High Risk Countries & Counter Measures

The Financial Action Task Force (FATF) classifies high-risk jurisdictions as having significant strategic deficiencies in their regimes to counter money laundering (ML), terrorism financing (TF) and proliferation financing (PF).

 

For all high-risk countries, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence. In the most serious cases, it asks countries to apply counter-measures to protect the international financial system from on-going ML/TF/PF risks emanating from the high-risk country. Such countries are often referred to as being on the ‘FATF blacklist’.

 

A comprehensive list of high-risk jurisdictions can be found here

 

The enhanced due diligence measures that Financial Institutions and Designated Non-Financial Businesses and Professions should conduct, as set out in paragraph 20 of the Interpretive Note to Recommendation 10 of the FATF Recommendations, and other measures that have a similar effect in mitigating risks, can be found here

 

Counter-measures for high-risk countries:

All FIs, DNFBPs, and Virtual Assets Service providers and non profit organizations shall apply enhanced due diligence measures to all business relationships and transactions with jurisdictions on the Black List, including natural persons and legal entities and those acting on their behalf, in addition to the countermeasures listed below:

 

1. Supervisory authorities shall prohibit the establishment of any branches or representative offices for FIs, DNFBPs, and Virtual Assets Service providers subject to its supervision within jurisdictions on the Black List.
   
   
2. All FIs, DNFBPs, and Virtual Assets Service providers and non profit organisations shall comply with their internal reporting mechanisms on monitoring transactions and activities pertaining to jurisdictions on the Black List, and submit suspicious transaction reporting to the FIU where relevant, using the existing template pertaining to jurisdictions on the Black List reports in GoAML (High Risk Jurisdiction and High Risk Jurisdiction Activity).
   
   
3. All supervisory authorities in the UAE shall impose increased monitoring and supervisory examination for financial groups with respect to any of their branches and subsidiaries located jurisdictions on the Black List.
   
   
4. All FIs, DNFBPs, and Virtual Assets Service providers and NPOs are prohibited from relying on third parties located in jurisdictions on the Black List to perform their due diligence procedures.
   
   
5. All supervisory authorities in the UAE shall remind all FIs, DNFBPs, and Virtual Assets Service providers of the requirement to implement targeted financial sanctions requirements in accordance with applicable UN Security Council Resolutions and CABINET DECISION NO. (74) of 2020, to protect financial and non-financial sectors in the UAE from ML, TF, and proliferation financing risks.
   
   
6. All supervisory authorities in the UAE must take legal action against FIs, DNFBPs, and Virtual Asset Service Providers, including their directors and senior management, in the event of failure to implement the measures stipulated in this decision.

 

Countries Under Increased Monitoring & Counter Measures

 

Jurisdictions under increased monitoring work actively with the Financial Action Task Force (FATF) to address strategic deficiencies in their regimes to counter money laundering, terrorism financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving the identified strategic deficiencies swiftly within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the ‘FATF grey list’.

 

A comprehensive list of jurisdictions under increased monitoring can be found here.

 

The enhanced due diligence measures Financial Institutions and Designated Non-Financial Businesses and Professions should conduct, as set out in paragraph 20 of the Interpretive Note to Recommendation 10 of the FATF Recommendations, alongside other risk mitigation measures, can be found here.

 

Counter-measures for countries under increased monitoring:

FIs, DNFBPs, and Virtual Assets Service providers and non profit organisations in the UAE shall on a regular basis review the Gray List and weaknesses identified in it, and take them into account when devising and applying risk-based compliance measures.

 

Due diligence measures taken by FIs, DNFBPs, and Virtual Assets Service providers and non profit organisations shall in all cases be proportionate to the risks posed from business relationships and transactions with natural or legal persons from such jurisdictions and be effective to minimize such risks. The measures taken may require the application of enhanced customer due diligence depending on the circumstances referred to at paragraph 20 to the interpretive note of Recommendation 10 as well as Article (4) of the 2019 Cabinet Decision.