FinCEN sets enhanced due diligence against high risk countries

FinCEN is increasing its effort to fight money laundering and terrorist financing. It is doing it by setting higher risk-based due diligence requirements for financial service institutions. The requirements meet the standards set by FATF.

FinCEN also  provided a list of countries that these requirements will be applied to, though if the risk-based approach results in similarly high risk issues in other countries, financial institutions are required to use these due diligence measures as well. The countries are as follows:

http://www.undervaluedequity.com/Country-Risk-Ranking-System-How-I-Assess-My-Stock's-Country-Risk.html
image from Jeroen Snoeks
Sanctioned countries:

  • Iran
  • Democratic People’s Republic of Korea (DPRK)

subject to FinCEN enhanced due diligence requirements:

  • Algeria
  • Ecuador
  • Myanmar

Improving Global AML/CFT Compliance: on-going process (also, subject to FinCEN enhanced due diligence):

  • Afghanistan
  • Angola
  • Guyana
  • Indonesia
  • Iraq
  • Lao PDR
  • Panama
  • Papua New Guinea
  • Sudan
  • Syria
  • Yemen

Jurisdictions not making sufficient progress (also, subject to FinCEN enhanced due diligence):

  • Uganda

Jurisdictions no longer subject to listing and monitoring (FinCEN recommends that financial institutions take the FATF’s decisions and the reasons behind the delisting into consideration when assessing risk):

  • Albania
  • Cambodia
  • Kuwait
  • Namibia
  • Nicaragua
  • Pakistan
  • Zimbabwe

About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


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CFT Means Counter-Financing of Terrorism

Counter-Financing of Terrorism (CFT) is also known as Combating the Financing of Terrorism. Both are abbreviated as CFT and mean the same thing.

IMFThis is an AML activity that encompasses surveillance, assessment, investigation, sanctions and other traditional AML activity. A bank can receive instructions or guidance from any number of government entities. International Monetary Fund (IMF) has developed standards for assessment through its Offshore Financial Centers assessment program. Surveillance guidance is provided by Financial Sector Assessment Program (FSAP), which is another the IMF. And the Financial Action Task Force (FATF) plays a crucial role in developing the standards for assessment.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.


FATF Means Financial Action Task Force

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. – FATF

FATF is housed at the Organization Economic Co-operation and Development (OECD) in Paris, France. It works with the G-7 world leaders, G-20 finance ministers to make policy and enforcement recommendations regarding anti-money laundering, anti-bribery, anti-corruption, anti-terrorist financing and anti-piracy. It is part thinktank and part NGO.

FATF has a membership status for each country. There are thirty five member nations and the rest are either observing the guidelines and recommendations or not actively doing so. FATF also has a Blacklist, a list of banned nations. The usual suspects are listed: Iran, North Korea, etc.

The Treasury represents the United States at the FATF. The Financial Crimes Enforcement Network (FinCEN) is the primary contact for guidance.


About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.