Circular Letter CVM/SMI/SIN 04/2012

CIRCULAR LETTER/CVM/SMI/SIN/Nº 004/2012
Rio de Janeiro, December 7, 2012.
Subject: Communications published by FATF.

To the Directors Responsible for Instruction CVM No. 301, of April 16, 1999,

1. With a view to the faithful compliance with Instruction CVM No. 301/99, in particular, the provisions of item VIII, of article 6, and item I of § 1, of the same article,
   we inform you that on October 19, 2012, the Financial Action Task Force against Money Laundering and Financing of Terrorism (FATF), in plenary session, approved and published communications whose versions in Portuguese and disclosed on the electronic address of the Financial Activities Control Council (Coaf), https://www.coaf.fazenda.gov.br/, we transcribe below:

FATF Communication of October 19, 2012
Paris, October 19, 2012 - The Financial Action Task Force (FATF) is the body that establishes global standards in the field of prevention and combating of money laundering and financing of terrorism (AML/CFT). To protect the international financial system from risks and encourage greater observance of AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies to, together with them, address such deficiencies that put the international financial system at risk.

Jurisdictions subject to FATF designation for its members and other jurisdictions to apply countermeasures to protect the international financial system from current and substantial risks of money laundering and financing of terrorism (ML/FT), originating from the jurisdictions.
Iran
Democratic People's Republic of Korea (DPRK)
Jurisdictions with strategic AML/CFT deficiencies that have not achieved the expected progress in addressing the deficiencies or have not committed to an action plan developed together with the FATF to address the deficiencies.
The FATF alerts its members of the risks associated with the deficiencies of each jurisdiction, as described below.

Bolivia
Cuba
Ecuador
Ethiopia
Ghana
Indonesia
Kenya
Myanmar
Nigeria
Pakistan
São Tomé and Príncipe
Sri Lanka
Syria
Tanzania
Thailand
Turkey*
Vietnam
Yemen

• See the text below regarding Turkey

Iran
The FATF remains particularly and exceptionally concerned about Iran's failure to address the risk of financing of terrorism and the serious threat this represents to the integrity of the international financial system, despite Iran's engagement with the FATF.
The FATF reiterates its appeal to its members and urges all jurisdictions to direct their financial institutions to pay special attention to relations and commercial operations with Iran, including Iranian companies and financial institutions. In addition to enhanced analysis, the FATF reiterates its appeal of February 25, 2009, made to its members, and urges all jurisdictions to apply effective countermeasures to protect their financial sectors from the risks of money laundering and financing of terrorism (ML/FT) emanating from Iran. The FATF continues to alert jurisdictions to protect themselves from correspondent relationships used to avoid or circumvent countermeasures and risk mitigation practices, consider ML/FT risks when analyzing requests from Iranian financial institutions to open branches or subsidiaries in their jurisdiction. Due to the continuing threat of terrorist financing coming from Iran, jurisdictions should consider measures already adopted and possible additional safeguards, or the strengthening of existing ones. The FATF urges Iran to address its ML/FT deficiencies in an immediate and significant manner, particularly by criminalizing the financing of terrorism and implementing requirements for reporting of unusual transactions (RUT). If Iran does not take concrete measures to improve its AML/CFT regime, the FATF may appeal to its members and all jurisdictions to reinforce countermeasures in February 2013.

Democratic People's Republic of Korea (DPRK)
The FATF remains concerned about the DPRK's failure to address the major deficiencies in its anti-money laundering and counter-terrorist financing (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to address its AML/CFT deficiencies seriously and immediately.
The FATF reiterates its request of February 25, 2011 and asks its members and all jurisdictions to direct their financial institutions to give greater attention to relations and commercial operations with the DPRK, as well as with companies and financial institutions of the DPRK. In addition to enhanced analysis, the FATF asks all jurisdictions to apply effective countermeasures that protect their financial sectors from the risk of money laundering and financing of terrorism (ML/FT) that arise from the DPRK. Jurisdictions must also protect themselves from correspondent relationships used to avoid or circumvent countermeasures and risk mitigation practices and consider ML/FT risks when analyzing requests from DPRK financial institutions to open branches or subsidiaries in their jurisdiction. The FATF remains prepared to assist the DPRK directly in addressing its AML/CFT deficiencies.

