Palestine Monetary Authority

Circular No. (2024/55)

To all banks operating in Palestine

Date: Wednesday, July 03, 2024

Subject: High-Risk Countries and Countries Under Enhanced Monitoring

Attached is a copy of Decision No. (2024/2) issued by the Financial Follow-Up Unit dated 2024/06/30 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 specific measures to be taken, emphasizing the necessity to comply with the following:

1. Take into account concerns regarding deficiencies in AML/CFT systems in countries classified on the grey list ("countries under enhanced monitoring"), when conducting and updating the self-assessment of AML/CFT risks.

2. Apply the Risk-Based Approach (RBA), such that the application of due diligence measures is proportionate to (risk analysis results, nature of financial transaction risks, customer risks, and country classification), with enhanced due diligence measures to be applied when high risks are identified.

Supervision Department Palestine Monetary Authority

Copy: The respected Financial Follow-Up Unit

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www.pma.ps

Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452 info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251 | Postal code: P6160675

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Financial Follow-Up Unit

State of Palestine

Decision No. (2024/2)

Issued by the Financial Follow-Up Unit

Dated June 30, 2024

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

Based on the provisions of Law No. (39) of 2022 on combating money laundering and terrorist financing and its amendments, particularly Article (20) and paragraphs (3, 4) of Article (30), and pursuant to Decision No. (8/J/2016) of the National Committee for Combating Money Laundering and Terrorist Financing dated December 1, 2016, regarding delegating to the Financial Follow-Up Unit the authority to list high-risk countries periodically issued by the Financial Action Task Force (FATF), and subsequent decisions by the General Assembly from February 21, 2020, to June 28, 2024, and further to Decision No. (T/2020/5) of the National Committee for Combating Money Laundering and Terrorist Financing dated February 24, 2020, regarding high-risk countries and countries under enhanced monitoring, and subsequently Decision No. (2020/1) of the Follow-Up Unit dated February 25, 2020, and its subsequent decisions regarding lists of high-risk countries and countries under enhanced monitoring, and based on public interest requirements, we hereby decide the following:

First

List of High-Risk Countries (Black List)

All financial institutions and specified non-financial businesses and professions in the State of Palestine must continue to implement the following measures regarding high-risk countries:

Country	Required Measures Regarding Countries
Democratic People's Republic of Korea (North Korea)	1. Apply targeted financial sanctions in accordance with Executive Decree No. (2022/14) regarding the implementation of Security Council resolutions.<br>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 measures to business relations and transactions with those countries (as part of countermeasures), proportionate to the emerging risks, in accordance with Articles (26, 27) of National Committee Instructions No. (4) of 2022 for financial institutions, and Articles (24, 25) of National Committee Instructions No. (3) of 2022 for specified non-financial businesses and professions.
Islamic Republic of Iran (Iran)	b. Apply the enhanced due diligence measures referred to in paragraph (a) of this item when dealing with any entity acting on behalf of a natural or legal person, including companies or institutions operating in those countries.<br>c. Enhance reporting mechanisms adopted by the financial institution or specified non-financial business/profession, including increasing cooperation among staff and promptly providing data to the money laundering and terrorist financing compliance officer within the institution, to ensure no transaction suspected of involving money laundering or its predicate offenses or terrorist financing is executed, and to report such suspicion to the Unit immediately without delay, providing all data related to attempting to conclude such transactions, while ensuring confidentiality of reporting and non-disclosure.<br>d. Do not establish branches, representative offices, or subsidiaries in those countries.<br>e. Do not rely on third parties located in those countries to conduct any due diligence measures regarding customers.<br>f. Do not establish any banking or correspondent relationships with financial institutions in those countries.
Republic of the Union of Myanmar (Myanmar)	1. Apply enhanced due diligence measures to business relations and transactions with Myanmar, proportionate to the risks emerging in the country, in accordance with Articles (26, 27) of National Committee Instructions No. (4) of 2022 for financial institutions, and Articles (24, 25) of National Committee Instructions No. (3) of 2022 for specified non-financial businesses and professions.<br>2. When applying enhanced due diligence measures, ensure that fund flows for humanitarian assistance, legitimate non-profit organization activities, and financial transfers are not disrupted.

Second

List of Countries Under Enhanced Monitoring (Grey List)

Amend the list of countries under enhanced monitoring (grey list) stipulated in Unit Decision No. (2024/1) by adding (Monaco, Venezuela) and removing (Republic of Turkey, Jamaica), so that the list becomes as shown in the table below, and take into account concerns regarding deficiencies in AML/CFT systems for these countries (according to the attached appendix).

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FINANCIAL FOLLOW-UP UNIT 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

No.	Country Name	No.	Country Name
1	Bulgaria	12	Nigeria
2	Burkina Faso	13	Philippines
3	Cameroon	14	Senegal
4	Croatia	15	South Africa
5	Democratic Republic of the Congo	16	South Sudan
6	Haiti	17	Syrian Arab Republic (Syria)
7	Kenya	18	Tanzania
8	Mali	19	Venezuela
9	Monaco	20	Vietnam
10	Mozambique	21	Yemen
11	Namibia	-	-

Third

Implementation

All financial institutions and specified non-financial businesses and professions must implement the provisions of this decision, which shall take effect from the date of its circularization.

