March 26, 2015 – FINTRAC Advisory

Financial transactions related to countries identified by the Financial Action Task Force (FATF)

In order to protect the international financial system from money laundering and terrorist financing risks, the Financial Action Task Force (FATF) issued two statements on February 27, 2015.

Islamic Republic of Iran and the Democratic People's Republic of Korea

In its February 27, 2015 public statement, FATF reaffirmed its particular and exceptional concerns about Iran's failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. FATF also reaffirmed its concerns about the Democratic People's Republic of Korea's (DPRK) failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. FATF reaffirmed the call on its members to strengthen preventive measures to protect their financial sectors from such risks.

Accordingly, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is reiterating to all reporting entities subject to the requirements of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) the risks of doing business with individuals and entities based in, or connected to, Iran and the DPRK.

FINTRAC is advising that reporting entities should consider the above when deciding whether to file a suspicious transaction report in respect of financial transactions or attempted financial transactions emanating from, or destined to, Iran or the DPRK. Reporting entities are also encouraged to undertake enhanced customer due diligence with respect to clients and beneficiaries involved in such transactions or proposed transactions.

Jurisdictions representing a risk arising from deficiencies

In its February 27, 2015 public statement, FATF calls on its members to consider the risks arising from the strategic AML/CFT deficiencies associated with the following jurisdictions that have not made sufficient progress in addressing the deficiencies, or that have not committed to an action plan developed with FATF to address the deficiencies: Algeria, Burma (Myanmar), and Ecuador.

FINTRAC is advising that reporting entities should consider giving special attention to transactions related to Algeria, Burma (Myanmar), and Ecuador.

Other jurisdictions

In its February 27, 2015 compliance document, FATF brought to the attention of its members several jurisdictions that have strategic AML/CFT deficiencies. The following jurisdictions have developed an action plan with FATF to address identified deficiencies and demonstrated some progress with the execution of their plans: Afghanistan, Angola, Guyana, Indonesia, Iraq, Lao PDR, Panama, Papua New Guinea, Sudan, Syria, and Yemen.

FATF is not yet satisfied that Uganda has made sufficient progress on its action plan agreed upon with FATF. If this jurisdiction does not take sufficient action to implement significant components of its action plan by June 2015, then FATF will identify Uganda as being out of compliance with its agreed action plan and will take the additional step of calling upon its members to consider the risks arising from the deficiencies associated with Uganda.

Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan, and Zimbabwe are no longer subject to FATF monitoring process

FATF welcomed the significant progress of Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan, and Zimbabwe in improving their AML/CFT regime. The seven jurisdictions have met their commitments in their action plan regarding the strategic deficiencies that FATF had identified. Albania, Cambodia, Kuwait, Namibia, Nicaragua, Pakistan, and Zimbabwe are therefore no longer subject to FATF's monitoring process.

The FATF February 27, 2015 statements can be found at the following website: http://www.fatf-gafi.org/

MONEYVAL Public Statement

The FATF brought to the attention of its members a statement issued on December 12, 2014 by the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), regarding concerns since December 2010 with deficiencies in the AML/CFT regime in Bosnia and Herzegovina. MONEYVAL has called upon Bosnia and Herzegovina to immediately and meaningfully address its AML/CFT deficiencies.

MONEYVAL Statement Bosnia and Herzegovina - December 2014

FINTRAC is advising that reporting entities should consider giving special attention to transactions related to Bosnia and Herzegovina.

FATF action on the terrorist group Islamic State of Iraq and the Levant

FINTRAC would like to reiterate the statement issued by FATF on October 24, 2014 expressing its deep concern with the financing generated by, and provided to, the terrorist group the Islamic State of Iraq and the Levant (ISIL).

On September 22, 2014, the Government of Canada updated the Criminal Code list of terrorist entities to include ISIL, which was previously known as Al Qaeda in Iraq.

Accordingly, FINTRAC is reminding all reporting entities subject to the requirements of the PCMLTFA, of their obligationsFootnote 1 to submit a terrorist property report if:

In this context, property includes any type of real or personal property. This also includes any deed or instrument giving title or right to property, or giving right to money or goods. A terrorist property report includes information about the property as well as any transaction or proposed transaction relating to that property.

FINTRAC is advising that reporting entities should consider the above when deciding whether to file a suspicious transaction report in respect of financial transactions or attempted financial transactions emanating from, or destined to, the jurisdictions under ISIL control and the surrounding jurisdictions. Reporting entities are also encouraged to undertake enhanced customer due diligence with respect to clients and beneficiaries involved in such transactions or proposed transactions.

On February 27, 2015, FATF issued a further statement on its actions relating to terrorist financing specifically on ISIL. The statement is available at the following link: http://www.fatf-gafi.org/documents/news/fatf-action-on-terrorist-finance.html.

Canada is a member of FATF and strongly supports its efforts to combat money laundering and terrorist financing.

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