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FinCEN Urges Institutions to Review AML Program Around Jurisdictions FATF Identified Have AML/CTF Deficiencies

November 2, 2018
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In an advisory issued on October 31, the Financial Crimes Enforcement Network (FinCEN) urged institutions to review and enhance their anti-money laundering (AML) program including policies, procedures and practices and their general risk-based approaches with respect to the relevant jurisdictions highlighted by the Financial Action Task Force (FATF). The two issuances of note in this advisory were the “FATF Public Statement” and the “Improving Global AML/CFT Compliance: Ongoing Process.” In the Public Statement, FATF highlights the concerning deficiencies in AML and counter-terrorism in the Democratic People’s Republic of Korea (DPRK) and Iran. FATF notes serious concerns around DPRK’s involvement in the proliferation of weapons of mass destruction and its financing. Prudent controls around enhanced due diligence (EDD) and OFAC will assist in compliance with this advisory as the U.S. Treasury maintains a robust sanctions program on known parties related to DPRK. As Iran continues to move towards more diligent AML/CTF laws, FATF notes that many items from their previously instated action plan remain unaddressed. FATF expects Iran to be in line with FATF standards by February 2019 or further steps will be taken to protect the global financial system from the risks stemming from Iran’s deficiencies. As such, BSA professionals should continue to apply enhanced due diligence procedures including obtaining information on the reasons for intended transactions and inquiries into business and personal relationships with those in and around Iran. The U.S. Treasury warns against front and shell companies to exploit the financial system, specifically. Diligence around ultimate beneficial ownership is key to protecting your institution from these risks. Additionally, as with DPRK, keep up to date on sanctions related to individuals and businesses in and around these regions.

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In the second issuance, jurisdictions identified as having strategic AML/CFT deficiencies for which an action plan has been developed with FATF are outlined. FATF notes that each region listed does demonstrate a high-level political commitment to address deficiencies. FinCEN directs institutions to ensure due diligence programs, especially those addressing correspondent accounts with foreign institutions, including appropriate risk-based policies and controls to detect and report suspicious activity. Jurisdictions added since the June list include The Bahamas, Botswana and Ghana.

As always, when jurisdictions are added or removed, BSA professionals should read FATF’s reasoning and make their own decisions when assessing risk. That means you should not blindly remove jurisdictions from what you consider areas of concern without considering your individual risk profile and customer base. Keeping up with updates from FATF and FinCEN are material to the success of your program.

As BSA professionals, you protect our nation every day. We thank you for that today and every day!

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