Bolivia
Bolivia has taken measures to improve its AML/CFT regime, including enacting a new law to substantially address deficiencies regarding the criminalization of money laundering and financing of terrorism and working to strengthen the capacity and autonomy of the Financial Intelligence Unit (FIU). However, despite Bolivia's political commitment to work with the FATF and the FATF Regional Cooperation Organization for South America (GAFISUD) to remedy its strategic AML/CFT deficiencies, Bolivia has not achieved the expected progress in implementing its action plan within the established timeframe. Bolivia must continue to work to remedy the remaining issue of improving the judicial structure to identify and block the assets of terrorists. The FATF encourages Bolivia to remedy its pending deficiencies and continue the process of implementing its action plan.

Cuba
In June 2011, the FATF identified strategic AML/CFT deficiencies in Cuba and it had not joined the FATF. Since then, Cuba has significantly improved its engagement and cooperation with the FATF and has requested to participate in GAFISUD. However, the FATF urges Cuba to continue its engagement with the FATF and to work with it to develop and reach an agreement on an action plan to resolve its AML/CFT deficiencies.

Ecuador
Ecuador has taken measures to improve its AML/CFT regime, including presenting the CFT law to Parliament. Despite Ecuador's political commitment to work with the FATF and GAFISUD to remedy its strategic AML/CFT deficiencies, Ecuador has not achieved the expected progress in implementing its action plan within the established timeframes and some strategic deficiencies remain. Ecuador must continue to work with the FATF and GAFISUD to implement its action plan and remedy the deficiencies: (1) ensuring the adequate criminalization of financing of terrorism; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) implementing adequate procedures for the confiscation of funds related to money laundering; and (4) strengthening the coordination of financial sector supervision. The FATF encourages Ecuador to remedy its pending deficiencies and continue the process of implementing its action plan.

Ethiopia
Ethiopia has taken measures to improve its AML/CFT regime, including through the creation of its FIU. However, despite the high-level political commitment of Ethiopia to work with the FATF to address its AML/CFT deficiencies, Ethiopia has not progressed sufficiently in implementing its action plan and some deficiencies remain. Ethiopia must continue working to implement its action plan to address these deficiencies: (1) adequately criminalizing money laundering and financing of terrorism (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist funds; (3) ensuring a fully operational and effective FIU; and (4) implementing effective, proportionate and dissuasive sanctions to deal with natural and legal persons who fail to comply with national ML/FT requirements. The FATF encourages Ethiopia to address the deficiencies and continue the process of implementing its action plan.

Indonesia
Indonesia has taken measures to improve its AML/CFT regime. However, despite the high political commitment to work in partnership with the FATF and the Asia/Pacific Group on Money Laundering (APG) to address its strategic AML/CFT deficiencies, Indonesia has not satisfactorily implemented its action plan, and some strategic AML/CFT deficiencies still remain. Indonesia must continue working to implement its action plan to address these deficiencies: (1) adequately criminalizing financing of terrorism; (2) establishing and implementing an adequate legal framework that can identify and block terrorist funds; and (3) modifying and implementing laws or other legal instruments to fully implement the International Convention for the Suppression of the Financing of Terrorism of 1999. The FATF encourages Indonesia to address the deficiencies, particularly through the approval of an adequate CFT law, and to proceed with the process of implementing its action plan.

Kenya
Kenya has taken measures to improve its AML/CFT regime, including the decree of the Terrorism Prevention Act and amendments to the Capital Markets Bill; and the processing in Parliament of amendments to the Proceeds of Crime and Money Laundering Prevention Act and the Finance Bill. The FATF has not yet assessed these laws due to their very recent nature and, therefore, cannot determine the extent to which they address the following issues: (1) adequately criminalizing financing of terrorism; (2) ensuring a fully operational and effective FIU; (3) establishing and implementing an adequate legal framework that can identify and block terrorist funds; (4) implementing effective, proportionate and dissuasive sanctions to deal with natural and legal persons who fail to comply with national AML/CFT requirements; (5) implementing an adequate and effective AML/CFT supervision program for the entire financial sector; (6) strengthening financial transparency; (7) improving and expanding customer due diligence measures; and (8) establishing adequate record-keeping obligations. Despite the high-level political commitment of Kenya to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to address its strategic AML/CFT deficiencies, Kenya has not satisfactorily implemented its action plan and some strategic AML/CFT deficiencies still remain. The FATF encourages Kenya to address the existing deficiencies and proceed with the process of implementing its action plan.

