July 28, 2016 – FINTRAC Advisory: Financial transactions related to countries identified by the Financial Action Task Force (FATF)

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 24, 2016.

Democratic People’s Republic of Korea and Islamic Republic of Iran

In its June 24, 2016 public statement, FATF remained concerned by the Democratic People’s Republic of Korea’s (DPRK) failure to address the significant deficiencies in its anti-money laundering and combatting the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. Further, FATF is concerned about the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financingFootnote 1. FATF reaffirmed the call on its members to apply effective preventive measures to protect their financial sectors from such risks.

FATF welcomed Iran’s adoption of, and high-level political commitment to an action plan to address its strategic AML/CFT deficiencies. However, until Iran implements the measures required to address the deficiencies identified in the action plan, FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.

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, the DPRK and Iran.

FINTRAC is advising that reporting entities should consider the above in determining whether they are required to file a suspicious transaction report in respect of one or more financial transaction(s) or attempted financial transaction(s) emanating from, or destined to, the DPRK or Iran where there are reasonable grounds to suspect that the transactions are related to the commission or attempted commission of a money laundering offence or a terrorist activity financing offence. 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.

Other jurisdictions

In its June 24, 2016 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 have demonstrated some progress with the execution of their plans: Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao People’s Democratic Republic, Syria, Uganda, Vanuatu, and Yemen.

Burma (Myanmar) and Papua New Guinea no longer subject to FATF monitoring process

FATF welcomed the significant progress of Burma (Myanmar) and Papua New Guinea in improving their AML/CFT regimes. The jurisdictions have met their commitments in their action plans regarding the strategic deficiencies that FATF had identified. Burma (Myanmar) and Papua New Guinea are therefore no longer subject to FATF’s monitoring process.

The FATF June 24, 2016 statements can be found at the following website: http://www.fatf-gafi.org/.

Caribbean Financial Action Task Force (CFATF) public statement

Reporting entities should take note that, on June 8, 2016, the Caribbean Financial Action Task Force (CFATF), under a process that is separate and distinct from the FATF monitoring process, issued for the first time a public statement regarding the strategic AML/CFT deficiencies of Haiti.

CFATF Public Statement – June 2016

FATF action on the terrorist group Islamic StateFootnote 2

FINTRAC would like to reiterate the previous statements issued by FATF, expressing its deep concern with the financing generated by, and provided to, the terrorist group the Islamic State (IS).

On September 22, 2014, the Government of Canada updated the Criminal Code list of terrorist entities to include the IS, which was previously listed as Al Qaeda in Iraq.

Accordingly, FINTRAC is reminding all reporting entities subject to the requirements of the PCMLTFA, of their obligationsFootnote 3 to submit a terrorist property report if:

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 in determining whether they are required to file a suspicious transaction report in respect of one or more financial transaction(s) or attempted financial transaction(s) emanating from, or destined to, the jurisdictions under IS control and the surrounding jurisdictions where there are reasonable grounds to suspect that the transactions are related to the commission or attempted commission of a money laundering offence or a terrorist activity financing offence. 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.

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