Decision No. (1) of 2023 Regarding High-Risk Countries and Countries Under Enhanced Follow-Up

Palestine Monetary Authority

Circular No. (53 / 2023)
To all banks operating in Palestine
Date: Wednesday, 01 March, 2023

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. (2023/01) dated 2023/02/26 regarding High-Risk Countries and Countries Under Enhanced Follow-Up according to 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 measures to be taken in this regard, emphasizing the necessity to comply with the following:

1. Taking into account concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems in countries classified on the "Grey List" (Countries Under Enhanced Follow-Up), when conducting and updating the self-assessment of money laundering and terrorist financing risks.
2. Applying the Risk-Based Approach (RBA), such that the application of due diligence measures is proportional to (risk analysis results, nature of the financial transaction risk, customer risks, and country classification), with enhanced due diligence measures to be taken when high risks are perceived.

Supervision Group
Palestine Monetary Authority

Copy: To the respected gentlemen / Financial Follow-Up Unit

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Financial Follow-Up Unit
State of Palestine

وحدة المتابعة المالية
دولة فلسطين

Decision No. (2023/1)
Issued by the Financial Follow-Up Unit
Date: 2023/02/26

Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Based on the provisions of Law No. (39) of 2022 regarding the combating of money laundering and terrorist financing and its amendments, particularly the provisions of Article (20) and paragraphs (3, 4) of Article (30), and based on the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (8/J/2016) issued on 2016/12/01 regarding 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 2021/02/21, until 2023/02/24, and in addition to the decision of the National Committee for Combating Money Laundering and Terrorist Financing No. (T/5/2020) issued on 2020/02/24 regarding High-Risk Countries and Countries Under Enhanced Follow-Up, and subsequently to the Financial Follow-Up Unit decision No. (2020/1) dated 2020/02/25 and subsequent decisions regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up.

Based on the requirements of public interest, it is decided as follows:

First
List of High-Risk Countries (Black List)
All financial institutions, businesses, and designated non-financial businesses and professions in the State of Palestine must continue to apply the following procedures towards high-risk countries:

Country	Required Procedures Towards Countries
- Democratic People's Republic of Korea (North Korea).	1. Apply targeted financial sanctions in accordance with the provisions of Executive Decree No. (2022/14) regarding the implementation of Security Council resolutions.
- Islamic Republic of Iran (Iran).	2. Pay special attention to commercial relations and transactions with those countries, including companies and financial institutions, and apply the following counter-measures: ; a. Apply enhanced due diligence measures on business relations and transactions with those countries (as part of counter-measures), in proportion to the risks arising therein, according to the details of Articles (26, 27) of National Committee Instructions No. (4) of 2022 regarding Financial Institutions, and Articles (24, 25) of National Committee Instructions No. (3) of 2022 regarding Designated Non-Financial Businesses and Professions.

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b. Apply the enhanced due diligence measures mentioned in paragraph (a) of this item when dealing with any entity acting on behalf of a natural or legal person, including companies or financial institutions operating in those countries.
c. Enhance the reporting mechanisms adopted by the financial institution or one of the designated non-financial businesses and professions, including increasing cooperation between employees and promptly providing data to the money laundering and terrorist financing compliance officer within the financial institution or one of the designated non-financial businesses and professions, to ensure that no transaction or operation suspected of involving money laundering or one of the predicate offenses associated with it or terrorist financing is executed, and to report this suspicion to the Unit immediately and without delay, providing it with all data related to the attempt to conclude those transactions, while ensuring the confidentiality of the report and not notifying the client.
d. Do not establish branches, representative offices, or subsidiaries in those countries. e. Do not rely on third parties located in those countries to take any due diligence measures towards customers. f. Do not establish any banking correspondent relationships or similar correspondent relationships with financial institutions in those countries.

Country

Required Procedures Towards Countries

Republic of the Union of Myanmar.

1. Apply enhanced due diligence measures on business relations and transactions with Myanmar, in proportion to the risks arising in the country, according to the details of Articles (26, 27) of National Committee Instructions No. (4) of 2022 regarding Financial Institutions, and Articles (25, 24) of National Committee Instructions No. (3) of 2022 regarding Designated Non-Financial Businesses and Professions. ; 2. When applying enhanced due diligence measures, it must be ensured that the flow of funds for humanitarian assistance and legitimate non-profit organization activities and financial transfers is not disrupted.

