AML High Risk Countries | Know Your Compliance Limited

High-Risk Countries Regulations

The Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024 came into force on 24th January 2024. It makes alterations to Regulation 33(3)(a) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR).

Prior to this date, countries posing a higher risk of money laundering were listed in Schedule 3ZA of the MLR. The new amendments have deleted this Schedule and now define a high-risk third country as ‘a country named on either of the lists published by the Financial Action Task Force’.

Who Are The FATF?

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The UK has been a member of the FATF since 1990. The force set international standards with the aim of preventing illegal activities and the harm they cause to society. The FATF maintain 2 lists of the countries who are considered high-risk for money laundering.

The FATF are a policy-making body and work with governments to improve or bring about national legislative and regulatory reforms in anti-money laundering controls. Businesses with obligations under the Money Laundering Regulations often refer to the FATF recommendations and standards as a resource for ensuring AML compliance.

Who Are The High-Risk AML Countries?

The AML high-risk countries lists published by the FATF are for high-risk and other monitored jurisdictions. The lists are regularly reviewed and updated by the FATF and firms with AML obligations must monitor the updates each month. At the time on publication (August 2024), the high-risk countries are as follows: –

Jurisdictions under increased monitoring – Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of the Congo, Haiti, Kenya, Mali, Monaco, Mozambique, Namibia, Nigeria, Philippines, Senegal, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, Yemen.
High-Risk Jurisdictions subject to a Call for Action – Democratic Republic of Korea, Iran, Myanmar.

Enhanced Due Diligence & Ongoing Monitoring

Enhanced Due Diligence (EDD) is often required for higher risk customers, business relationships and/or high-risk countries. It is an extra level of background, financial and status assessments and additional identity and verification checks. EDD is carried out in addition to the standard level of customer due diligence required under the MLR. It is essential where an individual or business presents increased exposure and/or a higher threat with regard to money laundering risks.

Regulation 33(1)(b) of the MLR requires businesses to apply enhanced customer due diligence and ongoing monitoring when dealing with a business or person established in a high-risk country.

Enhanced Due Diligence Checks Include (but are not limited to): –

Source of wealth/funds (i.e. property sales, inheritance, assets etc)
Scrutinising an individual’s position or employment.
Due diligence on family members and close known associates.
Transaction history and monitoring.
Enhanced referencing.
Obtaining purpose and reasons for certain transactions.
Onsite visits and physical audits.
Enhanced, ongoing monitoring of the business relationship.

AML Risk Assessment & Due DIligence Templates

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