Financial Crime World

Bhutan Placed on FATF’s List for Deficiencies in Anti-Money Laundering and Counter-Terrorism Financing Measures

Thimphu, Bhutan - The Financial Action Task Force (FATF) has placed Bhutan on its list of countries with deficiencies in implementing anti-money laundering and counter-terrorism financing measures. This move aims to curb financial crimes and terrorism financing.

Progress Made but Significant Improvements Required

According to the FATF’s Bhutan Follow-Up Report 2018, Bhutan has made some progress in implementing the technical requirements of the FATF Recommendations. However, significant improvements are still needed in several areas.

Areas for Improvement

  • Risk assessment and application of a risk-based approach (R.1)
  • National cooperation and coordination (R.2)
  • Measures against money laundering (R.3) and terrorist financing (R.5)

Partial Compliance and Non-Compliance

Bhutan has been found partially compliant with regards to:

  • Confiscation and provisional measures (R.4)
  • Targeted financial sanctions related to terrorism and terrorist financing (R.6), and proliferation (R.7)

However, it has been rated non-compliant for its laws on:

  • Financial institution secrecy (R.9)
  • Customer due diligence (R.10)

Additional Recommendations

The report also recommends improvements in:

  • Record keeping (R.11)
  • Politically Exposed Persons (PEPs) management (R.12)
  • Correspondent banking (R.13)
  • Money or value transfer services (R.14)
  • New technologies (R.15)
  • Wire transfers (R.16)
  • Reliance on third parties (R.17)

Additionally, Bhutan needs to:

  • Enhance internal controls and foreign branches and subsidiaries (R.18)
  • Improve reporting of suspicious transactions (R.20)
  • Increase transparency and beneficial ownership of legal persons (R.24) and arrangements (R.25)

Compliance with Regulation and Supervision

Bhutan has been found largely compliant with regards to:

  • Regulation and supervision of financial institutions (R.26)
  • Powers of supervisors (R.27)
  • Statistics (R.33)

However, it still requires improvements in several areas, including:

  • Financial intelligence units (R.29)
  • Law enforcement and investigative authorities (R.30)
  • Cash couriers (R.32)
  • International cooperation (R.37)

Deadline to Address Deficiencies

The FATF has given Bhutan a deadline to address these deficiencies. Failure to do so may result in further action against the country.