Iran has joined North Korea as one of the only two countries on the Financial Action Task Force (FATF) blacklist it was announced at the international money laundering and terrorist financing watchdog’s February plenary meetings.

Pakistan meanwhile received a further stern warning from the FATF that it still needs to tighten its anti-money laundering and counter financing of terrorism (AML/CFT) controls.

South Korea however has been commended by the task force for establishing a sound legal and institutional framework.

Iran blacklisted

In June 2016, the FATF granted Iran a reprieve from the blacklist after it committed to address strategic deficiencies in its anti-money laundering AML/CFT controls.

Having failed to do this, the FATF has reinstated countermeasures against Iran and called on its members to implement new measures, including increased supervisory examination of financial institutions based in Iran and tougher reporting mechanisms of financial transactions.

There is little doubt that the reinstated countermeasures will heighten Iran’s isolation in the global financial system.

Pakistan’s incomplete plan

Pakistan has been asked by FATF to complete its action plan. It has made progress in risk-based supervision and in pursuing domestic and international cooperation, but the watchdog says it needs to continue its work to address strategic deficiencies in other areas.

With all deadlines in its action plan now expired, and only 14 of 27 action items largely addressed, the FATF is strongly urging Pakistan to swiftly complete its full action plan by June 2020.

If it does not, the FATF may direct all jurisdictions to advise their financial institutions to “give special attention to business relations and transactions with Pakistan”.

South Korea

South Korea now understands its AML/CFT risks according to the FATF which says it now has a sound legal and institutional framework capable of “delivering some good results” in the financial sector.

But the country still needs to apply similarly rigorous AML/CFT measures to non-financial businesses, the FATF concluded.

Categories: Trade Based Financial crimes News