Second
List of Countries Under Enhanced Follow-Up (Grey List) Amend the list of Countries Under Enhanced Follow-Up (Grey List) stipulated in the Unit's decision No. (2022/3) by deleting both (Kingdom of Morocco, Kingdom of Cambodia), and adding both (Republic of South Africa, Republic of Nigeria) so that the list becomes as in the table below, and taking into account concerns regarding deficiencies in anti-money laundering and counter-terrorist financing systems

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for these countries (according to the attachment to this decision) when conducting the self-assessment of money laundering and terrorist financing risks, including identifying, analyzing, and evaluating those risks.

Number	Country Name	Number	Country Name
1	Republic of Albania	13	Republic of Panama
2	Barbados	14	Republic of the Philippines
3	Burkina Faso	15	Republic of Senegal
4	Cayman Islands	16	Republic of South Africa
5	Democratic Republic of Congo	17	Republic of South Sudan
6	Gibraltar	18	Syrian Arab Republic (Syria)
7	Republic of Haiti	19	Republic of Tanzania
8	Jamaica	20	Turkish Republic
9	Hashemite Kingdom of Jordan (Jordan)	21	Republic of Uganda
10	Republic of Mali	22	United Arab Emirates
11	Republic of Mozambique	23	Republic of Yemen (Yemen)
12	Republic of Nigeria	-	-

Third
Implementation
All financial institutions, businesses, and designated non-financial businesses and professions must implement the provisions of this decision, and it shall be enforced from the date of its circular.

Director of the Financial Follow-Up Unit
Dr. Firas Marar
(Signature)

Attachment: Concerns regarding deficiencies in the anti-money laundering and counter-terrorist financing system.

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Concerns regarding deficiencies in the anti-money laundering and counter-terrorist financing system

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Attached to Financial Follow-Up Unit Decision No. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Concerns Regarding Deficiencies in Anti-Money Laundering and Counter-Terrorist Financing Systems in Countries

• Part One: Deficiencies through Assessment Reports (for all countries):
  This section explains how to access concerns regarding the anti-money laundering, counter-terrorist financing, and counter-proliferation financing system for countries listed on the Grey List, as well as all other countries undergoing mutual evaluation by the FATF or peer groups. Those concerns can be accessed by reviewing the mutual evaluation reports related to those countries and the follow-up reports for this report.

Mutual evaluation reports and follow-up reports published on the FATF website or the FATF Middle East and North Africa Regional Body (MENAFATF) website contain all deficiencies and main conclusions regarding the anti-money laundering and counter-terrorist financing system in countries listed on the Enhanced Follow-Up list and all other countries that have undergone evaluation. These can be obtained according to the following mechanism:

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

1. Enter 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 image on the side.

b. Accessing mutual evaluation reports in Arabic (for countries subject to evaluation by the FATF Middle East and North Africa Regional Body):

1. Enter the website: www.menafatf.org
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. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

• Part Two: Implementation of Action Plans to Address Deficiencies
  Countries listed on the Grey List have made a high-level political commitment to address strategic deficiencies in their anti-money laundering and counter-terrorist financing systems, and those countries are still fulfilling their commitments to address remaining deficiencies.
  The items below outline the key pillars 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 account whether negative or positive:

