BaFin Circular 6/2012 (GW) on Updated FATF Public Statement

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16.11.2012

I.
FATF
Public Statement of 19 October 2012 regarding Iran, the Democratic People's Republic of Korea (North Korea) and other countries

During its Plenary Meeting held in Paris on 19 October 2012, the FATF released an updated Public Statement and an updated Information Report (see II).

The Statement issued by the
FATF on 19 October 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 22 June 2012 and BaFin Circular 3/2012 ( 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.

This category now includes Bolivia, Cuba, Ecuador, Ethiopia, Indonesia, Kenya, Myanmar, Nigeria, Pakistan, São Tomé and Príncipe, Sri Lanka, Syria, Tanzania, Thailand, Turkey, Vietnam and Yemen. For Turkey, reference is made to the explanatory notes since the FATF has decided to suspend Turkey's membership on 22 February 2013 unless certain conditions are met before that date (for more details please refer to
Annex 1
).

Business relationships with these countries or with business partners who reside in these countries or transactions from or to these countries require enhanced due diligence and organisational requirements in order to combat the increased risks identified by the FATF . In addition, 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 19 October 2012 regarding countries under review

In the ongoing review of countries by the
FATF and the
FATF
-style regional bodies (FSRBs), certain countries continue to have deficiencies with regard to the FATF's key recommendations. For details, please refer to the translated FATF Information Report of 19 October 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.
BaFin administrative practice relating to section 3 (2) no.
2, second alternative, of the
GwG with regard to cash transactions (here: possible extension of grace period)

On 29 December 2011 and 1 March 2012, the Act on Optimising the Prevention of Money Laundering (Gesetz zur Optimierung der Geldwäscheprävention – GwOptG ) entered into force.

In deviation from the effective dates stipulated in Article 12 of the GwOptG , BaFin announced in Circular 2/2012 ( GW ) of 21 March 2012 that in cases where BaFin or external auditors identified contraventions of the provisions of section 3 (2) no. 2 of the GwG (thresholds applying to the transfer of funds) as introduced by the GwOptG , BaFin would refrain from imposing any supervisory sanctions until 31 December 2012.

In Circular 4/2012 of 26 September 2012, it was also pointed out that cash deposits made into a third-party account held with the institution at which the deposit is made also constituted money transfer within the meaning of section 3 (2) no. 2, second alternative, of the GwG and the Wire Transfer Regulation. The due diligence requirements have to be complied with whenever the above-mentioned threshold is reached. For explanatory purposes, reference was made in particular to Article 2 (7) of Regulation ( EC ) No 1781/2006 (Wire Transfer Regulation).

To date, the European Commission has not yet published its proposal for the Fourth EU Money Laundering Directive and for the Amendment of Regulation ( EC ) No 1781/2006 (Wire Transfer Regulation), which defines the scope of Article 2 of the Wire Transfer Regulation. Following publication of the proposal, BaFin will consult with the German Federal Ministry of Finance to examine the possibility of extending the grace period granted in BaFin Circular 2/2012 of 21 March 2012 with regard to BaFin's refraining from imposing any supervisory sanctions in cases of non-compliance with section 3 (2) sentence 2 of the GwG (see chapter V.2 of the Circular). Nonetheless, the credit institutions' duty to comply with these provisions remains unaffected.

Additional information

Circular 06/2012 (
GW
) - Annex 1:
FATF
Public Statement

Circular 06/2012 (
GW
) - Annex 2: Improving Global
AML

Circular 3/2012 (
GW
)

Circular 2/2012 (
GW
)

Circular 2/2010 (
GW
)

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