On December 4th, The Hong Kong Monetary Authority issued circulars recounting the latest statements from the Financial Action Task Force – one circular for Stored Value Facilities (SVF) one for Authorized Institutions (AI). Here’s the SVF one:
The Chief Executive
All Stored Value Facility Licensees
Statements issued by the Financial Action Task Force
I am writing to inform you that on 3 November 2017 the Financial Action Task Force (FATF) published two updated statements identifying jurisdictions that may pose a risk to the international financial system and also provided details of a number of outcomes from the FATF Plenary meeting held on 1-3 November 2017.
FATF Public Statement
The FATF has issued a public statement identifying jurisdictions that have strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes. The statement can be found at: http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/public-statement-november-2017.html.
(1) Jurisdiction subject to a FATF 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 threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMD) and its financing.
Stored value facility (SVF) licensees 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 them to increased scrutiny and enhanced due diligence.
(2) Jurisdiction subject to a FATF call on its members and other jurisdictions to apply enhanced due diligence measures
Iran adopted and committed to an action plan to address its strategic AML/CFT deficiencies and therefore in June 2016, the FATF has suspended counter-measures for twelve months to monitor Iran’s progress. In light of Iran’s demonstration of its political commitment and the steps it has taken in line with the action plan, the FATF has decided to continue the suspension of counter-measures in June 2017. The FATF will assess the progress made by Iran and take appropriate actions at the FATF Plenary meeting in February 2018. The FATF remains concerned with the terrorist financing risk emanating from Iran and the threat it poses to the international financial centre.
SVF licensees should therefore continue to apply enhanced due diligence, proportionate to the risks, to business relationships and transactions with natural and legal persons from Iran.
Improving Global AML/CFT Compliance: On-going Process
The FATF has also issued an updated statement on jurisdictions that have strategic AML/CFT deficiencies but have developed an action plan and provided a written high level political commitment to address the identified deficiencies. The statement can be found at: http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-november-2017.html.
FATF statement on the DPRK
In addition to the FATF Public Statement, the FATF also published a separate statement to express its deep concern over the proliferation financing risk emanating from the DPRK and highlighted the importance of robust implementation of the FATF standards to disrupt the DPRK’s illicit financial activities. To address the threat posed by the DPRK’s illicit activities related to the proliferation of WMD and its financing, the FATF has called upon its members and urged all jurisdictions to effectively implement the relevant FATF recommendations and UNSC Resolutions. The statement can be found at: http://www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/statement-dprk-nov-2017.html.
Other Outcomes from the FATF Plenary, Buenos Aires, 1-3 November 2017
The FATF has published various outcomes of the Plenary held on 1-3 November 2017, which may be of interest to SVF licensees. Further information can be found at: http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-plenary-november-2017.html.
Executive Director (Enforcement and AML)