Articles of Interest 068

NCCT version 2.0

The Financial Action Task Force (FATF) traditionally released a list of Non-Compliant Countries and Territories (NCCT) who did not offer legislative or regulatory environments conducive to combatting money laundering and terrorist financing.  As of today, there are no more countries afflicted with the stigma of seeing their names on the NCCT list.

According to today’s New York Times, Bulgaria’s government is run by organised crime.  Nigeria is still a basket case, Burma is still being run by drug-smuggling generals and Mexico is rapidly turning into a narco-state.  There are plenty of other examples of countries whose efforts to AML and CTF can be called into question, yet the FATF no longer issues an editorial on the subject.

Today, the FATF released in a statement a general “tut, tut” towards Iran, Uzbekistan, Turkmenistan, Pakistan, Sao Tome & Principe and Cyprus.  In summary, Iran and Uzbekistan should address their deficiencies “urgently”, however Turkmenistan is merely “urged”.  Unfortunately, the situation remains unchanged in both Pakistan and Sao Tome & Principe.  Cyprus, on the other hand, receives a muted round of applause for its work.

How are anti-money laundering specialists to judge country risk?  Must we read between the lines of such FATF statements?  How much more important is “urged” rather than “urgently”?  Are we all so afraid of liability issues and political risk that the whole system becomes lukewarm?

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http://www.fatf-gafi.org/dataoecd/25/17/41508956.pdf


FATF Statement

16 October 2008
 

IRAN
The FATF welcomes Iran’s recent engagement with the international community on anti-money laundering, notes the initial steps taken towards remedying the deficiencies inthis area, and urges Iran to address the remaining weaknesses.
 
The FATF is particularly concerned that the lack of corresponding effort by Iran to address the risk of terrorist financing continues to pose a serious threat to the integrity of the international financial system. Urgent action to address this vulnerability is necessary.
 
The FATF calls on its members, and urges all jurisdictions, to strengthen preventive measures to protect their financial sectors from this risk.
 
The FATF is prepared to engage directly in assisting Iran in decisively addressing the weaknesses in its AML/CFT regime.
 
UZBEKISTAN

The FATF takes note of the action plan prepared by Uzbekistan to address deficiencies in its AML/CFT regime.   
 
The FATF is increasingly concerned that the continuing failure by Uzbekistan to restore its AML/CFT regime poses a serious threat to the integrity of the international financial system. Urgent action to address this vulnerability and to meet international standards is necessary.
 
The FATF calls on its members, and urges all jurisdictions, to strengthen preventive measures to protect their financial sectors from this risk.
 
The FATF, along with the Eurasian Group, is prepared to engage directly in assisting Uzbekistan in developing a robust AML/CFT regime.
 
TURKMENISTAN

The FATF notes Turkmenistan’s efforts towards adopting AML legislation. However, financial institutions should be aware that the lack of an AML/CFT regime in Turkmenistan constitutes a money laundering/terrorist financing vulnerability in the international financial system.  Turkmenistan is urged to continue its efforts to establish a
comprehensive AML/CFT regime that meets international AML/CFT standards and to work closely with the Eurasian Group and the International Monetary Fund to achieve this.  
 
PAKISTAN AND SÃO TOMÉ AND PRÍNCIPE
 
The FATF reaffirms its public statement of 28 February 2008 regarding the money laundering and financing of terrorism risks posed by Pakistan and São Tome and Principe.
 
AML/CFT IMPROVEMENTS IN THE NORTHERN PART OF CYPRUS
The FATF welcomes the significant progress made in the northern part of Cyprus and notes that the northern part of Cyprus has substantially addressed the AML/CFT deficiencies that the FATF had identified. FATF encourages the northern part of Cyprus to continue to improve its AML/CFT system. Implementation will be monitored through
appropriate mechanisms.