Circular on FATF High-Risk Jurisdictions and Plenary Outcomes for Authorized Institutions

Our Ref.: B10/14C B1/15C 11 March 2020 The Chief Executive All Authorized Institutions Dear Sir/Madam, Statements issued by the Financial Action Task Force I am writing to inform you that on 21 February 2020 the Financial Action Task Force (FATF) published two updated statements identifying jurisdictions that have strategic deficiencies in their anti-money laundering and counter-financing of terrorism (AML/CFT) and counter proliferation financing regimes and also to draw your attention to a number of outcomes from the FATF Plenary meeting held on 19-21 February 2020. High-Risk Jurisdictions subject to a Call for Action The FATF has issued a statement 1 identifying high-risk jurisdictions that have significant strategic deficiencies in their AML/CFT and counter proliferation financing regimes. The FATF calls on all members and other jurisdictions to apply enhanced due diligence and counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing, and proliferation financing risks emanating from the jurisdictions below. The statement can be found at: https://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/ documents/call-for-action-february-2020.html. (1) Democratic People’s Republic of Korea (DPRK) The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its AML/CFT regime and the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction and its financing. Authorized institutions (AIs) should give special attention to business relationships and transactions associated with the DPRK, including DPRK companies, financial institutions and those acting on their behalf, and subject

1 AIs are reminded of the requirements set out in paragraph 4.15 of the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Authorized Institutions).

• 2 - them to increased scrutiny and enhanced due diligence. AIs should also terminate correspondent relationships with DPRK banks, where required by relevant United Nations Security Council Resolutions. (2) Iran The FATF fully lifts the suspension of counter-measures given Iran’s failure to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards. The FATF remains concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. AIs should give special attention to business relationships and transactions associated with Iran, including Iranian companies, financial institutions and those acting on their behalf, and subject them to increased scrutiny and enhanced due diligence. Jurisdictions under Increased Monitoring The FATF has also issued a statement on jurisdictions that have strategic deficiencies in their AML/CFT and counter proliferation financing regimes but have committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and are subject to increased monitoring. The statement can be found at: https://www.fatf￾gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/ increased-monitoring-february-2020.html. Other Outcomes from the FATF Plenary, Paris, 19-21 February 2020 The FATF has published various outcomes of the Plenary, which may be of reference to AIs. In particular, recognising the potential that innovation offers to improve AML/CFT efforts, the FATF has published on 6 March 2020 a new guidance paper on digital identity which explains the FATF’s requirements for customer identification and verification and ongoing due diligence and how these can align with key components of digital identity systems. Further information can be found at: https://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-fatf-plenary￾february-2020.html. Yours faithfully, Carmen Chu Executive Director (Enforcement and AML)