BaFin Circular 3/2012 on FATF Updates for Iran, North Korea and High-Risk Jurisdictions

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06.07.2012

I.
FATF
Public Statement of 22 June 2012 regarding Iran, the Democratic People's Republic of Korea (North Korea) and other countries

During its Plenary Meeting held in Rome on 22 June 2012, the FATF released an updated Public Statement and an updated Information Report.

The Statement issued by the
FATF on 22 June 2012 (Annex 1) concerns jurisdictions for which substantial deficiencies have been identified regarding measures to combat money laundering and terrorist financing.

1. Category 1: Jurisdictions subject to a
   FATF call 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 ( ML / TF ) risks emanating from the jurisdictions.

This category still includes Iran and the Democratic People's Republic of Korea (North Korea).
The FATF's Public Statement of 16 February 2012 and BaFin Circular 2/2012 ( GW ) continue to apply to both countries. Please refer to BaFin Circular 2/2010 ( GW ) for information on the measures that still have to be taken.

2. Category 2: 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. The FATF calls on its members to consider the risks arising from the aforementioned deficiencies associated with each jurisdiction, as described below.

This category now includes Bolivia, Cuba, Ecuador, Ethiopia, Ghana, Indonesia, Kenya, Myanmar, Nigeria, Pakistan, São Tomé and Príncipe, Sri Lanka, Syria, Tanzania, Thailand, Turkey, Vietnam and Yemen. Please note that Kenia, Myanmar and Turkey have not made sufficient progress since being identified in the Public Statement of June 2011. If these jurisdictions do not take significant actions by October 2012, the FATF will call upon its members to apply counter-measures proportionate to the risks associated with the jurisdiction.

Business relationships with these countries or with business partners who reside in these countries and transactions from or to these countries require enhanced due diligence and organisational requirements in order to combat the increased risks identified by the FATF . Moreover, the results of any security and review measures taken in this respect are to be clearly documented for the internal audit function, the audit of annual financial statements and any special audits. These measures correspond to those specified in BaFin Circular 2/2010 ( GW ).

II.
FATF
Information Report of 22 June 2012 regarding countries under supervision

In the ongoing review of countries by the
FATF and the
FATF
-style regional bodies (
FSRBs
), certain countries have continued to show deficiencies with regard to the FATF's key recommendations.

For details, please refer to the translated
FATF
Information Report of 22 June 2012 (Annex 2).

Although there is no direct obligation to take action and no requirement to apply enhanced due diligence and organisational requirements appropriate for the increased risk with respect to these countries, the situation in these countries must be taken into consideration when assessing the risks of these countries or persons from these countries in the context of preventing money laundering and terrorist financing.

III. Suspicious transaction reports pursuant to section 11 of the German Money Laundering Act (
Geldwäschegesetz –
GwG
)

In view of
BaFin's regular dialogue with the prosecution authorities, I would like to offer an explanation regarding the obligation to report suspicious transactions pursuant to section 11 of the GwG :

The obligation to report suspicious transactions continues to exist even where the respective party attempts to execute a transaction or enter into a business relationship. This applies, in particular, to situations where a potential customer initially requests an institution or person covered by the Act to execute a transaction or enter into a business relationship with him, but then withdraws this request for no apparent reason, without giving a plausible explanation and, in particular, when the institution or person covered by the Act takes the measures necessary to ensure compliance with due diligence requirements.

Even in these cases, institutions and persons covered by the Act are subject to the obligation to report suspicious transactions whenever factual circumstances exist, indicating that the assets or property connected with a transaction or business relationship are the product of an offence under section 261 of the Criminal Code (Strafgesetzbuch) or are related to terrorist financing.

Additional information

Circular 03/2012 (
GW
) - Annex 1:
FATF
Public Statement

Circular 03/2012 (
GW
) - Annex 2: Improving Global
AML

Circular 2/2012 (
GW
)

Circular 2/2010 (
GW
)

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