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HM Treasury Advice on High Risk Jurisdictions

12th May 2016

High Risk Jurisdictions

In February the Financial Action Task Force (FATF) published two statements that identified countries lacking with regards to their regimes for tackling anti-money laundering (AML) and counter terrorist financing (CTF).

FATF informs that these jurisdictions’ failure to address their significant deficiencies in combating the financing of terrorism and their anti-money laundering regimes pose serious threat to the integrity of the international financial system.

Since then, HM Treasury have responded to FATFs statements and seek to provide advice to regulated firms.

Requirements for Regulated Firms:

Regulated firms must put in place policies and procedures in order to prevent activities related to terrorist financing and money laundering as required by The Money Laundering Regulations 2007.

In certain situations and on a risk-sensitive basis, regulated businesses are required to apply enhanced levels of due diligence and ongoing monitoring to their clients and potential clients.

HM Treasury Advice for Regulated Firms:

The advice that HM Treasury have now issued in response to FATF’s statements concerns the risks that these jurisdictions pose by having unsatisfactory anti-money laundering and counter-terrorist financing controls in place.

As such, HM Treasury advises firms to consider the following jurisdictions as High Risk and thus firms should apply Enhanced Due Diligence (EDD) measures:

• Democratic People’s Republic of Korea (DPRK)*
• Iran*

In addition regulated firms are urged to take appropriate actions in relation to the following jurisdictions so as to lessen the associated risks, which may include undertaking Enhanced Due Diligence measures in high risk situations:

• Afghanistan*
• Bosnia & Herzegovina
• Guyana
•  Iraq*
• Lao PDR
• Myanmar
• Papua New Guinea
• Syria*
• Uganda
• Vanuatu
• Yemen

It should be noted that are the time of writing, the countries that are asterisked (*) are all subject to sanctions measures which would require firms to take additional measures. More details of all regimes currently subject to financial sanctions can be found at the HM Treasury site.

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