on 2016/12/01 regarding delegating the Financial Follow-Up Unit to publish the list of high-risk countries issued periodically by the Financial Action Task Force (FATF), and subsequently what was decided by the Group since 2020/02/21 until 2025/02/21, and in addition to the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (T/5/2020) issued on 2020/02/24 regarding high-risk countries and countries under enhanced monitoring, and subsequently to the Financial Follow-Up Unit decision No. (2020/1) dated 2025/02/25 and subsequent decisions regarding lists of high-risk countries and countries under enhanced monitoring.

Based on the requirements of public interest, it is decided as follows:

First List of High-Risk Countries (Black List) All financial institutions, businesses, and specified non-financial professions in the State of Palestine must continue to implement the following procedures regarding high-risk countries:

Country	Required Procedures Regarding Countries
Democratic People's Republic of Korea (North Korea).	1. Apply targeted financial sanctions in accordance with the provisions of Executive Decree No. (14/2022) regarding the implementation of Security Council decisions.
Islamic Republic of Iran (Iran).	2. Pay special attention to commercial relations and transactions with those countries, including companies and financial institutions, and apply the following countermeasures: <br> a. Apply enhanced due diligence procedures on business relations and operations with those countries (as part of countermeasures), and in proportion to the risks arising therein, according to the details of Articles (26, 27) of National Committee Instructions No. (4) of 2022 regarding financial institutions, and Articles (24, 25) of National Committee Instructions No. (3) of 2022 regarding specified businesses and non-financial professions.

1/3

---

[Page 3]

Financial Follow-Up Unit State of Palestine وحدة المتابعة المالية دولة فلسطين

b. Apply the enhanced due diligence procedures mentioned in paragraph (a) of this item when dealing with any entity acting on behalf of a natural or legal person, including companies or financial institutions operating in those countries. c. Enhance the reporting mechanisms adopted by the financial institution or one of the specified non-financial businesses/professions, including increasing cooperation between employees and expediting the provision of data to the anti-money laundering and counter-terrorist financing officer within the financial institution or one of the specified non-financial businesses/professions, to ensure that no transaction or operation suspected of involving money laundering or terrorist financing or one of the predicate crimes associated with it or terrorist financing is executed, and to report this suspicion to the Unit immediately and without delay, providing it with all data related to the attempt to conclude such operations, while ensuring the confidentiality of the report and not notifying the customer. d. Do not establish branches, representative offices, or subsidiaries in those countries. e. Do not rely on third parties located in those countries to take any due diligence procedures regarding customers. f. Do not establish any banking correspondent relationships or similar correspondent relationships with financial institutions in those countries.

Country

Required Procedures Regarding Countries

Union of Myanmar (Myanmar).

1. Apply enhanced due diligence procedures on business relations and operations with Myanmar, and in proportion to the risks arising in the country, according to the details of Articles (26, 27) of National Committee Instructions No. (4) of 2022 regarding financial institutions, and Articles (25, 24) of National Committee Instructions No. (3) of 2022 regarding specified businesses and non-financial professions. <br> 2. When applying enhanced due diligence measures, it must be ensured that the flow of funds for humanitarian assistance and legitimate non-profit organization activities and financial transfers is not disrupted.

Second List of Countries Under Enhanced Monitoring (Grey List) Amend the list of countries under enhanced monitoring (Grey List) stipulated in the Unit's decision No. (2024/3) by adding both (the Lao People's Democratic Republic (Laos), and the Federal Democratic Republic of Nepal (Nepal)), and removing (the Republic of the Philippines), so that the list becomes as in the table below, to take into account concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems for these countries (according to the attached annex to this decision) when conducting the self-assessment of money laundering and terrorist financing risks, including identifying, analyzing, and evaluating those risks.

2/3

---

[Page 4]

Financial Follow-Up Unit State of Palestine وحدة المتابعة المالية دولة فلسطين

No.	Country Name	No.	Country Name
1	Algeria	14	Monaco
2	Angola	15	Republic of Mozambique
3	Bulgaria	16	Republic of Namibia
4	Burkina Faso	17	Federal Democratic Republic of Nepal
5	Cameroon	18	Republic of Nigeria
6	Côte d'Ivoire (Ivory Coast)	19	Republic of South Africa
7	Croatia	20	Republic of South Sudan
8	Democratic Republic of the Congo	21	Syrian Arab Republic (Syria)
9	Republic of Haiti	22	Republic of Tanzania
10	Republic of Kenya	23	Venezuela
11	Lao People's Democratic Republic (Laos)	24	Vietnam
12	Republic of Lebanon	25	Republic of Yemen (Yemen)
13	Republic of Mali

Third Implementation All financial institutions, businesses, and specified non-financial professions must implement the provisions of this decision, and it shall be effective from the date of its circular.