Country	Key Pillars
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 demonstrating a meaningful increase in the number of money laundering cases indicted, particularly those stemming from foreign offences where the criminal proceeds were laundered in Albania. The FATF has made the initial determination that Albania has substantially completed its action plan and appreciates Albania's work to address its strategic deficiencies. However, the FATF has not yet decided to authorise an on-site visit to the country to verify the implementation of Albania's AML/CFT reforms. This is because the FATF remains concerned that Albania's apparent plans to establish a Voluntary Tax Compliance (VTC) programme do not comply with the FATF's principles for managing the AML/CFT implications of VTC programmes or FATF's best practices in this area. Albania should ensure that any amnesty provisions included in the VTC law do not present an opportunity for individuals or legal persons to legalise or repatriate assets of unlawful origin and that any criminal amnesty only relates to the previous incorrect or non-reporting of taxable income. Albania should revise its draft VTC law and work with MONEYVAL to ensure that any VTC law passed or implemented has adequate safeguards to prevent the potential for abuse of the programme for money laundering purposes. Alternatively, it could consider abandoning the planned VTC programme altogether.
Barbados	Since February 2020, when Barbados made a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime, Barbados has taken steps towards improving its AML/CFT regime, including by, taking appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes, and by demonstrating that ML investigations and prosecutions are in line with the country's risk profile. Barbados should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) ensuring that accurate and up-to-date beneficial ownership information is available on a timely basis; (2) further pursuing repatriation or sharing of confiscated assets with other countries. The FATF expresses concern that Barbados failed to complete its action plan, which fully expired in April 2022. The FATF strongly urges Barbados to swiftly

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Attached to Financial Follow-Up Unit Decision No. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

demonstrate significant progress in completing its action plan by June 2023 or the FATF will consider next steps if there is insufficient progress

Country	Key Pillars
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 increasing ML investigations and the use of international cooperation in line with its risk profile. Burkina Faso should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) updating its understanding of ML/TF risks, including through the revision of the national risk assessment in line with the sectoral priorities identified in its national strategy; (2) strengthening of resource capacities of all AML/CFT supervisory authorities and implementing risk based supervision of FIs and DNFBPs; (3) maintaining comprehensive and updated basic and beneficial ownership information of legal persons and strengthening the system of sanctions for violations of transparency obligations; (4) increasing the diversity of suspicious transactions reporting; (5) establishing procedures for effective implementation of declaration of cross-border declaration of currencies and bearer negotiable instruments; (6) enhancing cooperation between LEAs and prosecutorial authorities combatting TF and conducting TF investigations and prosecutions in line with its risk profile; and (7) implementing an effective targeted financial sanctions 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 now expired and work remains. The FATF encourages Burkina Faso to continue to implement its action plan to address the above-mentioned strategic deficiencies as soon as possible.
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 advancing ML prosecutions into convictions and demonstrating progress on complex ML cases with a foreign predicate. However, the Cayman Islands should continue to work on implementing its action plan to address its remaining strategic deficiencies, by demonstrating that they are prosecuting all types of money laundering cases in line with the jurisdiction's risk profile and that such prosecutions are resulting in the application of dissuasive, effective, and proportionate sanctions. The FATF expresses concern that the Cayman Islands failed to complete its action plan, which fully expired in May 2022. The FATF strongly urges the Cayman Islands to swiftly demonstrate significant progress in completing its action plan by June 2023 or the FATF will consider next steps if there is insufficient progress.

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Attached to Financial Follow-Up Unit Decision No. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Country	Key Pillars
The Democratic Republic of the Congo	(Statement from October 2022) In October 2022, the DRC made a high-level political commitment to work with the FATF and GABAC to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in October 2020, the DRC has made progress on some of the MER's recommended actions including making confiscation of proceeds of crime a policy priority. The DRC will work to implement its FATF action plan by: (1) finalising the NRA on ML and TF and adopting an AML/CFT national strategy; (2) designating supervisory authorities for all DNFBP sectors, and developing and implementing a risk-based supervision plan; (3) adequately resourcing the FIU, and build its capacity to conduct operational and strategic analysis; (4) strengthening the capabilities of authorities involved in the investigation and prosecution of ML and TF; and (5) demonstrating effective implementation of TF and PF-related TFS.
Gibraltar	Since June 2022, when Gibraltar made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, Gibraltar has taken steps to do so, including by demonstrating that the supervisors for trust and company service providers, lawyers, gaming businesses, real estate agents, and other non-bank entities are now using a range of effective, proportionate, and dissuasive sanctions for AML/CFT breaches, specifically by taking more enforcement actions, imposing financial penalties, and publishing the results of cases, where appropriate. Gibraltar should continue to work on implementing its action plan to address its strategic deficiencies, including by showing that it is able to pursue more final confiscation judgments commensurate with the risk and context of Gibraltar.
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. The FATF recognises the political commitment expressed at a high level and the efforts demonstrated by Haiti to advance its commitments in the midst of the challenging social, economic and security situation within the country. Haiti should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) completing 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 preventive 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

