The Treasury's Financial Crimes Enforcement Network (FinCEN) issued a release describing changes finalized at the FATF plenary meeting in Paris this month.
The Financial Action Task Force (FATF), an intergovernmental body that sets global standards for anti-money laundering, countering the financing of terrorism, and countering proliferation finance (AML/CFT/CPF), has updated its lists of jurisdictions with strategic deficiencies. U.S. financial institutions should incorporate these updates into their risk-based policies and compliance procedures.
The FATF issued two statements: (1) Jurisdictions Under Increased Monitoring, which publicly identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline; and (2) High-Risk Jurisdictions Subject to a Call for Action, which publicly identifies jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply enhanced due diligence and, in the most serious cases, apply countermeasures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from the identified countries.
On February 21, 2025, the FATF added Laos and Nepal to its list of jurisdictions under increased monitoring, while removing the Philippines from this designation.
The FATF’s high-risk jurisdictions list remains unchanged. Iran, the Democratic People’s Republic of Korea (DPRK), and Burma remain subject to calls for action. FATF continues to urge the application of countermeasures against Iran and DPRK, while requiring enhanced due diligence measures for Burma without full countermeasures.
Financial institutions must comply with due diligence obligations per 31 CFR § 1010.610(a) and broader AML requirements under 31 U.S.C. § 5318(h). Correspondent accounts for foreign financial institutions (FFIs) require specific risk-based measures to detect and report suspicious activities. Money services businesses (MSBs) must maintain stringent controls when dealing with foreign agents and counterparties, as per FinCEN Interpretive Release 2004-1 and additional AML program guidance.
Financial institutions must comply with United Nations Security Council Resolutions (UNSCRs) implementing economic and financial sanctions, as well as Office of Foreign Assets Control (OFAC) sanctions programs.
Financial institutions should apply enhanced due diligence for jurisdictions subject to a call for action. Burma remains on the high-risk list, requiring proportionate risk-based measures. Institutions should refer to FinCEN and OFAC guidance on financial transactions involving Burma.
For DPRK and Iran, U.S. financial institutions must comply with existing FinCEN regulations and U.S. sanctions, prohibiting any correspondent accounts with North Korean or Iranian financial institutions.
Iran-Specific Measures: The National Security Presidential Memorandum (NSPM)-2, issued on February 4, 2025, enforces maximum pressure on Iran due to its nuclear and missile programs. U.S. financial institutions are broadly prohibited from engaging in transactions with Iranian entities, including those covered under Executive Order 13599 and 31 CFR Part 560. Additionally, under Section 311 of the USA PATRIOT Act, Iran remains a Jurisdiction of Primary Money Laundering Concern, with 31 CFR § 1010.661 prohibiting financial institutions from maintaining accounts for Iranian banks.
For jurisdictions removed from FATF monitoring, U.S. financial institutions should assess risk implications in accordance with 31 CFR § 1010.610(a) and 31 CFR § 1010.210.
As reported earlier the FATF concluded a plenary in Paris February 21.
During the plenary the FATF discussed ongoing work on evolving proliferation financing and terrorist financing risks, financial inclusion, and standards for domestic and cross-border payments, including agreeing to release draft updates for public consultation.
The FATF also agreed to consult the public on an initiative examining complex proliferation financing and sanctions evasion schemes.
This was the second FATF Plenary under the Presidency of Elisa de Anda Madrazo of Mexico. Delegates from the FATF’s Global Network of over 200 jurisdictions and observers from international organisations participated in three days of technical discussions to determine measures to address key money laundering, terrorism financing and proliferation financing issues.
After an extensive public consultation, the Plenary agreed changes to the FATF Standards to better support a risk-based approach and financial inclusion, a key priority under the Mexican Presidency.
It also finalised important work on combating financial flows related to online child sexual exploitation, with a report approved for publication next month, aiming to protect children from harm.
To support the implementation of the changes to the Standards around financial inclusion, the Plenary agreed to launch a further public consultation. The Plenary also agreed to consult publicly on work relating to payment transparency and complex proliferation financing and sanctions evasions, as the FATF continues to seek the widest possible range of views and perspectives to inform its work.
The FATF removed the Philippines from its increased monitoring following a successful on-site visit and updated its statements on ‘high-risk and other monitored jurisdictions’.
The Plenary also welcomed Kenya who was invited to participate at the FATF Plenary and Working Groups under the new guest initiative aimed at increasing inclusivity and better taking into account regional specificities at the FATF. Kenya joins the Cayman Islands and Senegal who began participating in the guest initiative in October 2024.
The suspension of the Russian Federation continues to stand.
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