Director of the Financial Follow-Up Unit Dr. Firas Marar [Signature and Stamp]

Attachment: Concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems.

3/3

---

[Page 5]

Concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems

---

[Page 6]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

Concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems in countries

• Part One: Deficiencies through assessment reports (for all countries): This section explains how to access concerns regarding the anti-money laundering and counter-terrorist financing and proliferation financing systems of countries listed on the Grey List, as well as all other countries undergoing mutual evaluation by the Financial Action Task Force or peer groups. Those concerns can be accessed by reviewing the mutual evaluation reports related to those countries and the follow-up reports for this report.

Mutual evaluation reports and follow-up reports published on the website of the Financial Action Task Force or the Financial Action Task Force of the Middle East and North Africa region contain all deficiencies and main conclusions regarding the anti-money laundering and counter-terrorist financing systems of countries listed on the enhanced monitoring list and all other countries that have undergone evaluation. Those can be obtained according to the following mechanism:

a. Access to mutual evaluation reports in English (for all countries).

1. Enter the website: www.fatf-gafi.org
2. From the Topics menu, select (Mutual Evaluations).
3. Select (Mutual Evaluations Reports).
4. Search for the country name in English in the search window shown in the image on the side.

b. Access to mutual evaluation reports in Arabic (for countries subject to evaluation by the FATF MENA region group).

1. Enter the website: www.menafatf.org/ar
2. Select the item (Mutual Evaluation) then (Evaluation Reports - Second Round of Evaluation), or follow-up reports.
3. Select the report from the list that appears according to the country name.

1

---

[Page 7]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

• Part Two: Implementation of action plans to address deficiencies Countries listed on the Grey List have made a high-level political commitment to address strategic deficiencies in their anti-money laundering and counter-terrorist financing systems, and those countries are still implementing their commitments to address remaining deficiencies.

The items below outline the key pillars that those countries are working to address or have addressed, which depend on specific deficiencies according to mutual evaluation reports and follow-up reports, which must be taken into account whether negative or positive:

Country	Key Pillars
Algeria	(Statement from October 2024) <br> In October 2024, Algeria made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its mutual evaluation report (MER) in May 2023, Algeria has made progress on many of the MER's recommended actions including by more effectively pursuing money laundering investigations and prosecutions. Algeria will continue to work with FATF to implement its action plan by: (1) improving risk-based supervision, especially for higher risk sectors, including through the adoption of new procedures, risk assessments, supervision manuals and guidelines, as well as undertaking inspections and applying effective, proportionate and dissuasive sanctions; (2) developing an effective framework for basic and beneficial ownership information; (3) enhancing its regime for suspicious transaction reports; (4) establishing an effective legal and institutional framework for targeted financial sanctions for terrorism financing; and (5) implementing a risk-based approach to oversight of non-profit organisations, without disrupting or discouraging legitimate activity.
Angola	(Statement from October 2024) <br> In October 2024, Angola made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in June 2023, Angola has made progress on some of the MER's recommended actions including enhancing national cooperation and coordination, international cooperation and the use of financial intelligence by competent authorities. Angola will continue to work with the FATF to implement its FATF action plan by: (1) enhancing its understanding of ML/TF risks; (2) improving risk-based supervision of non-financial banking entities and DNFBPs; (3) ensuring competent authorities have adequate, accurate and timely access to beneficial ownership information and that breaches to obligations are adequately addressed; (4) demonstrating an increase in ML investigations and prosecutions; (5) demonstrating the ability to identify, investigate and prosecute TF; and (6) demonstrating an effective process to implement targeted financial sanctions without delay.

