December 7, 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 October 23, 2015.

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

In its October 23, 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 combatting 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 apply effective 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 financial transactions or attempted financial transactions.

Jurisdictions representing a risk arising from deficiencies

In its October 23, 2015 public statement, FATF calls on its members to consider the risks arising from the strategic AML/CFT deficiencies associated with the following jurisdiction that has not made sufficient progress in addressing the deficiencies: Burma (Myanmar).

FINTRAC is advising that reporting entities should consider giving special attention to financial transactions or attempted financial transactions related to Burma (Myanmar).

Other jurisdictions

In its October 23, 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, Algeria, Angola, Bosnia and Herzegovina, Guyana, Iraq, Panama, Papua New Guinea, Syria, Uganda and Yemen.

FATF is not yet satisfied that Lao PDR 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 February 2016, then FATF will identify Lao PDR 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 Lao PDR.

Ecuador and Sudan no longer subject to FATF monitoring process

FATF welcomed the significant progress of Ecuador and Sudan in improving their AML/CFT regimes. The jurisdictions have met their commitments in their action plans regarding the strategic deficiencies that FATF had identified. Ecuador and Sudan are therefore no longer subject to FATF’s monitoring process.

The FATF October 23, 2015 statements can be found at the following website: http://www.fatf-gafi.org/

Caribbean Financial Action Task Force (CFATF) public statement

Reporting entities should take note that, on November 26, 2015, the Caribbean Financial Action Task Force (CFATF), under a process that is separate and distinct from the FATF monitoring process, issued for the first time a public statement regarding the strategic AML/CFT deficiencies of Suriname.

Suriname has not made sufficient progress in addressing their significant AML/CFT deficiencies, including making certain legislative reforms. If specific steps have not been made by May 2016, then CFATF will identify Suriname as not taking sufficient steps to address its AML/CFT deficiencies. CFATF members will then be called upon to consider implementing counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Suriname. Further, CFATF will consider referring Suriname to the FATF International Cooperation Review Group (ICRG).

FATF action on the terrorist group Islamic StateFootnote 1

FINTRAC would like to reiterate the preceding statements issued by FATF, expressing its deep concern with the financing generated by, and provided to, the terrorist group the Islamic State (IS).

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

Accordingly, FINTRAC is reminding all reporting entities subject to the requirements of the PCMLTFA, of their obligationsFootnote 2 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 IS 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 financial transactions or attempted financial transactions.

On October 23, 2015, FATF also noted that terrorists financing remains a top priority given the terrorist threats posed most notably by IS and foreign terrorist fighters.

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

Additional information for reporting entities – Ministerial directives under Part 1.1 of the PCMLTFA

Part 1.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) entered into force on June 19, 2014. Part 1.1 authorizes the Minister of Finance to:

FINTRAC is responsible to monitor and assess compliance with directives, and will inform reporting entities when a directive has been issued. While the Minister of Finance has not yet issued a Directive, reporting entities should familiarize themselves with this new authority. Additional information is available on the Department of Finance website: http://www.fin.gc.ca/legislation/pcmltfa-lrpcfat-eng.asp.

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