February 27, 2009 FINTRAC Advisory

FINTRAC calls for increased vigilance when dealing with entities from Iran, Uzbekistan, Turkmenistan, Pakistan, São Tomé and Príncipe, and Azerbaijan

In a February 25, 2009 statement, the Financial Action Task Force (FATF) announced that it remains concerned by Iran's failure to meaningfully address the ongoing and substantial deficiencies in its anti-money laundering (AML/CFT) regime. The FATF remains particularly concerned 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. The FATF indicated that jurisdictions should protect against correspondent relationships being used to bypass or evade counter-measures.

The FATF also reiterated the concerns it expressed in its October 16, 2008 statement about the failure of Uzbekistan to restore its AML/CFT regime.

Accordingly, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is alerting all individuals and entities that are subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), to the risk of doing business with individuals and entities based in Iran and Uzbekistan.

Financial transactions emanating from, or destined to, Iran and Uzbekistan should continue to be viewed by individuals and entities that are subject to the requirements of the PCMLTFA as potentially suspicious.

In addition, FINTRAC would like to remind reporting entities that since June 2007 the PCMLTFA has clear requirements for correspondent banking that include the requirement for enhanced due diligence measures and on-going monitoring when the foreign financial institution lacks sufficient AML/CFT policies and procedures. For more information, please refer to FINTRAC Guideline 6.

The FATF also reiterated concerns for the deficiencies in the AML/CFT regimes of Turkmenistan, Pakistan, and São Tomé and Príncipe. The FATF had previously announced these concerns in February 28, 2008 and October 16, 2008 statements.

As well, the FATF brought to the attention of its members a statement issued by the Council of Europe Committee of experts on the evaluation of anti-money laundering measures and the financing of terrorism (MONEYVAL) regarding the deficiencies in the AML/CFT regime in Azerbaijan. MONEYVAL has called upon Azerbaijan to address these concerns.

Accordingly, reporting entities should give heightened attention to transactions related to Azerbaijan.

The text of the FATF statement can be found at:
http://www.fatf-gafi.org

Canada is a member of the FATF and strongly supports its efforts to combat money laundering and terrorist financing.

The Office of the Superintendent of Financial Institutions (OSFI) has also issued a Notice to all federally regulated financial institutions. For a copy of the Notice, visit:
www.osfi-bsif.gc.ca.