Key Jurisdictions Monitored by FATF in Asia, Middle East Improving AML Standards

Several influential jurisdictions in Asia, the Middle East and Africa have improved their standards at countering financial crime so much they will no longer be formally monitored by a global watchdog group.

The Paris-based Financial Action Task Force (FATF), which sets global anti-money laundering (AML) standards, stated last week that Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan and Zimbabwe have successful risen their cumulative financial crime standards to the point where they will not be residents of a multi-tiered blacklist created to pressure change.

Only one country, Uganda, actually fell in the rankings released by FATF at the end of its plenary session meeting.

The group noted that despite the country’s “high-level political commitment” to work with FATF and regional-style bodies to strengthen its “strategic deficiencies,” they are not satisfied Uganda has made sufficient progress.

To address the shortcomings, FATF wants to Uganda to make several core changes and upgrades in its financial crime frameworks.

Those moves include criminalizing terror financing and creating powers to trace and freeze terror assets, improve record-keeping requirements, create a financial intelligence unit to analyze and oversee the filing of suspicious transaction reports and draft laws to foster better cross-border sharing of information.

The widely-watched list is something banks the world over rely on and use as data points to gauge country financial crime risks.

The countries themselves named on the list typically try to get themselves into a milder category, or, ideally, off the list completely, as such a designation can also hurt trade, the desire for foreign business to be located in the region and can attract criminals looking for regions with lax financial crime controls, implementation, supervision or enforcement.

The list is broken up into several categories, with the worst being jurisdictions the FATF is calling on members to apply “counter-measures” to because the group believes these

jurisdictions represent “on-going and substantial money laundering and terrorist financing risks” to the world’s financial systems. Only Iran and North Korea hold this illustrious position.

Going a rung lower, the next category is jurisdictions with “strategic deficiencies” that have not made sufficient progress or have failed to commit to an FATF-approved “action plan.” Members are called to consider those risks when dealing with Algeria, Ecuador and Myanmar.

The final stratifications of the list center on countries that have strategic deficiencies, but do have an action plan and are making progress or, in the case of Uganda, are not making enough progress. Countries on this tier include Afghanistan, Iraq, Panama, Syria and Yemen.

The FATF is calling on the countries cited to “complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members” to consider that progress in their risk scoring and general dealings with these countries.