2

---

[Page 8]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

Country	Key Pillars
Bulgaria	Since October 2023, when Bulgaria made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, Bulgaria has taken steps towards improving its AML/CFT regime, including by ensuring that the beneficial ownership information held in its Register is accurate and up-to-date and by identifying the subset of non-profit organisations (NPOs) most vulnerable to TF abuse. Bulgaria should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) addressing the remaining technical compliance deficiencies; (2) improving investigations and prosecutions of different types of money laundering in line with risks, including high-scale corruption and organised crime; (3) ensuring the ability to conduct parallel financial investigations in all terrorism investigations; (4) addressing gaps in the PF TFS frameworks; and (5) demonstrating initial implementation of risk-based monitoring of NPOs to prevent abuse for TF purposes.
Burkina Faso	In February 2021, Burkina Faso made a high-level political commitment to work with the FATF and GIABA to strengthen the effectiveness of its AML/CFT regime, Burkina Faso should continue to work on implementing its action plan to address its remaining strategic deficiency, by implementing an effective targeted financial sanctions regime related to TF and PF. <br> The FATF notes Burkina Faso's continued progress across its action plan, however all deadlines have expired and work remains. The FATF urges Burkina Faso to swiftly implement its action plan to address the above-mentioned strategic deficiency as soon as possible as all deadlines expired in December 2022.
Cameroon	In June 2023, Cameroon made a high-level political commitment to work with the FATF and GABAC to strengthen the effectiveness of its AML/CFT regime, Cameroon has taken steps to improve its AML/CFT regime by aligning AML/CFT national strategies and policies with the findings of the NRA; demonstrating its AML/CFT cooperation and coordination between competent authorities; improving risk-based prioritisation of incoming international cooperation, and establishing a regime for violations of transparency obligations applicable to legal persons. Cameroon should continue working on implementing its action plan to address its strategic deficiencies, including by: (1) enhancing risk-based supervision of banks and implementing effective risk-based supervision for non-bank FIs and DNFBPs, and conducting appropriate outreach to high-risk FIs and DNFBPs; (2) maintaining and ensuring timely access by competent authorities to adequate and up to date beneficial ownership information on legal persons; (3) enhancing secure information exchange between the FIU, reporting entities and competent authorities and demonstrating an increase in dissemination of intelligence reports to support operational needs of competent authorities; (4) demonstrating that authorities are able to conduct a range of ML investigations, and prosecute ML in line with risks; (5) implementing policies and procedures for seizing and confiscating proceeds and instrumentalities of crime and managing frozen, seized and confiscated property, and prioritising seizure and confiscation of assets at the border; (6) demonstrating that TF investigations and prosecutions are pursued in line with risk; and (7) demonstrating effective implementation of

3

---

[Page 9]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

Country	Key Pillars
	TF and PF TFS regimes and implementing a risk-based approach to NPOs without disrupting legitimate NPO activities.
Côte d'Ivoire	(Statement from October 2024) <br> In October 2024, Côte d'Ivoire made a high-level political commitment to work with the FATF and GIABA to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in June 2023, Côte d'Ivoire has made significant progress on many of the MER's recommended actions including by strengthening its legal AML/CFT framework through several important legislative and regulatory amendments, updating ML/TF analysis by drafting typology reports on the highest risk predicate offences, strengthening the human and technical resources of the FIU and prosecutors, and operationalising the agency in charge of the management of assets seized and confiscated. Côte d'Ivoire will continue to work with the FATF to implement its FATF action plan by: (1) enhancing its use of international cooperation in ML/TF investigations and prosecutions; (2) improving the implementation of risk-based supervision of financial institutions and designated non-financial businesses and professions and conducting outreach campaigns to improve compliance; (3) improving the verification and access of basic and beneficial ownership information of legal persons and applying sanctions in case of violation; (4) enhancing the use of financial intelligence by law enforcement authorities and improving disseminations by the FIU; (5) demonstrating a sustained increase in the number of ML and TF investigations and prosecutions of different types in line with the country's risk profile; and (6) strengthening the targeted financial sanctions framework.
Croatia	In June 2023, Croatia made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime. At its February 2025 Plenary, the FATF made the initial determination that Croatia has substantially completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future. <br> Croatia has made the following key reforms: (1) completing the national risk assessment, including assessing the ML/TF risk associated with the misuse of legal persons and legal arrangements and the use of cash in the real estate sector; (2) increasing FIU human resources and improving analytical capabilities; (3) continuing to improve LEA detection, investigation and prosecution of different types of ML, including ML involving foreign predicate offences and the misuse of legal persons; (4) demonstrating a sustained increase in the application of

