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AML/FT – An update to the jurisdictions we should be mindful of

21 February 2019

On 13 February, 2019, the European Commission (EC) issued a new list of 23 third countries which are deemed to have strategic deficiencies in their anti-money laundering (AML) and funding of terrorism (FT) frameworks. Under the 4th and 5th AML Directives, the EC is empowered to adopt delegated acts to identify high-risk third countries, considering strategic deficiencies, particularly:

  1. the legal and institutional AML/FT framework of the third country;
  2. the powers and procedures of the third country's competent authorities for the purposes of combating ML and TF; and
  3. the effectiveness of the AML/FT system in addressing ML or FT risks of the third country.

The list has been established based on an analysis of 54 jurisdictions, which was prepared by the EC in consultation with the Member States. The countries assessed meet at least one of the following criteria:

  1. the country has systemic impact on the integrity of the EU financial system;
  2. the country is reviewed by the International Monetary Fund as international offshore financial centres;
  3. the country has economic relevance and strong economic ties with the EU.

The aim of this list is to protect the EU financial system by better preventing money laundering and terrorist financing risks. As a result of the listing, all Maltese subject persons will be required to apply enhanced due diligence on financial operations involving customers and financial institutions from these high-risk third countries to better identify any suspicious money flows. On the basis of a new methodology, which reflects the stricter criteria of the 5th anti-money laundering directive in force since July 2018, the list has been established following an in-depth analysis.

The 23 jurisdictions on the list are: (1) Afghanistan, (2) American Samoa, (3) The Bahamas, (4) Botswana, (5) Democratic People's Republic of Korea, (6) Ethiopia, (7) Ghana, (8) Guam, (9) Iran, (10) Iraq, (11) Libya, (12) Nigeria, (13) Pakistan, (14) Panama, (15) Puerto Rico, (16) Samoa, (17) Saudi Arabia, (18) Sri Lanka, (19) Syria, (20) Trinidad and Tobago, (21) Tunisia, (22) US Virgin Islands, (23) Yemen.

The EC issued the list in the form of a Delegated Regulation. The ensuing steps will be that the list would be submitted to the European Parliament and Council for their approval within 1 month (and a possible further one-month extension).

 

Source: European Commission