Circular to Licensed Corporations, SFC-licensed Virtual Asset Service Providers and Associated Entities
Anti-Money Laundering / Counter-Financing of Terrorism
(1) FATF Statement on High-Risk Jurisdictions subject to a Call for Action
(2) FATF Statement on Jurisdictions under Increased Monitoring
(3) Outcomes from the FATF Plenary, 26-28 June 2024
(1) FATF Statement on High-Risk Jurisdictions subject to a Call for Action
Further to our circular issued on 8 March 20241, the Financial Action Task Force (FATF) issued a statement on High-Risk Jurisdictions subject to a Call for Action on 28 June 2024, which can be found at https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/Call-for-action-june-2024.html. For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and, in the most serious cases, apply countermeasures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from those countries.
(i) Jurisdictions subject to a FATF call for applying countermeasures
Democratic People's Republic of Korea (DPRK)
The FATF reiterates its concerns over the DPRK’s continued failure to address the significant deficiencies in its anti-money laundering and counter-financing of terrorism (AML/CFT) regime and the serious threats posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction and its financing.
While the FATF has continually reiterated since 2011 the need for all countries to robustly implement the targeted financial sanctions in accordance with United Nations Security Council Resolutions (UNSCR) and apply countermeasures2 to protect their financial systems from the ML/TF/PF threat emanating from DPRK, DPRK has increased connectivity with the international financial system which raises proliferation financing risks3. The FATF therefore calls for greater vigilance and renewed implementation and enforcement of countermeasures against the DPRK.
Iran
Given Iran’s failure to enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, the FATF fully lifts the suspension of countermeasures and call on its members and urges all jurisdictions to apply effective countermeasures4.
The FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system until Iran implements the measures required to address the deficiencies identified with respect to countering terrorism-financing in the Action Plan.
(ii) Jurisdiction subject to a FATF call for applying enhanced due diligence measures proportionate to the risks arising from the jurisdiction
Myanmar
Given the continued lack of progress and the majority of the action items in relation to Myanmar’s strategic deficiencies still not addressed after a year beyond the action plan deadline, the FATF has called on its members and other jurisdictions to apply enhanced due diligence measures5 proportionate to the risk arising from Myanmar since October 2022. If no further progress is made by October 2024, the FATF will consider countermeasures.
(2) FATF Statement on Jurisdictions under Increased Monitoring
The FATF has issued an updated statement on Jurisdictions under Increased Monitoring6 with the addition of Monaco and Venezuela, and removal of Jamaica and Türkiye from the list. The statement can be found at https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/increased-monitoring-june-2024.html.
The FATF will closely monitor and continue to assess the progress made by these jurisdictions in addressing the identified strategic deficiencies in their AML/CFT regimes and encourages its members and all jurisdictions to take into account the information presented in the statement in their risk analysis. Licensed corporations, SFC-licensed virtual asset service providers and associated entities are reminded to browse the website of the FATF for the relevant information, including any updated statements issued by the FATF from time to time.
(3) Outcomes from the FATF Plenary, 26-28 June 2024
The FATF also published various outcomes of its recent Plenary which may be of interest to licensed corporations, SFC-licensed virtual asset service providers and associated entities. They include:
(a) the agreement on the publication of the report on the fifth annual update on jurisdictions’ progress on implementing the FATF Standards on virtual assets and virtual asset service providers.
The FATF noted that while some jurisdictions have made progress in introducing regulations and registering or licensing virtual asset service providers since the last update in June 2023, global implementation is still lagging. The FATF calls on all jurisdictions to act rapidly and fully implement the FATF’s requirements on virtual assets and virtual asset service providers. The report7 was published on 9 July 2024; and
(b) the agreement on having further dialogue with relevant bodies and experts in both the public and private sectors before finalising the proposed amendments to Recommendation 168 given the complexity of the requirements and potential impact.
Further information on the FATF Plenary’s outcomes can be found at https://www.fatf-gafi.org/content/fatf-gafi/en/publications/Fatfgeneral/outcomes-fatf-plenary-june-2024.html.
Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong at 2231 1569 who will assist in referring your queries to the relevant officer.
Intermediaries Supervision DepartmentIntermediaries DivisionSecurities and Futures Commission
End
SFO/IS/024/2024
1 Please refer to our circular issued on 8 March 2024 (https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/aml/doc?refNo=24EC13).2 The countermeasures listed by the FATF include terminating correspondent relationships with DPRK banks, closing any subsidiaries or branches of DPRK banks in their countries, and limiting business relationships and financial transactions with DPRK persons.3 The FATF highlighted that as set out in UNSCR 2270, DPRK frequently uses front companies, shell companies, joint ventures and complex, opaque ownership structures for the purpose of violating sanctions.4 The examples of the countermeasures can be found in the Interpretative Note to Recommendation 19 (https://www.fatf-gafi.org/content/dam/fatf-gafi/recommendations/FATF%20Recommendations%202012.pdf.coredownload.inline.pdf#page=89).5 The FATF requires that as part of enhanced due diligence, financial institutions should increase the degree and nature of monitoring of the business relationship, in order to determine whether those transactions or activities appear unusual or suspicious.6 The statement sets out the list of jurisdictions that have committed to resolve swiftly the identified strategic deficiencies in their regimes to counter ML/TF/PF within agreed timeframes and are subject to increased monitoring.7 The report can be found at https://www.fatf-gafi.org/content/fatf-gafi/en/publications/Fatfrecommendations/targeted-update-virtual-assets-vasps-2024.html.8 As set out in our circular issued on 8 March 2024, the proposed amendments aim to help make cross-border payments faster, cheaper, more transparent and more inclusive whilst ensuring AML/CFT compliance, and ensure that the FATF Standards remain technology-neutral (https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/aml/doc?refNo=24EC13).
留言