Listing to One Side

White list, grey list, black list, Franz Liszt.  Mention the word ‘list’ these days in the context of either money laundering or offshore financial services and you will find governments and regulators either clamouring to get on, or desperately trying to get off  them, depending on whether the list is ‘good’ or ‘bad’.  Such is the nature of the sometime one-dimensional debate that surrounds regulation.

However, on 18 February FATF (Financial Action Task Force), the global standard setting body for anti-money laundering and combating the financing of terrorism, released two documents which could probably best be described as a black list and a very dark shade of grey list.  It would appear that we are getting closer to the stage where we need a colour wheel which has every shade of every colour so that we can satisfy the international community’s desire to pigeonhole countries.

First, the bad news.  In a public statement FATF identified three categories of countries which have strategic deficiencies in their AML/CFT infrastructure.  Compared statements from various US bodies, the commentary FATF gives Iran is tame, referring to “Iran’s failure to meaningfully address the ongoing substantial deficiencies in its AML/CFT regime”, closing with the promise that “if Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in June 2010.”  Those who have had experience with OFAC, the arm of the US Department of the Treasury responsible for administering and policing sanctions unilaterally imposed by the US, will be a long way down this track already.  In the second category, Angola, North Korea and Ethiopia are identified as not having engaged in any meaningful way with FATF although Ecuador has, but has failed to commit to rectifying its deficiencies.  Finally, Pakistan, Turkmenistan and Sao Tome and Principe have engaged but are still a long way off satisfying FATF of substantive progress.

Next, the not so bad news.  In a document entitled “Improving Global AML/CFT Compliance : On-going Process”, FATF identifies a number of jurisdictions which have made a high level political commitment to address strategic deficiencies.  Implementation of action plans to address these deficiencies needs assistance and monitoring by FATF.  Whilst each jurisdiction has differing situations, the basic message is the same : “Good start, well intentioned, now keep on pressing ahead.”  Jurisdictions here include : Antigua and Barbuda, Azerbaijan, Bolivia, Greece, Indonesia, Kenya, Morocco, Myanmar, Nepal, Nigeria, Paraguay, Qatar, Sri Lanka, Sudan, Syria, Trinidad and Tobago, Thailand, Turkey, Ukraine, Yemen.

Despite the easy criticisms of the list approach, these documents are a valuable source of information for all those involved in AML/CFT.  If you are carrying out a risk based approach to CDD, then if these jurisdictions do not figure on your list of higher risk jurisdictions, they should do.

You can see the lists at:

FATF Improving Global AML / CFT Compliance

FATF Public Statement on Countries with Deficiencies in their AML & CFT Strategies

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