Myanmar
Myanmar has taken measures to improve its AML/CFT regime, including removing its reservations on the extradition articles of the Vienna Convention, the Palermo Convention and the Terrorism Financing Convention. However, despite Myanmar's high-level political commitment to work with the FATF and the APG to address its AML/CFT deficiencies, Myanmar has not progressed sufficiently in implementing its action plan and some deficiencies remain. Myanmar must address these deficiencies, including: (1) adequately criminalizing financing of terrorism; (2) establishing and implementing adequate procedures to identify and freeze terrorist funds; (3) strengthening the extradition regime related to financing of terrorism; (4) ensuring a fully operational and effective FIU; (5) strengthening financial transparency; and (6) strengthening customer due diligence measures. The FATF encourages Myanmar to address the existing deficiencies and proceed with the process of implementing its action plan.

Nigeria
Nigeria has taken measures to improve its AML/CFT regime, including through the adoption by Parliament of the Constitutional Amendment Bill (prohibition) on Money Laundering and the Constitutional Amendment Bill (prevention) on Terrorism. The FATF has not yet assessed these laws due to their very recent nature and, therefore, cannot determine the extent to which they address the two pending issues of Nigeria regarding the criminalization of money laundering and financing of terrorism. The FATF encourages Nigeria to address the existing deficiencies and proceed with the process of implementing its action plan.

Pakistan
Pakistan has made significant progress in improving its AML/CFT regime, including the introduction of CFT amendments to Parliament. However, despite the high-level political commitment of Pakistan to work with the FATF and the APG to address its strategic AML/CFT deficiencies, Pakistan has not progressed sufficiently in the full implementation of its action plan and some of the main CFT deficiencies remain. Specifically, Pakistan needs to approve legislation that ensures the country is in compliance with FATF standards regarding the crime of financing of terrorism and the ability to identify, block and confiscate terrorist assets. The FATF encourages Pakistan to address the existing deficiencies and continue the implementation of its action plan.

São Tomé and Príncipe
Despite the high-level political commitment of São Tomé and Príncipe to work with the FATF and the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) to address its strategic AML/CFT deficiencies, São Tomé and Príncipe has not progressed sufficiently in implementing its action plan and some deficiencies remain. São Tomé and Príncipe must address these deficiencies, including: (1) adequately criminalizing money laundering and financing of terrorism; (2) establishing a fully operational Financial Intelligence Unit that functions effectively; (3) ensuring that financial institutions and Non-Profit Organizations and Non-Profit Entities (NPOs/NPEs) are subject to adequate regulation and supervision; and (4) implementing effective, proportionate and dissuasive sanctions to deal with non-compliance with national AML/CFT obligations. The FATF encourages São Tomé and Príncipe to address the existing deficiencies and continue with the process of implementing its action plan.

Sri Lanka
Sri Lanka has made significant progress in improving its AML/CFT regime. However, despite the high-level political commitment of Sri Lanka to work with the FATF and the APG to address its strategic AML/CFT deficiencies, Sri Lanka has not progressed sufficiently in implementing its action plan. Sri Lanka must continue working to remedy the pending issue regarding the adequate criminalization of financing of terrorism. The FATF encourages Sri Lanka to address this pending deficiency and proceed with the process of implementing its action plan.

Syria
Previously, Syria took significant measures to improve its AML/CFT regime. However, despite the high-level political commitment of Syria to work with the FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF) to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan and some AML/CFT deficiencies remain. Syria must continue working on the implementation of its action plan and to address these deficiencies: (1) providing sufficient legal basis to comply with obligations arising from Resolution 1373 and implementing adequate procedures to identify and block terrorist funds; and (2) ensuring that there are appropriate laws and procedures to provide mutual legal assistance. The FATF encourages Syria to demonstrate that the deficiencies have been addressed to allow the FATF to properly assess the country's progress.

