In conjunction with the latest advisories from the Financial Action Task Force (FATF), HM Treasury issued an advisory notice about AML/CFT with regard to these high-risk countries. Here is the introductory section:
HM Treasury Advisory Notice: Money Laundering and Terrorist Financing controls in higher risk jurisdictions
Requirement to apply Enhanced Due Diligence for higher risk jurisdictions
The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLRs 2019) require the UK regulated sector to apply enhanced customer due diligence in relation to high-risk countries.
MLRs 2019 Regulation 33 (1) (b) requires regulated businesses (“relevant persons”) to apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationship with a person established in a high-risk third country or in relation to any relevant transaction where either of the parties to the transaction is established in a high-risk third country. For these purposes, Regulation 33 (3) explains that:
• a high-risk third country means a country which has been 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 (latest consolidated version);
• a relevant transaction means a transaction in relation to which the relevant person is required to apply customer due diligence measures under Regulation 27;
• being established in a country means:
o in the case of a legal person, being incorporated in or having its principal
place of business in that country, or, in the case of a financial institution or a credit institution, having its principal regulatory authority in that country; and
o in the case of an individual, being resident in that country, but not merely having been born in that country.
MLRs 2019 Regulation (33) (6) (c) requires that relevant persons 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.