FATF warning lists: February 2020 update

In June 2016, Iran drafted an action plan in consultation with the FATF to address the serious deficiencies in its AML/CFT regime. The FATF then partially suspended the call for tighter measures against Iran and monitored the country's progress. In its plenary meeting of February 2020, the FATF concluded that Iran's progress in addressing the serious deficiencies in its AML/CFT regime was still insufficient. The FATF has therefore lifted its suspension of countermeasures against Iran. It is particularly concerned about Iran's high risk of terrorist financing and the threatening impact thereof on the international financial system.
Against this background, DNB and the Ministry of Finance urge financial institutions to continue to comply with the tighter measures with respect to transactions and business relationships in connection with Iran. This could include, for example, ex ante collection of additional information about the purpose and intended nature of the transactions or business relationships, enhanced due diligence by increasing the number of checks performed on transactions and business relationships, and selecting transaction patterns for further investigation.

DNB and the Ministry of Finance also reiterate the need to promptly report all unusual transactions with Iran to FIU-NL. Institutions must consider geographic risk factors when establishing whether transactions qualify as unusual based on the subjective indicator. This also includes the involvement in transactions of parties from countries without effective AML/CFT systems, such as Iran.

Last but not least, DNB and the Ministry of Finance remind institutions of the upcoming amendment of Section 9 of the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft. This amendment means that institutions will be explicitly obliged to take tighter measures with respect to countries with a higher risk of money laundering or terrorist financing such as Iran. The measures to be taken are listed below, and as they are expected to take effect in the near future, institutions should make the necessary preparations.

Section 9(1) in its amended form stipulates that institutions must take the following measures for transactions, business relations and correspondent banking relations in connection with high-risk countries such as Iran:

• obtaining additional information on customers and ultimate beneficial owners;
• obtaining additional information on the purpose and nature of the business relationship;
• obtaining information on the origin of the funds used in the business relationship or transaction, and the source of the assets of the customers and the ultimate beneficial owners involved;
• obtaining information on the backgrounds of and reasons for the intended or performed customer transactions;
• obtaining approval from the senior management for entering into or continuing the business relationship;
• performing enhanced due diligence by increasing the number of checks performed on transactions and business relationships, more frequently updating information on the customers and ultimate beneficial owners involved, and selecting transaction patterns for further investigation.

The FATF continues to be concerned about North Korea's serious deficiencies in addressing money laundering and terrorist financing, and the serious threat this poses to the integrity of the international financial system. The FATF is also highly concerned about the threat from North Korea's nuclear proliferation and proliferation funding. DNB and the Ministry of Finance emphasise that institutions must comply with the tighter measures regarding business relationships with North Korean residents and transactions to/from this country, also with a view to the restrictions following from the UN and EU sanctions.

The document “Jurisdictions under Increased Monitoring” lists the countries that have serious deficiencies in their AML/CFT systems but have expressed their commitment to address these. This list includes the following jurisdictions: Albania, the Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen and Zimbabwe.
Trinidad and Tobago was removed from this list in February 2020. Albania, Barbados, Jamaica, Mauritius, Myanmar, Nicaragua and Uganda were added.

Financial institutions must take the specific circumstances regarding these countries into account when taking AML/CFT measures.

If there is a reason to do so, the FATF will amend the documents in its next plenary meeting (in June or October).

1 This document used to be referred to as the “Public Statement".
2 This document used to be referred to as "Improving Global AML/CFT Compliance: On-going Process".