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Attached to Financial Follow-Up Unit Decision No. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Country	Key Pillars
	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; and (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 introducing its Charities regulations and bringing the microcredit sector under AML/CFT supervision. Jamaica should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) including all DNFBPs in the AML/CFT regime and ensuring adequate, risk-based supervision in all sectors; and (2) ensuring that BO definition is in line with the FATF Standards, 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 to competent authorities. The FATF again expresses concern that Jamaica failed to complete its action plan, which fully expired in January 2022. The FATF strongly urges Jamaica to swiftly demonstrate significant progress in completing its action plan by June 2023 or the FATF will consider next steps, which could include calling on its members and urging all jurisdictions to apply enhanced due diligence to business relations and transactions with Jamaica.
Jordan	Since October 2021, when Jordan made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime. Jordan has taken positive steps towards improving its AML/CFT regime, including by conducting inspections of reporting entities including FIs and DNFBPs, pursuing money laundering investigations and prosecutions for predicate offences in line with its risk profile, and conducting outreach on TFS obligations. Jordan should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) completing and implementing the ML/TF risk assessments of legal persons and virtual assets; (2) applying effective, proportionate, and dissuasive sanctions for noncompliance; (3) implementing a sanctions mechanism for violations of the transparency obligations related to legal persons and arrangements; (4) applying effective, proportionate, and dissuasive sanctions in ML cases; and (5) demonstrating that TFS deficiencies are rectified.

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Attached to Financial Follow-Up Unit Decision No. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Country	Key Pillars
Mali	In October 2021, Mali made a high-level political commitment to work with the FATF and GIABA to strengthen the effectiveness of its AML/CFT regime. Mali has taken steps towards improving its AML/CFT regime, including by conducting AML/CFT trainings for FIs and DNFBPs and enhancing the FIU and LEAs cooperation mechanisms on the use of financial intelligence. Mali should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) implementing the national strategic AML/CFT action plan in line with the NRA; (2) developing and starting to implement a risk based approach for the AML/CFT supervision of all FIs and higher risk DNFBPs and demonstrating effective, proportionate and dissuasive sanctions for non-compliance; (3) conducting a comprehensive assessment of ML/TF risks associated with all types of legal persons; (4) increasing the capacity of the FIU and the LEAs and enhancing their cooperation on the use of financial intelligence; (5) conducting parallel financial investigation; (6) strengthening the capacities of relevant authorities responsible for investigation and prosecution of TF; (7) strengthening the legal framework and procedures to implement TFS related to TF and PF; and (8) implementing a risk-based approach for supervision of the NPO sector to prevent abuse for TF purposes.
Mozambique	(Statement from October 2022) In October 2022, Mozambique made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in April 2021, Mozambique has made progress on some of the MER's recommended actions to improve its system including by finalising its NRA and strengthening its asset confiscation efforts. Mozambique will work to implement its FATF action plan by: (1) ensuring cooperation and coordination amongst relevant authorities to implement risk-based AML/CFT strategies and policies; (2) conducting training for all LEAs on mutual legal assistance to enhance the gathering of evidence or seizure/confiscation of proceeds of crime; (3) providing adequate financial and human resources to supervisors, developing and implementing a risk-based supervision plan; (4) providing adequate resources to the authorities to commence the collection of adequate, accurate and up-to-date beneficial ownership information of legal persons; (5) increasing the human resources of the FIU as well as increasing financial intelligence sent to authorities; (6) demonstrating LEAs capability to effectively investigate ML/TF cases using financial intelligence; (7) conducting a comprehensive TF Risk Assessment and begin implementing a comprehensive CFT strategy; (8) increasing awareness on TF and PF-related TFS; and (9) carrying out the TF risk assessment

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Attached to Financial Follow-Up Unit Decision No. (2023/1) Regarding lists of High-Risk Countries and Countries Under Enhanced Follow-Up

Country	Key Pillars
	for NPOs in line with the FATF Standards and using it as a basis to develop an outreach plan.
Nigeria	In February 2023, Nigeria made a high-level political commitment to work with the FATF