Circular to Licensed Corporations and Associated Entities - Anti-Money Laundering / Counter-Financing of Terrorism
(1) FATF Statement on Democratic People’s Republic of Korea and Iran
(2) FATF Statement on Improving Global AML/CFT Compliance: On-Going Process
(3) Outcomes from the Meeting of the FATF Plenary, 19-21 June 2019

5 Jul 2019



Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Financing of Terrorism

(1)  FATF Statement on Democratic People’s Republic of Korea and Iran

(2)  FATF Statement on Improving Global AML/CFT Compliance: On-Going Process

(3)  Outcomes from the Meeting of the FATF Plenary, 19-21 June 2019

(1)  FATF Statement on Democratic People’s Republic of Korea and Iran

Further to our circular issued on 1 March 2019, this is to inform you that the Financial Action Task Force (“FATF”) issued an updated statement on 21 June 2019 identifying jurisdictions that have strategic deficiencies in their anti-money laundering and combating the financing of terrorism (“AML/CFT”) regimes.

The statement Note 1 has been separated into two sections.

(i)   Jurisdiction subject to a call on its members and other jurisdictions to apply counter-measures

Democratic People’s Republic of Korea (“DPRK”)

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its AML/CFT regime and the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (“WMDs”) and its financing. The FATF calls on its members and other jurisdictions to continue to apply counter-measures and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions to protect their financial sectors from money laundering, terrorist financing and WMD proliferation financing risks emanating from the jurisdiction.

Licensed corporations (“LCs”) and associated entities (“AEs”) should give special attention to business relationships and transactions with the DPRK, including DPRK companies, financial institutions and those acting on their behalf, and subject them to increased scrutiny and enhanced due diligence measures.

In addition, LCs and AEs are reminded that it is an offence under section 4 of the Weapons of Mass Destruction (Control of Provision of Services) Ordinance (Cap. 526) for a person to provide any services where he believes or suspects, on reasonable grounds, that those services may be connected to WMD proliferation.

(ii)  Jurisdiction subject to a call on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction

Iran

The FATF decided to continue the suspension of counter-measures while expressing disappointment that the Action Plan that Iran adopted in June 2016 to address its strategic AML/CFT deficiencies, remains outstanding.  The FATF expects Iran to proceed swiftly to address all the remaining items by completing and implementing the necessary AML/CFT reforms.  

Until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism-financing in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF calls on its members and other jurisdictions to continue to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction.

LCs and AEs should therefore continue to apply enhanced due diligence, proportionate to the risks, with respect to business relationships and transactions with natural and legal persons from Iran, including (1) obtaining information on the reasons for intended transactions; and (2) conducting enhanced monitoring of business relationships, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.

(2)  FATF Statement on Improving Global AML/CFT Compliance: On-Going Process

In addition, please be informed that as part of the on-going process to improve global AML/CFT compliance, the FATF has set out in a separate statement an updated list of jurisdictions that have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. The FATF will closely monitor the implementation of those action plans and encourage its members to consider the information presented in the statement which can be found on the website of the FATF (http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/fatf-compliance-june-2019.html).

As the FATF will continue to assess the progress made by these jurisdictions in addressing the deficiencies in their AML/CFT systems and issue updated statements from time to time, LCs and AEs are reminded to browse the website of the FATF for the latest information. 

(3)  Outcomes from the Meeting of the FATF Plenary, 19-21 June 2019 

In addition to the statements in (1) and (2) above, the FATF has also published various other outcomes of its recent Plenary Meeting which may be of interest to LCs and AEs. They include, for example, (i) discussion of the mutual evaluation report of Hong Kong, China Note 2 regarding the level of effectiveness of its AML/CFT system and its level of compliance with the FATF Recommendations; (ii) adoption and issuance of an Interpretive Note to FATF Recommendation 15 on New Technologies to further clarify the FATF’s previous amendments to the international standards relating to virtual assets; and (iii) publication of the updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers.  Further information can be found on the website of FATF (http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-plenary-june-2019.html).

Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong at 2231 1569 who will assist to refer your queries to the relevant officer.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

End

SFO/IS/037/2019


Note 1 The statement can be found on the website of the FATF (http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/public-statement-june-2019.html).
Note 2 The mutual evaluation report of Hong Kong, China is expected to be published by the FATF in September 2019 after its internal quality and consistency review.


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Page last updated : 5 Jul 2019