By Jessica Caballero, CRCM, Senior Manager of Strategy and Evangelism, Banker’s Toolbox 

FinCEN Advisory Includes DPRK, Iran 

In an advisory issued on October 31, the Financial Crimes Enforcement Network (FinCEN) urged institutions to review and enhance their anti-money laundering (AML) program including policies, procedures and practices and their general risk-based approaches with respect to the relevant jurisdictions highlighted by the Financial Action Task Force (FATF). The two issuances of note in this advisory were the “FATF Public Statement” and the “Improving Global AML/CFT Compliance: Ongoing Process.”

In the Public Statement, FATF highlights the concerning deficiencies in AML and counter terrorism in the Democratic People’s Republic of Korea (DPRK) and Iran. FATF notes serious concerns around DPRK’s involvement in the proliferation of weapons of mass destruction and its financing. Prudent controls around enhanced due diligence (EDD) and OFAC will assist in compliance with this advisory as the U.S. Treasury maintains a robust sanctions program on known parties related to DPRK.

As Iran continues to move towards more diligent AML/CTF laws, FATF notes that many items from their previously instated action plan remain unaddressed. FATF expects Iran to be in line with FATF standards by February 2019 or further steps will be taken to protect the global financial system from the risks stemming from Iran’s deficiencies. As such, BSA professionals should continue to apply enhanced due diligence procedures including obtaining information on the reasons for intended transactions and inquiries into business and personal relationships with those in and around Iran. The U.S. Treasury warns against front and shell companies to exploit the financial system, specifically. Diligence around ultimate beneficial ownership is key to protecting your institution from these risks. Additionally, as with DPRK, keep up to date on sanctions related to individuals and businesses in and around these regions.

Read more about DPRK and Iran here.

In the second issuance, jurisdictions identified as having strategic AML/CFT deficiencies for which an action plan has been developed with FATF are outlined. FATF notes that each region listed does demonstrate a high-level political commitment to address deficiencies. FinCEN directs institutions to ensure due diligence programs, especially those addressing correspondent accounts with foreign institutions, including appropriate risk-based policies and controls to detect and report suspicious activity. Jurisdictions added since the June list include The Bahamas, Botswana and Ghana.

Read more on each jurisdiction’s specific deficiencies and action plans here.

As always, when jurisdictions are added or removed, BSA professionals should read FATF’s reasoning and make their own decisions when assessing risk. That means you should not blindly remove jurisdictions from what you consider areas of concern without considering your individual risk profile and customer base. Keeping up with updates from FATF and FinCEN are material to the success of your program.

As BSA professionals, you protect our nation every day. We thank you for that today and every day!

If you feel you need some extra help around your BSA/AML program or aren’t even sure where to start, give us a call. Our Professional Services team can work with you to assess your needs and create a plan to set you on the right path. Whether you need short-term help on a specific project or a long-term partner for ongoing assistance, your success is our number one goal.

– Jessica Caballero, CRCM

Caballero is a former OCC Examiner and currently Senior Manager of Strategy & Evangelism at Banker’s Toolbox. Banker’s Toolbox is the leading enterprise risk management solution for financial institutions, offering a suite of products to help mitigate risk and streamline compliance. The Banker’s Toolbox team, a unique combination of seasoned bankers, former regulators, and information technology consultants, specializes in designing, developing, and implementing risk management solutions while providing unparalleled customer service.