Financial Crime World

Bhutan Falls Short on Terrorist Financing Prevention: RATINGS REVEAL LAPSES IN IMPLEMENTATION OF FATF RECOMMENDATIONS

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Bhutan, a small Himalayan kingdom, has failed to adequately implement measures to prevent terrorist financing, according to its Mutual Evaluation report. The report, released by the Financial Action Task Force (FATF), assesses Bhutan’s compliance with international standards for combating terrorist financing.

FATF Recommendations

The FATF recommendations provide a set of technical requirements that countries must implement to prevent and combat terrorist financing. Bhutan has been found wanting in several areas, including:

  • Assessing risk and applying a risk-based approach
  • National cooperation and coordination
  • Confiscation and provisional measures

Weaknesses Identified

The report highlighted several weaknesses, including:

  • Lack of a comprehensive risk assessment framework
  • Inadequate coordination between law enforcement agencies
  • Limited powers for supervisory authorities to take effective action against terrorist financing

Compliance Rating

Bhutan was found compliant in only one area - customer due diligence. It was largely compliant in four areas, including:

  • Financial institution secrecy laws
  • Record keeping
  • Reporting of suspicious transactions

However, it was partially compliant in 24 areas, including:

  • National cooperation and coordination
  • Confiscation and provisional measures
  • Targeted financial sanctions related to terrorism and terrorist financing

Oversight Concerns

The report also noted that Bhutan had not fully implemented measures to prevent the misuse of new technologies, such as virtual currencies. Additionally, law enforcement authorities have limited powers to seize assets linked to terrorist financing.

Call for Action

In a statement, the FATF called on Bhutan to address these weaknesses and implement the necessary reforms to effectively combat terrorist financing. The report’s findings are likely to raise concerns among international partners and financial institutions about the risks of doing business with Bhutan.