Palestine Monetary Authority

Circular No. (135/2021) To all banks operating in Palestine Date: Tuesday, June 29, 2021

Subject: High-Risk Countries and Countries Under Enhanced Follow-Up

Attached is a copy of the decision issued by the Financial Follow-Up Unit No. (2021/2) dated 27/06/2021 concerning High-Risk Countries and Countries Under Enhanced Follow-Up according to the list issued by the Financial Action Task Force (FATF).

Accordingly, all banks operating in Palestine are requested to take the necessary legal measures to implement the requirements of the aforementioned decision and the measures to be taken in this regard.

Supervision Group Palestine Monetary Authority

Copy: The Honorable Financial Follow-Up Unit

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Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251 Gaza - Palestine P.O. Box 4026 Fax: +970 8 2844487 | Tel: +970 8 2825713 www.pma.ps

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Financial Follow-Up Unit

State of Palestine

Decision No. (2/2021) Issued by the Financial Follow-Up Unit Dated 27/06/2021 Concerning Lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Based on the provisions of Law No. (20) of 2015 concerning the combating of money laundering and terrorist financing and its amendments, particularly paragraph (16) of Article (20), and based on the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (8/J/2016) issued on 01/12/2016, concerning the delegation to 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 21/02/2020, until 25/06/2021, and in addition to the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (T/2020/5) issued on 24/02/2020 concerning High-Risk Countries and Countries Under Enhanced Follow-Up, and subsequently to the Financial Follow-Up Unit Decision No. (2020/1) dated 25/02/2020 and subsequent decisions concerning lists of High-Risk Countries and Countries Under Enhanced Follow-Up.

And based on the requirements of public interest, it has been decided as follows:

First

List of High-Risk Countries (Black List)

Continuation of the application of countermeasures against High-Risk Countries listed under item (Second) of Financial Follow-Up Unit Decision No. (2020/1), where the list of High-Risk Countries consists of the following countries:

1. Democratic People's Republic of Korea (North Korea).
2. Islamic Republic of Iran (Iran).

Second

List of Countries Under Enhanced Follow-Up (Grey List)

Modification of the list of Countries Under Enhanced Follow-Up (Grey List) stipulated in the Unit's Decision No. (2021/1), by deleting (Republic of Ghana) from the list, and adding (Republic of Haiti, Republic of Malta, Republic of South Sudan, Republic of the Philippines) and continuing to apply the measures stipulated in item (Fourth) of Financial Follow-Up Unit Decision No. (2020/1).

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State of Palestine – Al Bireh P.O.Box 3981 Tel: +970 22422551\2 | Fax: +970 22422553 | E-mail: info@ffu.ps | www.ffu.ps

No.	Country Name	No.	Country Name
1	Republic of Albania	12	Republic of Panama
2	Barbados	13	Syrian Arab Republic (Syria)
3	Republic of Botswana	14	Republic of Uganda
4	Kingdom of Cambodia	15	Republic of Yemen (Yemen)
5	Republic of Haiti	16	Burkina Faso
6	Jamaica	17	Cayman Islands
7	Republic of Mauritius	18	Kingdom of Morocco
8	Republic of Myanmar (Myanmar)	19	Republic of Senegal
9	Republic of Nicaragua	20	Zimbabwe
10	Islamic Republic of Pakistan (Pakistan)	21	Republic of South Sudan
11	Republic of Malta	22	Republic of the Philippines

Third

Implementation

All financial institutions, designated non-financial businesses and professions shall implement the provisions of this decision, and it shall be effective from the date of its circularization.

Director of the Financial Follow-Up Unit A. Wael Lavi

Attachment No. (1): Concerns Regarding Deficiencies in the Anti-Money Laundering and Combating the Financing of Terrorism System

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State of Palestine – Al Bireh P.O.Box 3981 Tel: +970 22422551\2 | Fax: +970 22422553 | E-mail: info@ffu.ps | www.ffu.ps

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Financial Follow-Up Unit

State of Palestine

Attachment to Financial Follow-Up Unit Decision No. (2/2021) Concerning Lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Concerns Regarding Deficiencies in Anti-Money Laundering and Combating the Financing of Terrorism Systems in Countries Under Enhanced Follow-Up.

Part One: Deficiencies Through Evaluation Reports

The Mutual Evaluation Reports (MERs) published on the FATF website contain all deficiencies and key conclusions regarding the AML/CFT system in countries listed on the Enhanced Follow-Up list, where this data must be taken into consideration. These reports can be obtained via the following mechanism:

1. Enter the website /http://www.fatf-gafi.org
2. Select the item (publications) then (mutual evaluations)
3. Search for the country name in English in the search window.

Part Two: Implementation of Work to Address Deficiencies

The following countries have made a high-level political commitment to address strategic deficiencies related to their AML/CFT systems, and these countries are still implementing their commitments to address remaining deficiencies.

