DFSA updates members on high-risk jurisdictions

Performing only a limited role in a trade transaction is not an excuse to absolve responsibility Paul Koster, CEO, DFSA. (EB FILE)

In a statement dated March 17, 2010, Paul Koster, Chief Executive of the Dubai Financial Services Authority (DFSA), has updated DFSA members on the recent actions of the Financial Action Task Force (FATF).

The FATF is the global standard setting body for anti-money laundering (AML) and combating the financing of terrorism (CFL).

According to the letter sent to the senior executive officers of DFSA-authorised firms, the FATF last month identified certain jurisdictions that have strategic deficiencies, as well as jurisdictions that are subject to an ongoing review process with the FATF.

The FATF provided a granular list of jurisdictions with various levels of strategic deficiencies to their AML/CFT regimes.

The first, or the highest risk jurisdictions are subject to an FATF call on its members and other jurisdictions to apply countermeasures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing risks emanating from the jurisdiction. Iran is currently the sole jurisdiction on that list.

"Enhanced due diligence and a high level of vigilance related to initial and ongoing customer due diligence are warranted with respect to customers, products or services with any jurisdiction noted on this list," Koster noted in his letter.

The second is a list of jurisdictions with serious strategic deficiencies that have no committed, high-level action plan to address these deficiencies.

The list includes Angola, Democratic People's Republic of Korea (North Korea), Ecuador and Ethiopia.

Third, the FATF has listed jurisdictions that it previously identified as having serious strategic deficiencies, but those that have a committed, high-level action plan to address the deficiencies.

This list currently included Pakistan, Turkmenistan and São Tomé and Príncipe.

Further, as part of its ongoing review of compliance with the AML/CFT standards, the FATF has identified certain jurisdictions that have developed an action plan with the FATF to rectify their strategic deficiencies.

These jurisdictions that are subject to an ongoing process of review include Antigua and Barbuda, Azerbaijan, Greece, Indonesia, Kenya, Qatar, Kenya, Morocco, Myanmar, Nepal, Nigeria, Paraguay, Qatar, Sri Lanka, Sudan, Syria, Trinidad and Tobago, Thailand, Turkey, Ukraine and Yemen.

"While this group of jurisdictions does not rise to the level of risk as the ones listed above, the DFSA does expect AFs [authorised firms], ASPs [ancillary service providers], RAs [registered auditors] and AMIs [authorised market institutions] to incorporate these jurisdictions in their risk-based programmes for AML/CFT," the DFSA's Kosters advised in the note.

The DFSA official notes in his letter that, according to the FATF guidelines, "Performing only a limited role in a trade transaction is not an excuse to absolve responsibility… If an originator, beneficiary or any counterparty to a trade transaction is in a jurisdiction that is identified by international bodies as having strategic deficiencies, a level of enhanced due diligence will apply".


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