AML Alert: Check lists of countries with deficiencies

The Jewelers Vigilance Committee advises that companies monitor the Financial Action Task Force’s lists of countries that aren’t completely cooperative with international anti-money laundering efforts.

Michelle Graff michelle.graff@nationaljeweler.com

One of the risks to consider when implementing an anti-money laundering program is the location of your counterparties, both vendors and customers. Some countries have more vigorous and cooperative engagement with international AML efforts than others.

Suzan R. Flamm (suzan@jvclegal.org) is assistant general counsel of the Jewelers Vigilance Committee

Because of that, it is critical that companies check watch lists that indicate the level of AML compliance of various countries. The Financial Action Task Force (FATF), an inter-governmental body that promotes AML compliance--as well as efforts to combat terrorist financing--maintains such lists.

Companies in the jewelry industry should determine, on a regular basis, whether any of their trading partners, accounts or distribution channels are located in countries that appear on current FATF lists. If they are, the next step is to assess the AML risks of doing business with the listed companies.

FATF maintains different lists of “High-Risk and Non-Cooperative Jurisdictions,” depending on the nature of the particular country’s AML/CFT deficiency, and whether the country is working with FATF to make corrections.

It is very important to be aware of these lists, which are updated regularly, as they include countries that produce precious stones, metals and/or finished jewelry. For current information be sure to check FATF’s website.

The FATF lists, as of February 2015, are detailed below.

Jurisdictions for which a FATF call for action applies
The first, and most serious, list is of jurisdictions that are subject to a FATF call for action.

In some cases, FATF has asked its members in the international community to apply countermeasures against countries on this list to protect the international financial system from significant risks of money laundering and terrorist financing. There are currently two countries on the list that fall into this category. Both are currently the subject of U.S. sanction programs:
-- Iran
-- North Korea

The other countries on this first list, while not subject to a call for countermeasures, have AML/CFT deficiencies and have not made much progress in addressing them.

FATF calls on its members to consider the risks arising from the deficiencies. This means that the shortcomings should be seriously evaluated when conducting an AML risk assessment involving companies or accounts based in the countries, or distribution channels through the countries. The countries in this category are:
-- Algeria
-- Ecuador
-- Myanmar (Note that,

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separately from AML/CFT considerations, a U.S. executive order bans the importation of rubies and jadeite from this country.)

Jurisdictions engaged in an ongoing process with FATF
The second FATF list is of countries that have AML deficiencies, but that have agreed to an action plan and have committed to work with FATF to make improvements.

The countries currently on this list are:
--Afghanistan
--Angola
--Guyana
--Indonesia
--Iraq
--Lao PDR
--Panama
--Papua New Guinea
--Sudan
--Syria
--Yemen

One country on this list has been identified as not having made sufficient progress: Uganda.

When conducting an AML risk assessment involving companies or accounts based in any of these countries, or distribution channels through these countries, the fact that the jurisdictions have AML/CFT deficiencies should be considered.

The risk assessment should also take into account that the listed countries are working with FATF to make improvements, and whether or not they are deemed to be making sufficient progress.

Several countries had been on this second list as recently as fall 2014 but are no longer subject to FATF’s compliance process. Those countries include: Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan and Zimbabwe.

Remember that AML compliance requires the periodic review of government watch lists that identify suspect entities and individuals and that identify countries with deficient AML/CFT practices, such as the FATF lists discussed here.

You can easily access the lists at JVCLegal.org by clicking “US & Int’l Lists & Forms” on the drop-down menu under the “AML” tab.

For questions about your anti-money laundering obligations, contact the JVC at askamlexpert@aol.com or 212-997-2002. Or, visit the website for information about our U.S. PATRIOT Act Compliance Kit and our AML testing services.

Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.