FATF Adds Four Nations to ‘Grey List’, Seeks Input on Planned Recommendation Revision

The Financial Action Task Force (FATF) on Friday added Malta, Haiti, South Sudan and the Philippines to its list of jurisdictions requiring increased monitoring for their shortcomings in meeting international standards on fighting money laundering and terrorist financing.

As part of the designations, the jurisdictions agreed to take various remedial steps to address deficiencies identified by the  intergovernmental organization, including improvements to their registries of corporate beneficial owners. Malta, which as an EU member-state marks a rare inclusion on the so-called “grey list”, must also give its Financial Intelligence Unit a stronger role in supporting criminal tax and money laundering investigations and identifying related risks for law enforcement officials, FATF said.

The watchdog group called on the Philippines to tighten its risk-based supervision of Designated Non-Financial Businesses and Professions (DNFBPs), enhance its supervisory efforts to address the risks of casino junkets, penalize unregistered and illegal remittance operators, and amend its financial sanctions framework to address terrorist financing and the funding of weapons of mass destruction, among other measures.

Under the terms of its agreement with FATF, South Sudan is expected to apply for membership in the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), while both Haiti and South Sudan will step up their efforts to draft national risk assessments outlining their potential vulnerabilities to illicit finance.

The Paris-based organization, which removed Ghana from the grey list on Friday, declined to do the same for Pakistan despite heavy lobbying by the South Asian nation, which has been on the list since 2018. Under a new FATF action plan, Pakistan will seek to bolster its international cooperation on financial crime investigations, improve compliance efforts by DNFBPs, and more aggressively pursue prosecutions of suspected money laundering.

Financial institutions in the newly grey-listed nations are likely to face rising compliance costs as a result of the designations, with a similarly negative impact on international trade in the countries.

Malta’s inclusion has already sparked sharp criticism from officials in the island-nation, including Prime Minister Robert Abela, who characterized the decision as “unjust“, according to The Times of Malta. The news outlet subsequently reported that an “overwhelming majority” of FATF member-states opposed Malta’s grey-listing but were effectively overruled by representatives from the United States, United Kingdom and Germany.

As part of the plenary meeting concluded on Friday, FATF separately published a white paper for public consultation on its potential plans to call for additional oversight of foreign and domestic legal entities and steps to improve the accuracy of beneficial-ownership data included in national registries. The paper also questioned whether existing recommendations on bearer shares and nominee arrangements are sufficient to mitigate their vulnerabilities to criminal exploitation.

During the plenary, FATF member-states approved the following publication schedule for upcoming reports and guidance papers:

• 28 June: Report on Money Laundering from Environmental Crime
• 29 June: Guidance on Proliferation Financing Risk Assessment and Mitigation
• 30 June: Report on Ethnically or Racially Motivated Terrorism Financing
• 1 July: Report on Opportunities and Challenges of New Technologies for AML/CFT
• 1 July: Stocktake on Data Pooling, Collaborative Analytics and Data Protection
• 5 July: Virtual Assets: Adoption of Second 12-Month Review of Implementation

Read more about FATF’s plenary outcomes here

Source: riskscreen.com