Tanzania
Tanzania has taken measures to improve its AML/CFT regime, decreeing amendments to the Money Laundering Prevention Act and the Terrorism Prevention Act, as well as the issuance of implementing regulations that expand to requirements related to customer due diligence and information records and provides for a national, operational and independent FIU. However, despite the high-level political commitment of Tanzania to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to address its AML/CFT deficiencies, Tanzania has not made sufficient progress in implementing its action plan, within the established timeframe, and some AML/CFT deficiencies remain. Tanzania must continue working on the implementation of its action plan to address these deficiencies, including: (1) clarifying pending issues regarding predicate offenses for money laundering and criminalizing financing of terrorism; (2) establishing and implementing adequate procedures to identify and block terrorist assets, as well as implementing United Nations Security Council Resolutions 1267 and 1373 through legislation, regulations or other legal means. The FATF encourages Tanzania to address the pending deficiencies, including the ratification of the Terrorism Financing Convention, and to continue the process of implementing its action plan.

Thailand
Thailand has taken measures to improve its AML/CFT regime, including the issuance of customer due diligence standards. However, despite the high-level political commitment of Thailand to work with the FATF and the APG to remedy strategic AML/CFT deficiencies, Thailand has not had sufficient progress in implementing its action plan, and some AML/CFT deficiencies remain, despite Thailand having faced external difficulties between 2009 and 2011, which had a significant impact on the legislative process that allowed for the approval of necessary laws and regulations. Thailand must continue working to implement its action plan and address pending deficiencies, including: (1) adequately criminalizing financing of terrorism; (2) establishing and implementing adequate procedures to identify and block terrorist assets; and (3) strengthening AML/CFT supervision. The FATF encourages Thailand to address the pending deficiencies and continue the process of implementing its action plan, especially by approving legislation on combating the financing of terrorism.

Turkey*
Despite the high-level political commitment of Turkey to work with the FATF to remedy strategic CFT deficiencies, Turkey has not had sufficient progress in implementing its action plan and some CFT deficiencies remain. Turkey must work to remedy these deficiencies, including: (1) adequately criminalizing financing of terrorism; and (2) implementing an adequate legal regime to identify and block terrorist assets. Given the continuing lack of progress in these two areas, the FATF decided to suspend, on February 22, 2013, Turkey's membership unless the following conditions are met before the said date: (1) adopt legislation to adequately correct deficiencies in its crimes of financing of terrorism; and (2) establish an adequate legal structure compatible with FATF Recommendations to identify and block terrorist assets. The FATF urges countries to apply countermeasures proportionate to the risks associated with this country.

Vietnam
Vietnam has taken measures to improve its AML/CFT regime. However, despite the high-level political commitment of Vietnam to work with the FATF and the APG to remedy strategic AML/CFT deficiencies, Vietnam has not had sufficient progress in implementing its action plan and some strategic AML/CFT deficiencies remain. Vietnam must continue working with the FATF and the APG to implement its action plan and remedy these deficiencies, including: (1) addressing pending issues regarding the adequate criminalization of financing of terrorism; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) making legal persons subject to criminal liability in accordance with FATF standards or demonstrating that there is a constitutional prohibition that prevents this measure; (4) improving the overall supervision framework (5) improving and expanding customer due diligence measures and reporting obligations; and (6) strengthening international cooperation. The FATF encourages Vietnam to address the pending deficiencies and continue the process of implementing its action plan.

Yemen
Despite the high-level political commitment of Yemen to work with the FATF and the MENAFATF to address strategic AML/CFT deficiencies, Yemen has not made sufficient progress in implementing its action plan, and some AML/CFT deficiencies remain. Yemen must continue working to implement its action plan and address these deficiencies, including: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and block terrorist assets; (3) developing the supervisory and monitoring capacity of financial sector supervisors and the Financial Intelligence Unit to ensure that financial institutions comply with the obligation to report suspicious transactions, especially regarding terrorist financing; and (4) ensuring a fully operational FIU that functions effectively. The FATF encourages Yemen to address the pending deficiencies and continue the process of implementing its action plan. * Ghana In line with Ghana's progress in broadly implementing its action plan agreed with the FATF, Ghana is now identified in another FATF public document: "Enhancing Global AML/CFT Compliance: Ongoing Process". Enhancing Global AML/CFT Compliance: Ongoing Process – October 19, 2012 Paris, October 19, 2012 - As part of its current review of compliance with AML/CFT standards, the FATF has identified, to date, the following jurisdictions with strategic AML/CFT deficiencies for which an action plan has been developed in partnership with the FATF. As the situation differs from one jurisdiction to another, each jurisdiction has submitted in writing its high-level political commitment to address the identified deficiencies. The FATF encourages such commitments. Several jurisdictions have not yet been examined by the FATF. The FATF continues to identify other jurisdictions that pose a risk to the international financial system. The FATF and FATF-style regional bodies (FSRBs) will continue to work with the jurisdictions listed below and will communicate their progress in addressing the identified deficiencies. The FATF urges these jurisdictions to complete the implementation of the action plans efficiently and within the proposed deadlines. The FATF will monitor the implementation of these action plans and encourage its members to consider the information presented below.

