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FINANCIAL ACTION TASK FORCE IDENTIFIES JURISDICTIONS WITH ANTI-MONEY LAUNDERING
AND COMBATING THE FINANCING OF TERRORISM AND COUNTER-PROLIFERATION DEFICIENCIES

Immediate Release
October 31, 2022

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) is informing U.S.
financial institutions that the Financial Action Task Force (FATF), an
intergovernmental body that establishes international standards for anti-money
laundering, countering the financing of terrorism, and countering the financing
of proliferation of weapons of mass destruction (AML/CFT/CPF), has issued public
statements updating its lists of jurisdictions with strategic AML/CFT/CPF
deficiencies following its plenary meeting this month.[1]  U.S. financial
institutions should consider the FATF’s stance toward these jurisdictions when
reviewing their obligations and risk-based policies, procedures, and
practices.[2]

On October 21, 2022, the FATF removed Nicaragua[3] and Pakistan from its list of
Jurisdictions under Increased Monitoring and added the Democratic Republic of
the Congo, Mozambique, and Tanzania.

The FATF added Burma to its list of High-Risk Jurisdictions Subject to a Call
for Action and called for enhanced due diligence, not countermeasures.  It also
noted that “when applying enhanced due diligence measures, countries should
ensure that flows of funds for humanitarian assistance, legitimate NPO activity
and remittances are not disrupted.”[4]  Iran and the Democratic People’s
Republic of Korea (DPRK) remain on the list of High-Risk Jurisdictions Subject
to a Call for Action and are still subject to the FATF’s countermeasures.

As part of the FATF’s listing and monitoring process to ensure compliance with
its international standards, the FATF issued two statements: (1) Jurisdictions
under Increased Monitoring, which publicly identifies jurisdictions with
strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or
are actively working with, the FATF to address those deficiencies in accordance
with an agreed upon timeline and; (2) High-Risk Jurisdictions Subject to a Call
for Action, which publicly identifies jurisdictions with significant strategic
deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply
enhanced due diligence, and, in the most serious cases, apply counter-measures
to protect the international financial system from the money laundering,
terrorist financing, and proliferation financing risks emanating from the
identified countries.

Jurisdictions Under Increased Monitoring

With respect to the FATF-identified Jurisdictions under Increased Monitoring,
U.S. covered financial institutions are reminded of their obligations to comply
with the due diligence obligations for foreign financial institutions (FFI)
under 31 CFR § 1010.610(a) in addition to their general obligations under 31
U.S.C. § 5318(h) and its implementing regulations.  As required under 31 CFR §
1010.610(a), covered financial institutions should ensure that their due
diligence programs, which address correspondent accounts maintained for FFIs,
include appropriate, specific, risk-based, and, where necessary, enhanced
policies, procedures, and controls that are reasonably designed to detect and
report known or suspected money laundering activity conducted through or
involving any correspondent account established, maintained, administered, or
managed in the United States.  Furthermore, money services businesses (MSBs)
have parallel requirements with respect to foreign agents or foreign
counterparties, as described in FinCEN Interpretive Release 2004-1, which
clarifies that the AML program regulation requires MSBs to establish adequate
and appropriate policies, procedures, and controls commensurate with the risk of
money laundering and the financing of terrorism posed by their relationship with
foreign agents or foreign counterparties.  Additional information on these
parallel requirements (covering both domestic and foreign agents and foreign
counterparts) may be found in FinCEN’s Guidance on Existing AML Program Rule
Compliance Obligations for MSB Principals with Respect to Agent Monitoring.
 Such reasonable steps should not, however, put into question a financial
institution’s ability to maintain or otherwise continue appropriate
relationships with customers or other financial institutions, and should not be
used as the basis to engage in wholesale or indiscriminate de-risking of any
class of customers or financial institutions.  Financial institutions should
also refer to previous interagency guidance on providing services to foreign
embassies, consulates, and missions.

