AML/ATF Ministerial Advisory 2/2019: Money Laundering and Terrorist Financing controls in higher risk jurisdictions (2019-08-19)

Summary

This is a Ministerial Advisory issued by Bermuda's Minister of Legal Affairs (published via the BMA's AML/ATF advisory channel) drawing attention to two FATF public statements of 21 June 2019 that identify jurisdictions with strategic AML/CFT deficiencies. It reminds the regulated sector and relevant persons of their existing obligation under the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 to apply enhanced due diligence to higher-risk countries, and lists the specific jurisdictions currently flagged by FATF. It replaces all prior advisories on this subject.

• Highest risk / counter-measures: Democratic People's Republic of Korea (DPRK) and Iran, both also subject to sanctions measures under the International Sanctions Regulations 2013.
• High risk, enhanced due diligence: The Bahamas, Botswana, Cambodia, Ethiopia, Ghana, Pakistan, Panama, Sri Lanka, Trinidad and Tobago, plus Syria, Tunisia and Yemen (also subject to sanctions measures).
• Take appropriate action / minimise risk: Jurisdictions on FATF's ongoing compliance monitoring list, addressed via the enumerated 'higher risk' category countries above.

• Regulation 11(1)(aa): Requires a relevant person to apply, on a risk-sensitive basis, enhanced customer due diligence to business relationships or transactions involving countries identified by FATF as higher risk.
• Regulation 11(1)(ab): Requires enhanced due diligence, on a risk-sensitive basis, where a person or transaction is from or in a country representing higher risk of money laundering, corruption, terrorist financing, or international sanctions exposure.
• Sanctioned jurisdictions: DPRK, Iran, Syria, Tunisia and Yemen are additionally subject to sanctions measures requiring further action under the International Sanctions Regulations 2013.

The Advisory applies to all entities and persons covered by Regulation 4 of the POCA Regulations, and notes that jurisdictions not yet reviewed by FATF are not thereby excluded from being treated as higher risk. Annexes A and B (the full FATF statements) are attached and should be read in full when making risk determinations.

Key obligations

• Apply enhanced customer due diligence, on a risk-sensitive basis, to business relationships and transactions involving customers or transactions from or in jurisdictions identified by FATF as higher risk (Regulation 11(1)(aa)).
• Apply enhanced customer due diligence, on a risk-sensitive basis, to customers or transactions from or in countries representing a higher risk of money laundering, corruption, terrorist financing or international sanctions exposure (Regulation 11(1)(ab)).
• For DPRK, Iran, Syria, Tunisia and Yemen, take the additional measures required under the International Sanctions Regulations 2013.
• Read the full FATF Public Statement and 'Improving Global AML/CFT Compliance' update (Annexes A and B) in their entirety before making risk determinations regarding the listed jurisdictions.
• Consider that jurisdictions not yet reviewed by FATF may still present higher money laundering or terrorist financing risk and should not be excluded from risk assessments solely because they are not listed.

Applies to

AML/AFT regulated financial institutions, independent professionals, casino operators, dealers in high value goods registered with the FIA, real estate brokers and real estate agents

Deadlines

• October 2019: FATF stated that if Iran does not enact the Palermo and Terrorist Financing Conventions by this date, enhanced reporting mechanisms and increased external audit requirements will be required for financial groups with branches/subsidiaries in Iran.