FATF highlights high-risk Jurisdictions Lacking AML Measures

FATF has recently released a statement about the concern that the Democratic People’s Republic of Korea (DPRK) could impact the global finance system, which was one of the key points of last month’s meeting that happened in June 2024.

The regulatory body highlighted DPRK’s continuous behavior to indulge in illicit activities, which can increase funding to weapons for mass destruction, and its defects in AML and CFT efforts.

The financial watchdog has suggested that all countries remain conscious of these risks and enforce strict measures against the DPRK to respond to these concerns.

While reviewing their practices, FATF declared some of the major happenings, including:

• U.S. financial institutions should consider all the updates regarding handling risks efficiently.
• Significant changes have been revealed, including adding Monaco and Venezuela to the Jurisdictions Under Increased Monitoring list due to their lack of a strong compliance regulatory system.
• Meanwhile, Turkiye and Jamaica have been removed from the list, reflecting their improvements in regulations to combat financial crimes on June 28, 2024.
• According to FATF, the list of high-risk countries will remain unchanged. Countries like Burma, Iran, and the DPRK are still experiencing the same concerns.
• Burma continues to fall in this section, and the committee asked countries to take extra steps, such as enhanced due diligence, to address the risks associated with it.

FATF also declared statements to make sure global compliance measures influence financial organizations. The recent developments include:

Jurisdictions Under Increased Monitoring

Countries with problems in their financial systems willing to resolve these concerns by working with the global watchdog for a fixed duration will remain unchanged.

High-Risk Jurisdictions Subject to a Call for Action

The council suggested that financial organizations must carry out enhanced due diligence and, in more sensitive scenarios, take strict measures to combat money laundering and protect their organizations from the risks these countries impose.

U.S. financial institutions must follow specific rules when dealing with foreign financial institutions (FFIs):

• Due diligence programs to identify and report expected or known illicit activities.
• Risk-based approach and analyze the risks associated with them to protect their organizations.
• Generate AML regulation strategies with all the necessary AML protocols, laws, and rules to manage risks linked to foreign countries.
• Ensure compliance without destroying their relationship with significant clients or complaints.
• Consult governmental guidelines before offering services to foreign consulates and embassies.

Read Also

• Key Developments of FATF Plenary, 21-23 February 2024
• Monaco and Venezuela Made It To FATF’s ‘Grey List’

Gray No More – What Measure Can Be Taken?

Financial organizations can protect themselves by carrying out these measures and can strengthen their compliance system.

• Regularly update and follow the financial regulation
• Carry out advanced KYC/AML/CFT measures
• Use efficient AML software for detecting illicit activities on the spot
• Perform risk assessment and risk scoring techniques to detect possible risks.

UAE recently made it out of FATF grey list. Check out what inspiration it sets for high risk jurisdictions.