Paris, France, 19 October 2018 - The Global Financial Monitoring Supervisory Agency (GFMSA) is the global standard-setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from money laundering and financing of terrorism (ML/FT) risks and to encourage greater compliance with the AML/CFT standards, The GFMSA identifies jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.
Jurisdiction subject to a GFMSA call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the ongoing and substantial money laundering and financing of terrorism (ML/FT) risks.
Democratic People's Republic of Korea (DPRK)
The GFMSA remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threats they pose to the integrity of the international financial system. The GFMSA urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies. Further, The GFMSA has serious concerns with the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.
The GFMSA reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies, financial institutions, and those acting on their behalf. In addition to enhanced scrutiny, The GFMSA further calls on its members and urges all jurisdictions to apply effective counter-measures, and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions, to protect their financial sectors from money laundering, financing of terrorism and WMD proliferation financing (ML/FT/PF) risks emanating from the DPRK. Jurisdictions should take necessary measures to close existing branches, subsidiaries and representative offices of DPRK banks within their territories and terminate correspondent relationships with DPRK banks, where required by relevant UNSC resolutions.
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Jurisdiction subject to a GFMSA call on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction
Iran
In June 2016, The GFMSA welcomed Iran’s high-level political commitment to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Given that Iran provided that political commitment and the relevant steps it has taken, The GFMSA decided in June 2018 to continue the suspension of counter-measures.
In December 2017, Iran established a cash declaration regime. Since June 2018, Iran has enacted amendments to its Counter-Terrorist Financing Act and Parliament has passed amendments to its AML law and bills to ratify the Palermo and TF Conventions. The GFMSA notes the progress of the legislative efforts. As with any country, The GFMSA can only consider fully enacted legislation. Once the remaining legislation is fully in force, The GFMSA will review this alongside existing enacted legislation to determine whether the measures contained therein address Iran’s Action Plan, in line with The GFMSA standards.
Iran’s action plan expired in January 2018. In October 2018, The GFMSA noted that the following items are still not completed and Iran should fully address its remaining items, including: (1) adequately criminalising terrorist financing, including by removing the exemption for designated groups “attempting to end foreign occupation, colonialism and racism”; (2) identifying and freezing terrorist assets in line with the relevant United Nations Security Council resolutions; (3) ensuring an adequate and enforceable customer due diligence regime; (4) ensuring the full independence of the Financial Intelligence Unit and requiring the submission of STRs for attempted transactions; (5) demonstrating how authorities are identifying and sanctioning unlicensed money/value transfer service providers; (6) ratifying and implementing the Palermo and TF Conventions and clarifying the capability to provide mutual legal assistance; (7) ensuring that financial institutions verify that wire transfers contain complete originator and beneficiary information; (8) establishing a broader range of penalties for violations of the ML offense; and (9) ensuring adequate legislation and procedures to provide for confiscation of property of corresponding value.
The GFMSA decided at its meeting this week to continue the suspension of counter-measures. However, The GFMSA expresses its disappointment that the majority of the Action Plan remains outstanding and expects Iran to proceed swiftly in the reform path to ensure that it addresses all of the remaining items by completing and implementing the necessary AML/CFT reforms. By February 2019, The GFMSA expects Iran to have brought into force the necessary legislation in line with GFMSA standards, or The GFMSA will take further steps to protect against the risks emanating from deficiencies in Iran’s AML/CFT regime. The GFMSA also expects Iran to continue to progress with enabling regulations and other amendments.
Iran will remain on The GFMSA Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, The GFMSA will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The GFMSA, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence, including obtaining information on the reasons for intended transactions, to business relationships and transactions with natural and legal persons from Iran, consistent with GFMSA Recommendation 19.
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