Global Financial Watchdog Calls for Enhanced Scrutiny of Business Ties with N. Korea and Iran

The Financial Action Task Force (FATF), a global financial watchdog, has issued a stern warning to its member countries to take immediate action against North Korea and Iran. The move is aimed at combating money laundering, terrorism financing, and weapons proliferation risks emanating from these countries.

North Korea: Enhanced Scrutiny of Business Ties

The FATF has urged its member countries to give special attention to business relationships with companies, financial institutions, and entities acting on behalf of North Korea. This includes:

• Enhanced scrutiny of transactions involving the Democratic People’s Republic of Korea (DPRK)
• Targeted financial sanctions in accordance with applicable United Nations Security Council resolutions

Iran: Failure to Complete Action Plan

Despite committing to addressing its strategic deficiencies in 2016, Iran is still considered a high-risk jurisdiction by the FATF. The country has failed to complete its action plan and:

• Has not enacted the Palermo and Terrorist Financing Conventions in line with FATF standards
• Has suspended counter-measures

FATF’s Call to Action

The FATF has called on its member countries to take the following actions:

• Require increased supervisory examination for branches and subsidiaries of financial institutions based in Iran
• Introduce enhanced reporting mechanisms
• Increase external audit requirements for financial groups with branches and subsidiaries located in Iran

Next Steps

If Iran ratifies the Palermo and Terrorist Financing Conventions in line with FATF standards, the FATF will decide on its next steps. Until then, the situation remains precarious:

• Iran will remain on the FATF’s statement on high-risk jurisdictions subject to a call for action
• The FATF remains concerned about terrorist financing risks emanating from the country and the threat this poses to the international financial system