The items below outline the key axes 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 consideration whether negative or positive:

Country	Key Axes
Albania	Since February 2020, when Albania made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, Albania has taken steps towards improving its AML/CFT regime, including by improving the implementation of targeted financial sanctions through supervisory actions that identify and rectify compliance deficiencies among financial institutions and DNFBPs. Albania should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) finalising a project to reduce the informal, cash-based economy and to register ownership of all real estate; (2) improving the timely handling of mutual legal assistance requests; (3) establishing more effective mechanisms to detect and prevent criminals from owning or controlling DNFBPs, including by strengthening competent authorities' powers to apply sanctions; (4) ensuring that accurate and up-to-date legal and beneficial ownership information is available about companies on a timely basis; (5) increasing the number of prosecutions for ML, especially in cases involving foreign predicate offences; and (6) demonstrating the continued use of asset seizures and securing final confiscations for the proceeds of crime, especially assets linked to third-party and professional money launderers, as well as indirect proceeds and equivalent value.
Barbados	In February 2020, Barbados made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime. Barbados should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating an effective application of risk-based supervision for FIs and DNFBPs; (2) taking appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes, and ensuring that accurate and up-to-date basic and beneficial ownership information is available on a timely basis; (3) increasing the capacity of the FIU to improve the quality of its financial information to further assist law enforcement authorities in investigating ML or TF; (4) demonstrating that ML investigations and prosecutions are in line with the country’s risk profile and result in sanctions, when appropriate, and reducing the backlog in completing cases; (5) further pursuing confiscation in ML cases, including by seeking assistance from foreign counterparts.
Botswana	In October 2018, Botswana made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime. At its June 2021 plenary, the FATF has made the initial determination that Botswana has substantially completed its action plan and warrants an on-site assessment to verify that the implementation of Botswana’s AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future. Botswana has made the following key reforms, including by: (1) developing a comprehensive national AML/CFT strategy and policy informed by national risk assessment results; (2) developing risk-based supervision and monitoring programmes; and (3) improving the dissemination and use of financial intelligence by the FIU and others to identify and investigate ML cases. The FATF will continue to monitor the COVID-19 situation and conduct an on-site visit at the earliest possible date.
Burkina Faso (Statement from February 2021)	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. Since the completion of its MER in 2019, Burkina Faso has made progress on a number of its MER recommended actions to improve technical compliance and effectiveness, including by adopting a national AML/CFT strategy in December 2020. Burkina Faso will work to implement its action plan, including by: (1) adopting and implementing follow-up mechanisms for monitoring actions in the national strategy; (2) seeking MLA and other forms of international cooperation in line with its risk profile; (3) strengthening of resource capacities of all AML/CFT supervisory authorities and implementing risk based supervision of FIs and DNFBPs; (4) maintaining comprehensive and updated basic and beneficial ownership information and strengthening the system of sanctions for violations of transparency obligations; (5) increasing the diversity of STR reporting; (6) enhancing FIU’s human resources through additional hiring, training and budget; (7) conduct training for LEAs, prosecutors and other relevant authorities; (8) demonstrating that authorities are pursuing confiscation as a policy objective; (9) enhancing capacity and support for LEAs and prosecutorial authorities involved in combatting TF, in line with the TF National Strategy; and (10) implementing an effective targeted financial sanctions regime related to terrorist financing and proliferation financing as well as risk-based monitoring and supervision of NPOs.
Cambodia	In February 2019, Cambodia made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies. Cambodia should take urgent action to fully address remaining measures in its action plan as all timelines have already expired. Cambodia should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) ensuring prompt, proportionate and dissuasive enforcement actions are applied to banks, as appropriate for AML/CFT breaches; (2) enhancing disseminations of financial intelligence to law enforcement authorities in connection with high-risk crimes; (3) demonstrating an increase in ML investigations and prosecutions in line with risk; (4) demonstrating an increase in the freezing and confiscation of criminal proceeds, instrumentalities, and property of equivalent value; (5) raising awareness amongst the private sector of new obligations concerning targeted financial sanctions related to proliferation financing and enhancing the understanding of sanctions evasion.
The Cayman Islands	Since February 2021, when the Cayman Islands made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime, the Cayman Islands has taken steps towards improving its AML/CFT regime, including by applying sanctions that are effective, proportionate and dissuasive, and taking administrative penalties and enforcement actions against obliged entities to ensure that AML/CFT breaches are remediated. The Cayman Islands should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) imposing adequate and effective sanctions in cases where relevant parties (including legal persons) do not file accurate, adequate and up-to-date beneficial ownership information in line with those requirements; and (2) demonstrating that they are prosecuting all types of money laundering in line with the jurisdiction’s risk profile and that such prosecutions are resulting in the application of dissuasive, effective, and proportionate sanctions.
Haiti	In June 2021, Haiti made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime. Haiti will work to implement its action plan, including by: (1) developing its ML/TF risk assessment process and disseminating the findings; (2) facilitating information sharing with relevant foreign counterparts; (3) addressing the technical deficiencies in its legal and regulatory framework that impede the implementation of AML/CFT preventative measures and implementing risk-based AML/CFT supervision for all financial institutions and DNFBPs deemed to constitute a higher ML/TF risk; (4) ensuring basic and beneficial ownership information are maintained and accessible in a timely manner; (5) ensuring a better use of financial intelligence and other relevant information by competent authorities for combatting ML and TF; (6) addressing the technical deficiencies in its ML offence and demonstrating authorities are identifying, investigating and prosecuting ML cases in a manner consistent with Haiti’s risk profile; (7) demonstrating an increase of identification, tracing and recovery of proceeds of crimes; (8) addressing the technical deficiencies in its TF offence and targeted financial sanctions regime; (9) conducting appropriate risk-based monitoring of NPOs vulnerable to TF abuse without disrupting or discouraging legitimate NPO activities.
Jamaica	Since February 2020, when Jamaica made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime, Jamaica has taken steps towards improving its AML/CFT regime, including by implementing targeted financial sanctions for TF without delay. Jamaica should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) developing a more comprehensive understanding of its ML/TF risks; (2) including all FIs and DNFBPs in the AML/CFT regime and ensuring adequate, risk-based supervision in all sectors; (3) taking appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes, and ensuring that accurate and up-to-date basic and beneficial ownership information is available on a timely basis; (4) taking proper measures to increase the use of financial intelligence and to increase ML investigations

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