Firms that are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 must apply enhanced due diligence measures to manage and mitigate the risks that arise from doing business with a person established in a high-risk third country.
The international Financial Action Task Force (FATF) produces guidance that is key to help identify high-risk jurisdictions. Firms should pay close attention to it when designing and maintaining their anti-money laundering risk assessments and when considering what due diligence to undertake on new clients or transactions.
At the end of last week HM Treasury published an advisory notice drawing attention to FATF's updated guidance. In particular:
- North Korea is high risk and firms should apply counter measures and enhanced due diligence measures;
- Iran is high risk and firms should apply enhanced due diligence measures; and
- The Bahamas, Botswana, Ethiopia, Ghana, Pakistan, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen may require enhanced due diligence measures and firms should take appropriate action to minimise associated risks.
FATF have also highlighted that North Korea, Iran, Syria, Tunisia and Yemen are subject to sanctions measures, so also require additional measures to be taken.
Firms should make sure that their AML documents and procedures are updated to reflect FATF's latest guidance and that their AML arrangements enable them to identify and assess the risks of money laundering and terrorist financing, to which their business is subject.