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AML/CFT

FinCEN Issues Advisory on the FATF Updated List of Jurisdictions with AML/CFT Deficiencies

Terri Luttrell, CAMS-Audit, CFCS
November 12, 2021
Read Time: 0 min

New FinCEN Advisory focuses on FATF Call to Action publication.

The publication updated its list of jurisdictions with anti-money laundering and combatting the financing of terrorism (AML/CFT) deficiencies.

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Takeaway 1

FinCEN Issued an advisory updating its list of jurisdictions with AML/CFT deficiencies.

Takeaway 2

FATF added Jordan, Mali, and Turkey to the list of jurisdictions under increased monitoring. 

Takeaway 3

USA PATRIOT ACT Section 312 obligations include enhanced due diligence procedures at institutions. 

FATF Call to Action

FinCEN issued advisory on newest FATF call to action publication

On October 26, 2021, FinCEN issued an advisory referencing the October 2021 Financial Action Task Force (FATF) Call to Action publication. The publication updated its list of jurisdictions with anti-money laundering and combatting the financing of terrorism (AML/CFT) deficiencies, and financial institutions should consider these changes when reviewing their overall BSA/AML programs and risk-based policies, procedures, and practices. 

The FATF is charged with monitoring jurisdictions for compliance to their global AML/CTF standards and reporting countries with strategic deficiencies. According to the recent FATF publication, several high-risk jurisdictions continue to have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. With the release of the FinCEN Priorities, it is more important than ever that financial institutions be aware of these deficient jurisdictions and adjust their monitoring programs accordingly. 

Increased Monitoring Required

FATF added two new countries to its list of increased monitoring

The FATF added Jordan, Mali, and Turkey to its list of the jurisdictions under increased monitoring and removed Botswana and Mauritius. 

The comprehensive list of countries identified by FATF as having deficiencies, although they may be making progress and are committed to a robust AML/CFT regime, are as follows: 

  • Albania 
  • Barbados 
  • Burkina Faso 
  • Cambodia 
  • Cayman Islands 
  • Haiti 
  • Jamaica 
  • Jordan 
  • Mali 
  • Malta 
  • Morocco 
  • Myanmar 
  • Nicaragua 
  • Pakistan 
  • Panama   
  • Philippines 
  • Senegal 
  • South Sudan 
  • Syria 
  • Turkey 
  • Uganda 
  • Yemen 
  • Zimbabwe 

The call for countermeasures or enhanced due diligence for the following jurisdictions remains strong. During the COVID-19 pandemic, FATF paused the review process for countries with serious deficiencies since they were already subject to enhanced measures. The February 2020 Call for Action is still in place for the following: 

1) Democratic People's Republic of Korea (DPRK) is subject to countermeasures due to significant deficiencies in its anti-money laundering and combating terrorism regime. Also, they pose severe threats to the integrity of the international financial system.  

2) Iran is subject to enhanced due diligence measures proportionate to the risks arising from the jurisdiction. As of February 2020, the FATF states that Iran has not completed their action plan as committed.  With this outstanding, the FATF remains concerned with terrorist financing, and enhanced due diligence efforts are called for as Iran threatens the international financial system. 

Since these are not new designations and are also on the OFAC list with robust sanctions programs, these jurisdictions should already be on each institution's higher risk radar.  

FinCEN Guidance

Institutions reminded of enhanced due diligence obligations

FinCEN guidance gives a powerful reminder of USA PATRIOT ACT Section 312 obligations. The regulations require that covered financial institutions ensure their enhanced due diligence programs include steps to: 

  • Conduct enhanced scrutiny of correspondent accounts to guard against money laundering and to identify and report any suspicious transactions following applicable law and regulation. 
  • Determine whether the foreign bank for which the correspondent account is established in turn maintains correspondent accounts for other foreign banks. If so, take reasonable steps to obtain information relevant to assess and mitigate money laundering risks associated with the foreign banks. 
  • Determine the identity of each foreign bank owner and the nature and extent of each owner's ownership interest. 

FATF generally updates its list of non-compliant jurisdictions quarterly. Financial institutions should review these updates and adjust their AML programs, including their AML software, accordingly. It is important to remember that if a jurisdiction is removed from this list, each institution should still review its risk profile to determine if it continues to be an area of concern for them. 

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About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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