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Latest FATF reports highlight strategic anti-money laundering deficiencies

Monday, 21 October, 2019

The latest reports from the global Financial Action Task Force (FATF) have retained the Bahamas, Pakistan, Panama, and Trinidad and Tobago as jurisdictions with strategic anti-money laundering (AML) deficiencies.

Of the four, Pakistan is most at risk of counter-measures, having addressed only five of the 27 items it agreed to remedy in its June 2018 undertakings to FATF. It has now been explicitly warned to complete its full action plan within the next four months.

'FATF strongly urges Pakistan to swiftly complete its full action plan by February 2020', says the outcomes report from FATF's plenary meeting last week. 'Otherwise, should significant and sustainable progress not be made across the full range of its action plan by the next plenary, the FATF will take action, which could include the FATF calling on its members and urging all jurisdictions to advise their financial institutions to give special attention to business relations and transactions with Pakistan.'

Warnings to the other grey-listed jurisdictions were put less urgently. The Bahamas was told it should continue to work on implementing its action plan to 'demonstrate that authorities are investigating and prosecuting all types of money laundering, including complex money laundering cases, stand-alone money laundering, and cases involving proceeds of foreign offences, including foreign tax crimes; and increase the identification, tracing and freezing or restraining of assets and to present cases linked with foreign offences and stand-alone money laundering cases.' Both Panama and Trinidad and Tobago were asked to improve their beneficial ownership reporting framework, among other technical requirements.

Brazil appears to have made significant progress. Although not on the grey list, FATF announced in February 2016 that it had 'deep concerns about Brazil's continued failure to remedy deficiencies identified six years earlier.’ In June this year, FATF even suggested expelling Brazil from the organisation, but has now withdrawn the threat after the country enacted two new laws for identifying and freezing terrorist assets.

FATF is, however, still concerned that a judge on Brazil's Supreme Court has issued an injunction against the use of financial intelligence in criminal investigations. 'FATF is following this situation closely and it looks forward to timely updates and reassurances from Brazil in this regard', it said.

FATF also announced intensified due-diligence measures against Iran and North Korea, with the threat of full counter-measures against Iran if it does not meet its targets by February 2020.

Three new jurisdictions were added to FATF's list of those subject to monitoring, namely Iceland, Mongolia and Zimbabwe. Three further jurisdictions (Ethiopia, Sri Lanka and Tunisia) were declared no longer subject to monitoring, having delivered their commitments for AML law reform. Both Russia and Turkey also received favourable new assessments.

Sources