The United Nations (UN) adopted several resolutions implementing economic and
financial sanctions.  Member States are bound by the provisions of these UN
Security Council Resolutions (UNSCRs), and certain provisions of these
resolutions are especially relevant to financial institutions.  Financial
institutions should be familiar with the requirements and prohibitions contained
in relevant UNSCRs.  In addition to UN sanctions, the U.S. Government maintains
a robust sanctions program.  For a description of current Office of Foreign
Assets Control (OFAC) sanctions programs, please consult OFAC’s Sanctions
Programs and Country Information.

High-Risk Jurisdictions Subject to a Call for Action

With respect to the FATF-identified High-Risk Jurisdictions Subject to a Call
for Action, the FATF added Burma to this category and urged jurisdictions to
apply enhanced due diligence proportionate to the risks.  U.S. financial
institutions should continue to consult existing FinCEN and OFAC guidance on
engaging in financial transactions with Burma.[5]

In the case of DPRK and Iran, the FATF-identified High-Risk Juridscitions
Subject to a Call for Action, specifically, counter-measures, financial
institutions must comply with the extensive U.S. restrictions and prohibitions
against opening or maintaining any correspondent accounts, directly or
indirectly, for North Korean or Iranian financial institutions.  Existing U.S.
sanctions and FinCEN regulations already prohibit any such correspondent account
relationships.

The Government of Iran and Iranian financial institutions remain persons whose
property and interests in property are blocked under E.O. 13599 and section
560.211 of the Iranian Transactions and Sanctions Regulations (ITSR).  U.S.
financial institutions and other U.S. persons continue to be broadly prohibited
under the ITSR from engaging in transactions or dealings with Iran, the
Government of Iran, and Iranian financial institutions, including opening or
maintaining correspondent accounts for Iranian financial institutions.  These
sanctions impose obligations on U.S. persons that go beyond the relevant FATF
recommendations.  In addition to OFAC-administered sanctions, on October 25,
2019, FinCEN found Iran to be a Jurisdiction of Primary Money Laundering Concern
and issued a final rule, pursuant to Section 311 of the USA PATRIOT Act,
imposing the fifth special measure available under Section 311.  This rule
prohibits U.S. financial institutions from opening or maintaining correspondent
accounts for, or on behalf of, an Iranian financial institution, and the use of
foreign financial institutions’ correspondent accounts at covered United States
financial institutions to process transactions involving Iranian financial
institutions (31 CFR § 1010.661).

Countries Removed

For jurisdictions removed from the FATF listing and monitoring process, U.S.
financial institutions should take the FATF’s decisions and the reasons behind
the delisting into consideration when assessing risk, consistent with financial
institutions’ obligations under 31 CFR § 1010.610(a) and 31 CFR § 1010.210.

If a financial institution knows, suspects, or has reason to suspect that a
transaction involves funds derived from illegal activity or that a customer has
otherwise engaged in activities indicative of money laundering, terrorist
financing, or other violation of federal law or regulation, the financial
institution must file a Suspicious Activity Report.

Questions or comments regarding the contents of this release should be addressed
to the FinCEN Regulatory Support Section at frc@fincen.gov.

[1] See also, Outcomes FATF Plenary (October 21, 2022).

[2] FinCEN issues these public statements about higher-risk countries as
identified by the FATF to ensure that financial institutions are advised of
concerns about weaknesses in the AML/CFT systems of other countries.

[3] The FATF noted, in relation to Nicaragua, that it “is strongly concerned by
the potential misapplication of the FATF Standards resulting in the suppression
of Nicaragua’s non-profit sector.” See, FATF, Jurisdictions under Increased
Monitoring (October 21, 2022).

[4] See, FATF, High-Risk Jurisdictions Subject to a Call for Action (October 21,
2022).

[5] See, FinCEN, Conditional Exception to Bank Secrecy Act Regulations Relating
to the Burma Section 311 Final Rule (October 19, 2016); OFAC, Burma-Related
Sanctions; and U.S. Department of State, Department of the Treasury, Department
of Commerce, Department of Labor, Department of Homeland Security, and Office of
the U.S. Trade Representative, Risks and Considerations for Businesses and
Individuals with Exposure to Entities Responsible for Undermining Democratic
Processes, Facilitating Corruption, and Committing Human Rights Abuses in Burma
(Myanmar) (January, 26, 2022).

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