AMLMarch 1, 2024

Update in FATF Public Statements – February 2024

The Financial Action Task Force (FATF) issued the latest documents relating to the ‘High-Risk Jurisdictions subject to a Call for Action’ and ‘Jurisdictions under Increased Monitoring’.

Entities and individuals subject to the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR) are obliged to assess the risks emanating from any jurisdiction they are dealing with, including whether they deal with jurisdictions considered as non-reputable or high-risk jurisdictions. Hence, it is crucial for subject persons to stay well-informed about the updates contained in such documents and implement such updates, primarily through updating the Jurisdiction Risk Assessment (JRA). Additionally, subject persons are required to carrying out enhanced due diligence measures when dealing with natural or legal persons established or linked with such jurisdiction.

In the recent update, the FATF introduced Kenya and Namibia to the ‘Jurisdictions that under Increased Monitoring’ which is also referred to as the ‘grey list’.

The Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) carried out a review to assess the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) measures of Kenya and Namibia.  Kenya’s evaluation revealed that although making strides in strengthening its AML/CFT system, fundamental improvements are required in relation to the understanding of Terrorist Financing (TF) risks, risk-based supervision and implementation of preventive measures, Money Laundering (ML) and Terrorist Financing (TF) investigations and preventing Proliferation Financing (PF).

The evaluation report explains that Kenya is exposed to ML threats from proceeds of crime emanating from within and outside the country through its financial system, legal sector, real estate sector and cross-border trade. In view of its geographical position and economic development as a region hub, the country is also considered a transit route for drug and illegal wildlife trafficking. Additionally, based on the National Risk Assessment (NRA) report and the risk profile of the country, Kenya faces TF risk arising from the neighbouring countries with active terrorist groups. The vulnerabilities associated with hawala activities, cross border currency movements, weak risk-based regulation and inadequate analysis of cross-border remittances heighten the TF risks.

Namibia’s evaluation demonstrated a good understanding of ML threats, however, Namibia is yet to assess and comprehend the extent of the proceeds. Namibia also faces TF threats and Competent Authorities demonstrated low TF understanding. The evaluation report highlights that in recent years, Namibia experienced a rise in fraud, corruption, tax crimes, and wildlife crimes and has capacity constraints to combat ML/FT threats effectively.

Since the adoption the Mutual Evaluation Reports (MER), both issued in September 2022, Kenya made progress on some of the  recommended actions including making amendments to its AML/CFT legislation to bring its framework in closer compliance with the FATF recommendations and establishing a case management system to better manage its international cooperation requests. Namibia made progress on its MER’s recommended actions to ensure a common understanding of ML/TF/PF risk across key stakeholders as well as improve international cooperation. The document highlighted that Kenya and Namibia are to collaborate with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime.

In February 2024, the FATF removed Barbados, Gibraltar, Uganda and United Arab Emirates from the ‘Jurisdictions under Increased Monitoring’, hence these jurisdictions are no longer subject to increased monitoring.

To summarise, the countries in the ‘grey-list’ are currently:  Bulgaria, Burkina Faso, Cameroon, Democratic Republic of Congo, Croatia, Haiti, Jamaica, Kenya, Mali, Mozambique, Namibia, Nigeria, Philippines, Senegal, South Africa, South Sudan, Syria, Tanzania, Türkiye, Vietnam, Yemen.

With regards the ‘High-Risk Jurisdictions subject to a Call for Action’, often referred to as ‘blacklist’, no changes were noted. Hence, countries in the ‘black-list’ include Iran, Democratic People’s Republic of Korea (DPRK) and Myanmar.

At Compliance 360 we can assist you. We can ease the responsibility of monitoring for document updates and ensuring your JRA is promptly updated with each change.  We have developed a model which takes into consideration multiple reliable indices, covering more than 250 jurisdictions, and is continuously updated. Our assessment is based on the latest FIAU’s requirements and principles.

Contact us on info@compliance360.mt or 21360000 to receive further information on the JRA, or to explore other services offered by Compliance 360 Ltd.