Head of the Financial Follow-Up Unit Dr. Firas Mazhar

Attachment: Concerns Regarding Deficiencies in AML/CFT Systems

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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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Concerns Regarding Deficiencies in AML/CFT Systems

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Attached to Financial Follow-Up Unit Decision No. (2024/2)

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

Part One: Deficiencies through Mutual Evaluation Reports (All Countries)

This section explains how to access concerns regarding AML/CFT and CFT proliferation financing systems in countries on the grey list, as well as all other countries subject to mutual evaluation by the FATF or peer groups. These concerns can be accessed by reviewing the countries' mutual evaluation reports and subsequent follow-up reports.

The mutual evaluation reports and follow-up reports on the FATF or MENAFATF websites contain all deficiencies and key conclusions regarding AML/CFT systems in countries on the enhanced monitoring list and all other evaluated countries. These concerns can be accessed through the following procedures:

a. Accessing mutual evaluation reports in English (All countries):

1. Visit the website: www.fatf-gafi.org
2. Select the (publications) item, then (publications).
3. From the topics list, select (Mutual Evaluations).
4. Search for the country name in English in the search window shown in the adjacent image.

b. Accessing mutual evaluation reports in Arabic (For countries subject to MENAFATF evaluation):

1. Visit the website: www.menafatf.org/ar
2. Select the (Mutual Evaluation) item, 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.

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Attached to Financial Follow-Up Unit Decision No. (2024/2)

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

Part Two: Implementation of Action Plans to Address Deficiencies

Countries on the grey list have made a high-level political commitment to address strategic deficiencies related to AML/CFT systems, and these countries continue to implement their commitments to address remaining deficiencies.

The items below outline the key areas those countries are addressing or have addressed, based on specific deficiencies identified in mutual evaluation and follow-up reports, which must be taken into account whether negative or positive:

Country	Key Areas
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 adopting an action plan to implement its national AML/CFT Strategy, establishing market entry controls for VASPs and postal money operators, communicating UN changes to targeted financial sanctions (TFS) and completing the implementation of a system to ensure prioritisation of STRs. Bulgaria should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating initial implementation of its national action plan for its AML/CFT Strategy; (2) addressing the remaining technical compliance deficiencies; (3) demonstrating initial implementation of risk-based supervision for postal money operators, currency exchange providers and real estate agents; (4) ensuring that the beneficial ownership information held in the Register is accurate and up-to-date; (5) improving investigations and prosecutions of different types of money laundering in line with risks, including high-scale corruption and organised crime; (6) ensuring that confiscation is pursued as a policy objective; (7) ensuring the ability to conduct parallel financial investigations in all terrorism investigations; (8) addressing gaps in the PF TFS frameworks; and (9) identifying the subset of non-profit organisations (NPOs) most vulnerable to TF abuse and demonstrating initial implementation of risk-based monitoring to prevent abuse for TF purposes.
Burkina Faso	Since February 2021, when 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 has taken steps towards improving its AML/CFT regime, including by implementing a case management system for mutual legal assistance requests, developing a software for the management of STRs and establishing procedures for the implementation of the cross-border declaration system. Burkina Faso should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) strengthening resource capacities of all AML/CFT supervisory authorities and implementing risk-based supervision; (2) maintaining comprehensive and updated basic and beneficial ownership information of legal persons and strengthening the system of sanctions for violations of transparency obligations; and (3) implementing an effective TFS regime related to TF and PF as well as risk-based monitoring and supervision of NPOs.
	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 deficiencies 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 should continue working on implementing its action plan to address its strategic deficiencies, including by work to implement its FATF action plan by: (1) aligning AML/CFT national strategies and policies with the findings of the NRA and monitoring their implementation, and demonstrating AML/CFT cooperation and coordination between competent authorities; (2) ensuring risk-based prioritisation of incoming international cooperation requests in line with risks and responding in an effective manner; (3) 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; (4) maintaining and ensuring timely access by competent authorities to adequate and up to date beneficial ownership information on legal persons, and establishing a sanctions regime for violations of transparency obligations applicable to legal persons; (5) 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; (6) demonstrating that authorities are able to conduct a range of ML investigations, and prosecute ML in line with risks; (7) 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; (8) demonstrating that TF investigations and prosecutions are pursued in line with risk; and (9) demonstrating effective implementation of TF and PF TFS regimes and implementing a risk-based approach to NPOs without disrupting legitimate NPO activities.
Croatia	Since June 2023, when Croatia made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, Croatia has taken steps towards improving its AML/CFT regime, including demonstrating the ability to systematically detect and where relevant investigate TF in line with its risk profile, addressing technical compliances deficiencies in relation to Recommendations 6 and 7, providing guidance to reporting entities on TFS, and identifying the subset of NPOs most vulnerable to TF abuse. Croatia should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) increasing FIU human resources and improving analytical capabilities; (2) continuing to improve law enforcement authorities’ (LEAs’) detection, investigation and prosecution of different types of ML, including ML involving a foreign predicate offences and the misuse of legal persons; (3) demonstrating a sustained increase in the application of provisional measures in securing direct/indirect proceeds, as well as foreign proceeds subject to confiscation; (4) demonstrating immediate communication of changes in UN TFS regimes to reporting entities and (5) providing targeted outreach to NPOs and to the donor community on potential vulnerabilities of NPOs to TF abuse.