FATF Issues Public Statement on North Korea, Iran, and Burma
Introduction
The Financial Action Task Force (FATF), an intergovernmental organization that sets international standards for combating money laundering, terrorist financing, and the proliferation of weapons of mass destruction, has issued a public statement following its recent plenary meeting. The FATF highlighted the growing financial connectivity between North Korea and the international financial system, and reiterated its concerns about North Korea’s failure to address significant deficiencies in its anti-money laundering/combating the financing of terrorism (AML/CFT) regime.
Requirements for US Financial Institutions
To protect the international financial system, US financial institutions must take into account these decisions and implement appropriate measures to prevent the use of their systems by individuals or organizations involved in illegal activities. This includes:
- Being aware of the risks associated with North Korea
- Implementing due diligence measures proportionate to the risk
- Consulting the entire range of FinCEN and OFAC guides on the treatment of transactions with North Korea
Countermeasures for High-Risk Jurisdictions
The FATF has identified several high-risk jurisdictions, including Burma. US financial institutions must continue to consult the entire range of FinCEN and OFAC guides on the treatment of transactions with Burma.
Specifically, for North Korea and Iran:
- US financial institutions must comply with the extended restrictions and prohibitions by the United States against opening or maintaining a direct or indirect correspondent account with North Korean or Iranian financial institutions
- The sanctions already exist and FinCEN regulations prohibit any relationship with these institutions
Blocked Property of Iranian Entities
The government of Iran and Iranian financial institutions remain subject to blocked property, as per Executive Order 13599 and the paragraph 560.211 of the Iranian Transactions and Sanctions Regulations (ITSR). US financial institutions and other American persons are generally prohibited from engaging in transactions or business with Iran, its government, and Iranian financial institutions, including opening or maintaining a correspondent account for these entities.
Evaluation of Risk
For jurisdictions removed from the FATF list, US financial institutions must take into account the FATF’s decisions and reasons behind the delisting when evaluating risks, in accordance with the obligations under 31 CFR § 1010.610(a) and 31 CFR § 1010.210.
Reporting Suspicious Activities
If a financial institution has knowledge, suspicion, or reason to suspect that a transaction involves funds derived from illegal activities or that the client has otherwise engaged in activities indicative of money laundering, terrorist financing, or other violation of federal law or regulation, the financial institution must file a suspicious activity report.
Contact Information
Questions or comments regarding this statement should be addressed to FinCEN’s Regulatory Support Section at frc@fincen.gov.