On July 11, Her Majesty’s Treasury (HMT) issued an Advisory Notice about the AML/CTF controls necessary for higher-risk jurisdictions, which also includes copies of FATF’s latest public statements:
Requirement to apply Enhanced Due Diligence for higher risk jurisdictions
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) require the UK regulated sector to apply enhanced customer due diligence to high-risk countries.
• MLR 2017 Regulation 33 (1) (b) states that regulated businesses (“relevant persons”) must apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationship or transaction with a person established in a high-risk third country. For these purposes, Regulation 33 (3) states that a high-risk third country is one identified by the European Commission in delegated acts adopted under Article 9.2 of the Fourth Money Laundering Directive. These delegated acts are set out in Delegated Regulation 2016/1675.
• MLR 2017 Regulation (33) (6) (c) requires that relevant persons must take into account “geographical risk factors” when assessing risk and the extent of measures which should be taken to manage and mitigate that risk. These risk factors are stated as including whether a country is identified by a credible source, including reports published by the Financial Action Task Force (FATF), as not implementing requirements to counter money laundering and terrorist financing that are consistent with FATF recommendations.
As the international anti-money laundering and counter-terrorist financing (AML/CTF) standard-setter, FATF regularly publishes statements that identify high-risk countries based on assessments of their AML/CTF regimes. In line with Regulation (33) (6) (c) HM Treasury would like to draw the regulated sectors attention to the latest publication by FATF on high risk jurisdictions.