Afghanistan
In June 2012, Afghanistan showed high-level political commitment to work with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. Since then, Afghanistan has been working to improve its AML/CFT regime, including the creation of high-level AML/CFT coordination mechanisms. However, the FATF has decided that certain strategic AML/CFT deficiencies remain. Afghanistan must work on implementing its action plan to correct these deficiencies: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and block terrorist resources; (3) implementing an adequate AML/CFT supervision and inspection program for all financial sectors; (4) establishing and implementing adequate procedures for the confiscation of assets related to money laundering; (5) establishing an operational and effective Financial Intelligence Unit; and (6) establishing and implementing effective controls for cross-border cash transactions. The FATF encourages Afghanistan to address the deficiencies and proceed with the process of implementing its action plan. Albania In June 2012, Albania showed high-level political commitment to work with the FATF and MONEYVAL to address its strategic AML/CFT deficiencies. Albania has taken measures to improve its AML/CFT regime, including the implementation of adequate customer due diligence provisions. The FATF, however, has decided that strategic AML/CFT deficiencies remain. Albania will work on implementing its action plan to correct these deficiencies: (1) establishing and implementing adequate procedures to identify and block terrorist resources; and (2) improving the international cooperation framework related to terrorist financing. The FATF encourages Albania to address the deficiencies and proceed with the process of implementing its action plan. Algeria In October 2011, Algeria showed high-level political commitment to work with the FATF and the MENAFATF to address its strategic AML/CFT deficiencies. Algeria has taken measures to improve its AML/CFT regime, including the expansion of reporting financial entities, which is provided for by the legal autonomy of the Financial Intelligence Unit and the expansion of its powers to request information and share it with other competent authorities. The FATF is concerned that strategic AML/CFT deficiencies may remain, and therefore greater engagement from Algeria is necessary to clarify whether such deficiencies have been addressed. Algeria must continue working on implementing its action plan: (1) adequately criminalizing terrorist financing; (2) establishing and implementing adequate procedures to identify and block terrorist resources; (3) strengthening and expanding customer due diligence measures; and (4) establishing a fully operational and effective Financial Intelligence Unit. The FATF encourages Algeria to address the deficiencies and proceed with the process of implementing its
action plan.

Angola
In June 2010, Angola showed high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since June 2012, Angola has taken measures to improve its AML/CFT regime. The FATF has identified, however, that certain strategic AML/CFT deficiencies remain. Angola must continue working on implementing its action plan to address these deficiencies: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing a fully operational and effective Financial Intelligence Unit; and (3) establishing and implementing an adequate legal framework to identify, trace, and block terrorist resources without delay. The FATF encourages Angola to address the remaining deficiencies and proceed with the process of implementing its action plan. Antigua and Barbuda In February 2010, Antigua and Barbuda showed strong political commitment to work with the FATF and the Caribbean Financial Action Task Force (CFATF) to address its strategic AML/CFT deficiencies. Since June 2012, Antigua and Barbuda has taken measures to improve its AML/CFT regime, including the promulgation of amendments to its Banking Act. The FATF has identified, however, that certain strategic AML/CFT deficiencies remain. Antigua and Barbuda must continue working on implementing its action plan to address such deficiencies, continuing to improve the overall supervisory framework. The FATF encourages Antigua and Barbuda to address the existing deficiencies and proceed with the process of implementing its action plan. Argentina In June 2011, Argentina showed strong political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since June 2012, Argentina has taken measures to improve its AML/CFT regime, including the practical application of Presidential Decree 918/2012 to block terrorist assets. The FATF has identified, however, that certain strategic AML/CFT deficiencies remain. Argentina must continue working on implementing its action plan to address such deficiencies: (1) addressing remaining deficiencies regarding the criminalization of money laundering, the confiscation of funds linked to money laundering, and the blocking of terrorist assets; (2) increasing financial transparency; (3) addressing remaining issues regarding the Financial Intelligence Unit and suspicious transaction reporting requirements; (4) improving the adequate AML/CFT supervision program for all financial sectors; (5) enhancing and expanding customer due diligence measures; and (6) establishing appropriate channels for international cooperation and ensuring their effective implementation. The FATF encourages Argentina to address the existing deficiencies and proceed with the process of implementing its action plan.

