Circular 01/2013 (GW) – FATF Public Statement and Grace Period Extension

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26.03.2013

I.
FATF
Public Statement of 22 February 2013 regarding Iran, the Democratic People's Republic of Korea (North Korea) and other countries

During its Plenary Meeting held in Paris on 22 February 2013, the FATF released an updated Public Statement and an updated Information Report (see II).

The Statement issued by the
FATF on 22 February 2013 (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 19 October 2012 and BaFin Circular 6/2012 ( 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 Ecuador, Ethiopia, Indonesia, Kenya, Myanmar, Nigeria, Pakistan, São Tomé and Príncipe, Syria, Tanzania, Turkey, Vietnam and Yemen. In its statement of 19 October 2012 the FATF threatened to suspend Turkey's FATF membership. Since new legislation was enacted on 7 February 2013, however, Turkey’s membership was not suspended (for details see
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 22 February 2013 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 22 February 2013 (
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: extension of grace period)

In Circular 2/2012 of 21 March 2012,
BaFin granted a grace period with regard to the implementation of certain parts of the new provisions introduced by the GwOptG . In deviation from the effective dates stipulated in Article 12 of the GwOptG , BaFin announced in the aforementioned Circular that in cases where BaFin or external auditors identified contraventions of provisions amended or introduced by the GwOptG (section 3 (2) sentence 1 no. 2 of the GwG (thresholds applying to the transfer of funds) and section 6 (2) of the GwG (identification of PEPs)), BaFin would refrain from imposing any supervisory sanctions until 31 December 2012. This grace period was extended by Circular 9/2012 of 13 December 2012 for the first time until 31 March 2013.

BaFin and the Federal Ministry of Finance have now agreed to extend the grace period one last time until 30 September 2013.

Additional information

Circular 01/2013 (
GW
) - Annex 1:
FATF
Public Statement

Circular 01/2013 (
GW
) - Annex 2: Improving Global
AML

Circular 6/2012 (
GW
)

Circular 2/2012 (
GW
)

Circular 2/2010 (
GW
)

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