The Financial Action Task Force (FATF) is the intergovernmental body responsible for setting international standards for the prevention of money laundering and terrorist financing (ML/TF). In this respect, the FATF monitors countries and jurisdictions to ensure the standards are effectively implemented or to identify counties that do not.

Further, the FATF maintains a list of jurisdictions under increased monitoring and a list of jurisdictions subject to a call for action. Both lists are reviewed during FATF’s plenaries and updated based on FATF’s findings or political and economic developments around the globe.

Jurisdictions placed under increased monitoring are jurisdictions identified with strategic deficiencies. These jurisdictions do not mandate the application of enhanced due diligence (EDD) measures or the rejection of customers originating from them. Yet, the FAFT calls for the application of a risk-based approach that considers the information provided in the risk analysis performed by obliged entities.

Often, these jurisdictions have committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and are subject to increased monitoring. This list is externally referred to as the “grey list”. Jurisdictions identified with strategic deficiencies that have been placed by the FATF under increased monitoring as of February 2023 are:

• Albania,
• Barbados,
• Burkina Faso,
• Cayman Islands,
• Democratic Republic of the Congo,
• Gibraltar,
• Haiti,
• Jamaica,
• Jordan,
• Mali,
• Mozambique,
• Nigeria,
• Panama,
• Philippines,
• Senegal,
• South Africa,
• South Sudan,
• Syria,
• Tanzania,
• Turkey,
• Uganda,
• United Arab Emirates,
• Yemen.

Jurisdictions no longer subject to increased monitoring due to progress in combating ML/TF are:

• Cambodia,
• Morocco.

On the contrary, high-risk jurisdictions subject to a call for action are those identified with significant strategic deficiencies in their regimes for countering ML/TF. For these jurisdictions, obliged entities are required to apply enhanced due diligence measures. The FATF lists the below three jurisdictions as high-risk:

• Democratic People’s Republic of Korea (DPRK),
• Iran,
• Myanmar.

Further to the above, the FATF proceeded with the suspension of the Russian Federation’s membership due to the ongoing crisis in Ukraine.

Obliged entities subject to the Prevention and Suppression of Money Laundering and Terrorist Financing Law of 2007, Cyprus Law 188(I)/2007 must consider the above information. This shall be reflected through the Anti-Money Laundering (AML) risk-scoring employed and the due diligence measures applied for customer onboarding and monitoring.

It is highlighted that deviation from the appropriate actions constitutes a violation of the said Law and can expose an entity to additional AML risk and administrative or criminal offences.

Contact us at info@salvusfunds.com if you have any questions or require support with your AML regulatory requirements; our Regulatory Compliance team is ready to help.

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