Bangladesh
In October 2010, Bangladesh showed strong political commitment to work with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. Since June 2012, Bangladesh has taken measures to improve its AML/CFT regime. The FATF, however, has identified that certain strategic AML/CFT deficiencies remain. Bangladesh must continue working on implementing its action plan to address such deficiencies: (1) adequately criminalizing terrorist financing; (2) establishing and implementing an adequate legal framework to identify and block resources belonging to terrorists; (3) creating a fully operational and effective Financial Intelligence Unit; (4) enhancing international cooperation; and (5) publishing guidelines for capital market intermediaries to ensure that AML/CFT obligations are respected. The FATF encourages Bangladesh to address the existing deficiencies and continue with the process of implementing its action plan. Brunei In June 2011, Brunei showed strong political commitment to work with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. Since June 2012, Brunei has taken measures to improve its AML/CFT regime, including the promulgation of the Mutual Legal Assistance Act. The FATF, however, has identified that certain strategic AML/CFT deficiencies remain. Brunei must continue working on implementing its action plan to address such deficiencies: (1) establishing and implementing an adequate legal framework to identify and block resources belonging to terrorists; and (2) ensuring a fully operational and effective Financial Intelligence Unit. The FATF encourages Brunei to address the existing deficiencies and continue with the process of implementing its action plan. Cambodia In June 2011, Cambodia showed strong political commitment to work with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. The FATF has identified that certain strategic deficiencies remain. Cambodia must continue working on implementing its action plan to address such deficiencies: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework to identify and block resources belonging to terrorists; (3) implementing adequate procedures to confiscate funds linked to money laundering; (4) ensuring a fully operational and effective Financial Intelligence Unit; and (5) enhancing and implementing effective controls for cross-border cash transactions. The FATF encourages Cambodia to address the existing deficiencies and continue with the process of implementing its action plan.

Ghana
In line with Ghana's progress in broadly addressing its action plan agreed with the FATF, the country has been removed from the FATF public statement and identified in this document. Since October 2010, Ghana has demonstrated strong political commitment to work with the FATF and the GIABA to address its strategic AML/CFT deficiencies; the country has taken significant measures to improve its AML/CFT regime; it promulgated the law criminalizing money laundering, established and implemented adequate measures to confiscate assets related to ML, improved customer due diligence measures, and increased the effectiveness of the Financial Intelligence Unit. The FATF will visit the country to confirm that the process of implementing reforms and necessary actions is underway to address the deficiencies previously identified by the FATF. Kuwait In June 2012, Kuwait showed strong political commitment to work with the FATF and the MENAFATF to address its strategic AML/CFT deficiencies. The FATF, however, has identified that certain strategic AML/CFT deficiencies remain. Kuwait will work to implement its action plan and resolve these deficiencies, including: (1) adequately criminalizing terrorist financing; (2) implementing the 1999 International Convention for the Suppression of the Financing of Terrorism; (3) establishing and implementing adequate procedures to identify and block terrorist assets; (4) ensuring that adequate laws and procedures are in place to provide mutual legal assistance; (5) establishing effective customer due diligence measures; (6) ensuring a fully operational FIU that functions effectively, particularly addressing the issue of operational autonomy; and (7) ensuring that financial institutions know and comply with their obligation to report suspicious transactions related to money laundering and terrorist financing. The FATF encourages Kuwait to address the pending deficiencies and continue the process of implementing its action plan. Kyrgyzstan In October 2011, Kyrgyzstan showed strong political commitment to work with the FATF and the Eurasian Group (EAG) to address its strategic AML/CFT deficiencies. Since June 2012, Kyrgyzstan has made progress in improving its AML/CFT regime, including the promulgation of amendments to the Money Laundering Prevention Law. The FATF, however, has identified that certain strategic AML/CFT deficiencies remain. Kyrgyzstan must continue working on implementing its action plan to resolve such deficiencies: (1) addressing remaining issues regarding the criminalization of money laundering; (2) adequately criminalizing terrorist financing; (3) addressing remaining issues regarding the implementation of adequate procedures to confiscate funds linked to money laundering; (4) creating effective customer due diligence measures for all financial institutions; and (5) implementing an adequate and efficient AML/CFT supervision program for all financial sectors. The FATF encourages Kyrgyzstan to address the
deficiencies and continue its process of implementing its action plan, specifically by promulgating necessary AML/CFT amendments.

