July 29, 2015 – FINTRAC Advisory
Financial transactions related to countries identified by the Financial Action Task Force (FATF)
In order to protect the international financial system from money laundering and terrorist financing risks, the Financial Action Task Force (FATF) issued two statements on June 26, 2015.
Islamic Republic of Iran and the Democratic People’s Republic of Korea
In its June 26, 2015 public statement, FATF reaffirmed its particular and exceptional concerns about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. FATF also reaffirmed its concerns about the Democratic People’s Republic of Korea’s (DPRK) failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. FATF reaffirmed the call on its members to apply effective preventive measures to protect their financial sectors from such risks.
Accordingly, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is reiterating to all reporting entities subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) the risks of doing business with individuals and entities based in, or connected to, Iran and the DPRK.
FINTRAC is advising that reporting entities should consider the above when deciding whether to file a suspicious transaction report in respect of financial transactions or attempted financial transactions emanating from, or destined to, Iran or the DPRK. Reporting entities are also encouraged to undertake enhanced customer due diligence with respect to clients and beneficiaries involved in such financial transactions or attempted financial transactions.
Jurisdictions representing a risk arising from deficiencies
In its June 26, 2015 public statement, FATF calls on its members to consider the risks arising from the strategic AML/CFT deficiencies associated with the following jurisdictions that have not made sufficient progress in addressing the deficiencies, or that have not committed to an action plan developed with FATF to address the deficiencies: Algeria and Burma (Myanmar).
FINTRAC is advising that reporting entities should consider giving special attention to financial transactions or attempted financial transactions related to Algeria and Burma (Myanmar).
In its June 26, 2015 compliance document, FATF brought to the attention of its members several jurisdictions that have strategic AML/CFT deficiencies. The following jurisdictions have developed an action plan with FATF to address identified deficiencies and demonstrated some progress with the execution of their plans: Afghanistan, Angola, Bosnia and Herzegovina, Ecuador, Guyana, Lao PDR, Panama, Papua New Guinea, Sudan, Syria, Uganda and Yemen.
FATF is not yet satisfied that Iraq has made sufficient progress on its action plan agreed upon with FATF. If this jurisdiction does not take sufficient action to implement significant components of its action plan by October 2015, then FATF will identify Iraq as being out of compliance with its agreed action plan and will take the additional step of calling upon its members to consider the risks arising from the deficiencies associated with Iraq.
Indonesia no longer subject to FATF monitoring process
FATF welcomed the significant progress of Indonesia in improving its AML/CFT regime. The jurisdiction has met its commitments in its action plan regarding the strategic deficiencies that FATF had identified. Indonesia is therefore no longer subject to FATF’s monitoring process.
The FATF June 26, 2015 statements can be found at the following website: http://www.fatf-gafi.org/
FATF action on the terrorist group Islamic State of Iraq and Syria
FINTRAC would like to reiterate the statements issued by FATF on October 24, 2014, and February 27, 2015, expressing its deep concern with the financing generated by, and provided to, the terrorist group the Islamic State of Iraq and Syria (ISIS).
On September 22, 2014, the Government of Canada updated the Criminal Code list of terrorist entities to include ISIS, which was previously known as Al Qaeda in Iraq.
Accordingly, FINTRAC is reminding all reporting entities subject to the requirements of the PCMLTFA, of their obligationsFootnote 1 to submit a terrorist property report if:
- They know of the existence of property in their possession or control that is owned or controlled by or on behalf of a terrorist or terrorist group; and
- They have information about a transaction or proposed transaction in respect of property referred to above.
In this context, property includes any type of real or personal property. This also includes any deed or instrument giving title or right to property, or giving right to money or goods. A terrorist property report includes information about the property as well as any transaction or proposed transaction relating to that property.
FINTRAC is advising that reporting entities should consider the above when deciding whether to file a suspicious transaction report in respect of financial transactions or attempted financial transactions emanating from, or destined to, the jurisdictions under ISIS control and the surrounding jurisdictions. Reporting entities are also encouraged to undertake enhanced customer due diligence with respect to clients and beneficiaries involved in such financial transactions or attempted financial transactions.
On June 26, 2015 FATF also noted that terrorist financing continues to be an issue of priority given the terrorist threats posed most notably by ISIS and foreign terrorist fighters.
Canada is a member of FATF and strongly supports its efforts to combat money laundering and terrorist activity financing.
Additional Information for Reporting Entities – Ministerial Directives under Part 1.1 of the PCMLTFA
Part 1.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) entered into force on June 19, 2014. Part 1.1 authorizes the Minister of Finance to:
- Issue directives that require reporting entities to apply countermeasures to transactions coming from or going to designated foreign jurisdictions or entities; and
- Recommend the introduction of regulations to restrict reporting entities from entering into a financial transaction coming from or going to designated foreign jurisdictions or entities.
FINTRAC is responsible to monitor and assess compliance with directives, and will inform reporting entities when a directive has been issued. While the Minister of Finance has not yet issued a Directive, reporting entities should familiarize themselves with this new authority. Additional information is available on the Department of Finance website: http://www.fin.gc.ca/legislation/pcmltfa-lrpcfat-eng.asp
- Date Modified: