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High Risk Country

Section 17H(1) of the Financial Intelligence and Anti-Money Laundering Act provides that where a jurisdiction is identified by the FATF as having significant or strategic deficiencies in its AML/CFT measures, the Minister of Financial Services and Good Governance (‘Minister’) may, on the recommendation of the National Committee for Anti-Money Laundering and Combating the Financing of Terrorism (National Committee), identify that jurisdiction as a high risk country.

In this respect, in light of the jurisdictions identified by FATF in its statement, “High-Risk Jurisdictions subject to a call for action” dated 21 February 2020, and on the recommendation of the National Committee for AML/CFT, the Minister has, on 4 May 2020, published a General Notice (Notice) entitled “Identification of high risk country by the Minister of Financial Services and Good Governance under section 17H (1) of the Financial Intelligence and Anti-Money Laundering Act”, wherein the Democratic People’s Republic of Korea (DPRK) and Iran have been identified as high-risk countries.

The General Notice reminds reporting persons that they are required, under section 17H(2) of the Financial Intelligence and Anti-Money Laundering Act, to apply such enhanced due diligence measures which are prescribed in the Financial Intelligence and Anti-Money Laundering Regulations 2018 with respect to business relationships or transactions involving those high risk countries. In addition, they shall, where applicable and proportionate to the risks, apply one or more of the following additional mitigating measures to persons and legal entities carrying out transactions involving those high-risk countries–

  1. the application of additional elements of enhanced due diligence;
  2. the introduction of enhanced relevant reporting mechanisms or systematic reporting of financial transactions;
  3. the limitation of business relationships or transactions with natural persons or legal entities from those high risk countries.

Additionally, reporting person shall also –

  1. consult the FATF public documents which are published on the website of the FATF (https://www.fatf-gafi.org/) at least 3 times a year, namely in February, June and October, and apply the countermeasures recommended by the FATF in those documents;
  2. give special attention to business relationships and transactions with persons (both natural and legal persons) in those high risk countries, including companies, legal arrangements/trusts and financial institutions based in those countries;
  3. strengthen systems and controls in managing their exposure to the vulnerabilities identified by FATF; and
  4. ensure that correspondent relationships, in particular, are not being used to evade countermeasures and risk mitigation practices.

               Any non-compliance with the directions and specifications contained in this Notice is a criminal offence under the Financial Intelligence and Anti-Money Laundering Act and may further attract administrative sanctions and penalties imposed by the supervisory authorities under the Financial Intelligence and Anti-Money Laundering Act.

               Financial institutions are required to ensure strict compliance with the General Notice.