Mongolia
In June 2011, Mongolia showed strong political commitment to work with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. Since June 2012, Mongolia has taken measures to improve its AML/CFT regime, including the creation of a dedicated AML unit within its police department. The FATF, however, has identified that strategic AML/CFT deficiencies remain. Mongolia must continue working on implementing its action plan to address such deficiencies: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework to identify and block resources belonging to terrorists; (3) implementing adequate procedures to confiscate funds linked to money laundering; (4) establishing suspicious transaction reporting requirements; and (5) demonstrating effective regulation of financial service providers. The FATF encourages Mongolia to address the existing deficiencies and continue with the process of implementing its action plan. Morocco In February 2010, Morocco showed strong political commitment to work with the FATF and the MENAFATF to address its strategic AML/CFT deficiencies. Since then, Morocco has made progress in its AML/CFT regime, adopting amendments to expand the scope of ML and TF offenses; expanding customer due diligence requirements; and working to operationalize the FIU. However, the FATF has identified that strategic AML/CTF deficiencies remain. Morocco must continue working on implementing its action plan to resolve such deficiencies, by promulgating laws that adequately criminalize terrorist financing. Namibia In June 2011, Namibia showed strong political commitment to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to address its strategic AML/CFT deficiencies. However, the FATF has identified that certain strategic AML/CFT deficiencies remain. Namibia must continue working on implementing its action plan to address such deficiencies: (1) adequately criminalizing terrorist financing; (2) establishing and implementing an adequate legal framework to identify and block resources belonging to terrorists; (3) implementing an adequate AML/CFT supervision program with sufficient powers; (4) ensuring a fully operational and effective Financial Intelligence Unit, specifically addressing the operational autonomy of the FIU; and (5) implementing effective, proportionate, and dissuasive sanctions to deal with non-compliance with national AML/CFT requirements. The FATF encourages Namibia to address the existing deficiencies and continue with the process of implementing its action plan.

Nepal
In February 2010, Nepal showed strong political commitment to work with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. Since June 2012, Nepal has taken measures to improve its AML/CFT system, ensuring that information held by the FIU is securely protected. The FATF, however, has identified that certain strategic AML/CFT deficiencies remain. Nepal must continue working on implementing its action plan to address such deficiencies: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing adequate procedures to identify and block terrorist resources; (3) implementing adequate procedures to confiscate resources linked to ML; (4) sanctioning and implementing appropriate mutual legal assistance laws; (5) ensuring a fully operational and effective Financial Intelligence Unit; and (6) establishing STR reporting obligations for ML and TF. The FATF encourages Nepal to resolve the existing deficiencies and continue the process of implementing its action plan. Philippines In October 2010, the Philippines showed strong political commitment to work in partnership with the FATF and the Asia-Pacific Group (APG) to address its strategic AML/CFT deficiencies. Since June 2012, the Philippines have taken significant measures to improve its AML/CFT system, issuing implementation standards and regulations for the recently approved CTF law. The FATF, however, has identified that certain strategic AML/CFT deficiencies remain. The Philippines must continue working on implementing its action plan to address such deficiencies: (1) taking additional measures for the adequate criminalization of money laundering; and (2) increasing the coverage of reporting entities to include designated non-financial activities and professions. The FATF encourages the Philippines to address the existing deficiencies and continue the process of implementing its action plan. The FATF gives strong support, particularly, for the Philippines to promulgate the pending AML legislative amendments. Sudan In February 2010, Sudan showed strong political commitment to work in partnership with the FATF and the MENAFATF to address its strategic AML/CFT deficiencies. The FATF has identified, however, that certain strategic AML/CFT deficiencies remain. Sudan must continue working on implementing its action plan to eliminate such deficiencies: (1) implementing adequate procedures to identify and block terrorist resources; (2) ensuring a fully operational and effective Financial Intelligence Unit; and (3) implementing an effective supervision program for compliance with AML/CFT measures. The FATF encourages Sudan to eliminate the existing deficiencies and proceed with the process of implementing its action plan.

