On November 15, 2011, the Financial Crimes Enforcement Network (FinCEN) issued two guidance documents alerting financial institutions operating in the United States of money laundering and terrorism financing risks associated with certain countries’ financial systems. These countries have been identified by the Financial Action Task Force (FATF) as having deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes. FinCEN’s guidance documents identify jurisdictions which have made a high-level commitment to address strategic AML/CFT deficiencies (FIN-2011-A104) and jurisdictions which either have not made sufficient progress or provided a political commitment to address AML/CFT deficiencies, or are subject to FATF’s call for counter measures (FIN-2011-A105).
In particular, FATF called on its members and urged all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism risks stemming from Iran and the Democratic People’s Republic of Korea. The FATF also called on its members to consider the risks arising from Cuba, Bolivia, Ethiopia, Kenya, Myanmar, Nigeria, Sao Tome and Principe, Sri Lanka, Syria and Turkey – each jurisdiction having strategic AML/CFT deficiencies and failing to make sufficient progress in addressing the deficiencies or failing to commit to an action plan developed with the FATF to address the deficiencies. Consequently, U.S. financial institutions are advised to apply enhanced due diligence (as described under implementing regulations 31 CFR § 1010.610(b) and (c)) when maintaining correspondent accounts for foreign banks operating under a banking license issued by these jurisdictions.
Notably, this guidance comes in response to the G-20 leaders’ call for the FATF to revive its process for assessing countries’ compliance with international AML/CFT standards and to publicly identify high risk countries. The FATF has indicated that it will continue to update information on these jurisdictions and others that pose a risk to the international financial system.