Circular to Licensed Corporations and Associated Entities - Anti-Money Laundering / Counter-Financing of Terrorism
(1) FATF Statement on High-Risk Jurisdictions subject to a Call for Action
(2) FATF Statement on Jurisdictions under Increased Monitoring
(3) Outcomes from the Meeting of the FATF Plenary, 19-21 February 2020

10 Mar 2020



Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Financing of Terrorism

(1)  FATF Statement on High-Risk Jurisdictions subject to a Call for Action

(2)  FATF Statement on Jurisdictions under Increased Monitoring

(3)  Outcomes from the Meeting of the FATF Plenary, 19-21 February 2020

(1)  FATF Statement on High-Risk Jurisdictions subject to a Call for Action Note 1

Further to our circular issued on 29 October 2019, this is to inform you that the Financial Action Task Force (“FATF”) issued an updated statement on 21 February 2020 identifying jurisdictions that have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. The statement can be found on the website of the FATF (http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/call-for-action-february-2020.html).

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

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (“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 effective 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.

Iran

The FATF noted Iran has not completed the Action Plan that it adopted in June 2016 to address its strategic AML/CFT deficiencies, including the measures required to address the deficiencies identified with respect to countering terrorism-financing.  Until Iran implements such measures, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.

In October 2019, the FATF called upon its members and urged all jurisdictions to: require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran; introduce enhanced relevant reporting mechanisms or systematic reporting of financial transactions; and require increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran.

Given Iran’s failure to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, the FATF fully lifts the suspension of counter-measures and calls on its members and urges all jurisdictions to apply effective counter-measures, in line with Recommendation 19 Note 2.

(2)  FATF Statement on Jurisdictions under Increased Monitoring Note 3

In addition, please be informed that the FATF has set out in a separate statement an updated list of jurisdictions under increased monitoring, which are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing Note 4. The FATF will closely monitor the implementation of those action plans and encourage its members to consider in their risk analysis 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/increased-monitoring-february-2020.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 February 2020

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) adoption of a new guidance paper on digital identity; and (ii) the final Guidance Paper for tackling the financial flows linked to the illegal wildlife trade will be published in June 2020.

Further information can be found on the website of the FATF (http://www.fatf-gafi.org/publications/fatfgeneral/documents/outcomes-fatf-plenary-february-2020.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/008/2020


Note 1 This statement was previously called "Public Statement"
Note 2 Countries should be able to apply appropriate countermeasures when called upon to do so by the FATF. Countries should also be able to apply countermeasures independently of any call by the FATF to do so. Such countermeasures should be effective and proportionate to the risks.  The Interpretative Note to Recommendation 19 specifies examples of the countermeasures that could be undertaken by countries.
Note 3 This statement was previously called "Improving Global AML/CFT Compliance: On-going Process"
Note 4 The FATF has removed one jurisdiction (namely Trinidad and Tobago) from, and added seven new jurisdictions (namely Albania, Barbados, Jamaica, Mauritius, Myanmar, Nicaragua, Uganda ) to, the list of jurisdictions under increased monitoring.


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Page last updated : 13 Jul 2020