Tajikistan
In June 2011, Tajikistan showed strong political commitment to work with the FATF and the Eurasian Group (EAG) to address its strategic deficiencies in AML/CFT. Since June 2012, Tajikistan has taken measures to improve its AML/CFT regime. The FATF, however, identified that certain strategic AML/CFT deficiencies remain. Tajikistan must continue to work on implementing its action plan to address such deficiencies: (1) addressing pending issues related to the criminalization of money laundering and terrorist financing; (2) establishing and implementing adequate procedures to confiscate resources linked to money laundering and to identify and freeze terrorist funds; (3) addressing pending issues related to the Financial Intelligence Unit and improving suspicious transaction report requirements; and (4) improving and expanding customer due diligence measures. The FATF encourages Tajikistan to eliminate existing deficiencies and to proceed with the implementation process of its action plan.

Venezuela
In October 2010, Venezuela showed strong political commitment to work with the FATF and the GAFIC to address its strategic AML/CFT deficiencies. Since then, Venezuela has taken measures to improve its AML/CFT regime, enacting the AML/CFT law that criminalizes terrorist financing, establishing the obligation to report suspicious transactions (STR) for money laundering and terrorist financing, and issuing a new resolution aimed at addressing deficiencies in the terrorist asset freezing regime. The FATF will visit the country to confirm that the implementation process of reforms and necessary actions is underway to address the deficiencies previously identified by the FATF.

Trinidad and Tobago
The FATF congratulates Trinidad and Tobago on the significant progress in improving its AML/CFT regime and highlights that the country has fulfilled its commitments in the Action Plan regarding the strategic deficiencies identified by the FATF in February 2010. Therefore, Trinidad and Tobago is no longer subject to FATF monitoring in its global AML/CFT compliance process. Trinidad and Tobago will work with the GAFIC while addressing all AML/CFT issues identified in its Mutual Evaluation Report, primarily implementing the new legislative and regulatory reform, in order to more effectively combat illicit financing in Trinidad and Tobago.

Jurisdictions that are not progressing sufficiently The FATF is still not satisfied with the progress of the action plan agreed with the following jurisdictions. The most important items of the action plan and/or the majority of them have not been addressed. If these jurisdictions do not take sufficient measures to implement important components in their action plans by February 2013, the FATF will identify them as being out of compliance with the

agreed action plan and will call on its members to reflect on the risks arising from the deficiencies associated with the jurisdiction.

Nicaragua
Despite the strong political commitment of Nicaragua to work with the FATF and the GAFIC to address its strategic AML/CFT deficiencies, the FATF is still not satisfied with the progress of Nicaragua's action plan and some strategic deficiencies remain. Nicaragua must work with the FATF and the GAFIC to implement its action plan and address such deficiencies: (1) establishing effective customer due diligence measures and adequate record-keeping requirements, particularly for entities not regulated by the supervisory authority; (2) establishing the obligation to report adequate suspicious transaction reports for ML and TF; (3) implementing an adequate AML/CFT supervision program in all financial sectors; (4) ensuring a fully operational and effective Financial Intelligence Unit; and (5) establishing adequate procedures to identify and freeze terrorist funds. The FATF encourages Nicaragua to address the remaining deficiencies and to continue with the implementation process of its action plan.

Zimbabwe
Despite the strong political commitment of Zimbabwe to work with the FATF and the ESAAMLG to address its strategic AML/CFT deficiencies, the FATF is still not satisfied with the progress of Zimbabwe's action plan and some strategic deficiencies remain. Zimbabwe must work with the FATF and the ESAAMLG to implement its action plan and address such deficiencies: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework to identify and freeze assets belonging to terrorists; (3) ensuring a fully operational and effective Financial Intelligence Unit; (4) ensuring that financial institutions are aware of and comply with their obligations to forward suspicious transaction reports related to ML and TF; (5) enacting and implementing mutual legal assistance legislation; and (6) implementing the United Nations International Convention for the Suppression of the Financing of Terrorism of 1999. The FATF encourages Zimbabwe to eliminate existing deficiencies and to continue the implementation process of the action plan.

Sincerely,
Waldir de Jesus Nobre
Superintendent of Market and Intermediary Relations Francisco José Bastos Santos Superintendent of Institutional Investor Relations