On March 10, the Hong Kong Securities and Futures Commission (SFC) issued a AML/CTF Circular. This Circular included updates by the United Nations ISIL (Da’esh) and Al-Qaida Sanctions Committee (included as a PDF), plus the following information from FATF:
(1) FATF Statement on Democratic People’s Republic of Korea and Iran
Further to our circular issued on 28 October 2016, this is to inform you that the Financial Action Task Force (“FATF”) issued an updated statement on 24 February 2017 identifying a number of jurisdictions that have strategic deficiencies in their anti-money laundering and combating the financing of terrorism (“AML/CFT”) regimes.
The statement Note 1 has been separated into two sections.
(i) Jurisdiction subject to a call on its members and other jurisdictions to apply counter-measures
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 serious threat this poses to the integrity of the international financial system. Further, the FATF has serious concerns with the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (“WMDs”) and its financing. The FATF calls on its members and other jurisdictions to continue to apply counter-measures and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions to protect the international financial system from the on-going and substantial money laundering, terrorist financing and WMD proliferation financing risks emanating from the jurisdiction.
Licensed corporations (“LCs”) and associated entities (“AEs”) should give special attention to business relationships and transactions with the DPRK, including DPRK companies, financial institutions and those acting on their behalf, and subject them to increased scrutiny and enhanced due diligence measures.
In addition, LCs and AEs are reminded that it is an offence under section 4 of the Weapons of Mass Destruction (Control of Provision of Services) Ordinance (Cap. 526) for a person to provide any services where he believes or suspects, on reasonable grounds, that those services may be connected to WMD proliferation.
(ii) Jurisdiction subject to a call on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction
The FATF welcomed Iran’s adoption of an Action Plan to address its strategic AML/CFT deficiencies and suspended counter-measures for twelve months accordingly in June 2016 in order to monitor Iran’s progress. The counter-measures will be re-imposed after the twelve-month period if Iran fails to demonstrate sufficient progress to FATF in implementing the Action Plan.
Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF remains concerned with the risk of terrorist financing emanating from Iran and the threat this poses to the integrity of the international financial system. The FATF calls on its members and other jurisdictions to continue to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction.
LCs and AEs should apply enhanced due diligence measures to business relationships and transactions with natural and legal persons from Iran. LCs and AEs are further advised that the type of enhanced due diligence measures applied should be effective and proportionate to the risks, and in line with the standards as specified in the FATF statement Note 1 .
(2) FATF Statement on Improving Global AML/CFT Compliance: On-Going Process
In addition, please be informed that in a separate statement as part of the on-going process to improve global AML/CFT compliance, the FATF has set out an updated list of jurisdictions that have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. The FATF will closely monitor the implementation of those action plans and encourage its members to consider the information presented in the statement which can be found on the website of the FATF (http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-february-2017.html).
As the FATF will continue to assess the progress made by these jurisdictions in addressing the deficiencies in their AML/CFT systems and issue updated statements from time to time, LCs and AEs are reminded to browse the website of the FATF for the latest information.
(3) Outcomes from the Meeting of the FATF Plenary, 22-24 February 2017
In addition to the statements in (1) and (2) above, the FATF has also published various other outcomes of its recent Plenary Meeting which may be of interest to LCs and AEs. They include, for example, FATF’s on-going work to combat terrorist financing. Further information can be found on the website of FATF (http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-plenary-february-2017.html).