4

---

[Page 10]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

Country	Key Pillars
	provisional measures in securing direct/indirect proceeds, as well as foreign proceeds subject to confiscation; (5) demonstrating the ability to systematically detect and where relevant investigate TF in line with its risk profile; (6) establishing a national framework for the implementation of UN TFS measures and providing guidance and conducting outreach and training to reporting entities; and (7) identifying the subset of NPOs most vulnerable to TF abuse and providing targeted outreach to NPOs and to the donor community on potential vulnerabilities of NPOs to TF abuse.
DEMOCRATIC REPUBLIC OF THE CONGO	Since October 2022, when the DRC made a high-level political commitment to work with the FATF and GABAC to strengthen the effectiveness of its AML/CFT regime, the DRC has taken steps towards improving its AML/CFT regime, including by establishing a mechanism to promote interagency coordination and cooperation on both ML and TF at the operational level. The DRC should continue to work to implement its FATF action plan to address its strategic deficiencies, including by: (1) developing and implementing a risk-based supervision plan; (2) building the capacity of the FIU to conduct operational and strategic analysis; (3) strengthening the capabilities of authorities involved in the investigation and prosecution of ML and TF; and (4) demonstrating effective implementation of TF and PF-related TFS.
Haiti	(Statement from June 2024) <br> Since June 2021, when Haiti made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime, Haiti has taken steps towards improving its AML/CFT regime, including improving the FIU's access to and use of a wide range of information in its financial intelligence products through the adoption of a new organic law. The FATF recognises the political commitment expressed at a high level and the efforts demonstrated by Haiti to advance its commitments in the midst of the challenging social, economic and security situation within the country. Haiti should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) completing its ML/TF risk assessment process and disseminating the findings; (2) implementing risk-based supervision for all financial institutions and DNFBPs deemed to constitute a higher ML/TF risk; (3) ensuring basic and beneficial ownership information are maintained and accessible in a timely manner; (4) ensuring the FIU has adequate resources and processes to produce and disseminate operational and strategic analysis to competent authorities for combatting ML and TF; (4) demonstrating authorities are identifying, investigating and prosecuting ML cases in a manner consistent with Haiti's risk profile; (5) demonstrating an increase of identification, tracing and recovery of

5

---

[Page 11]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

Country	Key Pillars
	proceeds of crimes; (6) addressing the technical deficiencies in its targeted financial sanctions regime; and (7) conducting appropriate risk-based monitoring of NPOs vulnerable to TF abuse without disrupting or discouraging legitimate NPO activities. <br> The FATF notes Haiti's continued progress across its action plan, however all deadlines are expired and work remains. The FATF encourages Haiti to continue to implement its action plan to address the above-mentioned strategic deficiencies.
Kenya	Since February 2024, when Kenya made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, Kenya has taken steps towards improving its AML/CFT regime, including by completing a TF risk assessment and by bringing its TFS framework related to proliferation financing into compliance. Kenya should continue to work to implement its FATF action plan to address its strategic deficiencies, including by:(1) presenting the results of the NRA and other risk assessments in a consistent manner to competent authorities and the private sector and updating the national AML/CFT strategies; (2) improving risk-based AML/CFT supervision of FIs and DNFBPs and adopting a legal framework for the licensing and supervision of VASPs; (3) enhancing the understanding of preventive measures by FIs and DNFBPs, including to increase STR filing and implement TFS without delay; (4) designating an authority for the regulation of trusts and collection of accurate and up-to-date beneficial ownership information and implementing remedial actions for breaches of compliance with transparency requirements for legal persons and arrangements; (5) improving the use and quality of financial intelligence and implementation of financial intelligence products; (6) increasing ML and TF investigations and prosecutions in line with risks; (7) bringing the TFS framework in compliance with R.6 and ensure its effective implementation; and (8) revising the framework for NPO regulation and oversight to ensure that mitigating measures are risk-based and do not disrupt or discourage legitimate NPO activity.
Lao PDR	In February 2025, Lao PDR made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in August 2023, Lao PDR has made progress on some of the MER's recommended actions including increasing FIU resources and eliminating bearer shares. Lao PDR will continue to work with the FATF to implement its FATF action plan by: (1) enhancing its understanding of ML/TF risks; (2) improving risk-based supervision of casinos, banks and reporting entities in SEZs, including fit and proper checks; (3) enhancing the quality and quantity of financial intelligence analysis and spontaneous dissemination to law enforcement

6

---

[Page 12]

Attached to Financial Follow-Up Unit Decision No. (2025/1) Regarding lists of high-risk countries and countries under enhanced monitoring

[Text cuts off here]