The global watchdog against money laundering and terrorist financing has maintained the Philippines and Vietnam on its “grey list” of jurisdictions subject to increased monitoring.
Among other measures taken in Singapore last week at a plenary session of the Financial Action Task Force (FATF), an intergovernmental organization that leads global action to combat financial crime, are the removal of Jamaica and Türkiye from its grey list and the addition of Monaco and Venezuela.
Iran, North Korea and Myanmar remain blacklisted as “high-risk jurisdictions subject to call for action” and the suspension of Russia – announced in February 2023, a year after its military offensive into Ukraine – has been maintained.
The three-day meeting of the Paris-based forum from June 26 to 28 was the sixth and final under the two-year presidency of T. Raja Kumar. A former deputy secretary at Singapore’s Ministry of Home Affairs, Kumar now serves as the ministry’s senior adviser on international affairs.
Delegates from more than 200 jurisdictions took part in the meeting that also discussed “proliferation financing” of weapons of mass destruction.
The task force in a statement says that the meeting reviewed the progress, since its last plenary in Paris in February, of 17 grey list countries – Bulgaria, Burkina Faso, Cameroon, Croatia, Democratic Republic of Congo, Haiti, Jamaica, Mali, Mozambique, Nigeria, Philippines, Senegal, South Africa, South Sudan, Tanzania, Türkiye and Vietnam.
And, while it updated statements on these countries, it deferred reporting on four others on the grey list – Kenya, Namibia, Syria and Yemen.
Philippines improving, but deadlines expired
On the Philippines, the task force says the country “has taken significant steps towards improving” its regime to combat money laundering and terrorist financing since 2021.
These include increased probes into money laundering and “prosecutions in line with risk”. They also include enforcing beneficial ownership transparency obligations and law-enforcement access to beneficial ownership data records.
At the same time, the task force notes that the Philippines is now supervising designated non-financial businesses and professions.
“[But] the Philippines should continue to work on implementing its action plan to address its strategic deficiencies,” it says, pointing to risks associated with casino junkets, false currency declarations and terrorist financing.
“The FATF urges the Philippines to swiftly implement its action plan to address the above-mentioned strategic deficiencies as soon as possible as all [action plan] deadlines expired in January 2023.”
Limited progress in Vietnam
On Vietnam, the task force sees “limited progress” since June last year when the country made a high-level political commitment to strengthen its regime.
“The FATF strongly encourages Vietnam to coordinate internally to demonstrate further progress on its action plan and share relevant information. […] Vietnam should continue to work on implementing its action plan to address its strategic deficiencies,” the task force says, outlining ten areas where it needs to take action.
These include increasing:
- Risk understanding, domestic co-ordination and cooperation
- International cooperation
- Risk-based supervision
- Virtual asset regulation
- Compliance in areas like money laundering, targeted financial sanctions, customer due diligence and suspicious transactions.
Other areas highlighted for improvement are:
- Outreach activities with the private sector
- Up-to-date information on beneficial ownership
- Ensuring independence of Vietnam’s Financial Intelligence Unit and enhancing its analysis
- Parallel financial investigations and prosecutions
- Monitoring to comply with targeted financial sanctions on proliferation financing.
Significant progress in Türkiye
On removing Türkiye from the grey list, the FATF welcomes the country’s “significant progress” in addressing deficiencies identified in 2021.
“Türkiye should continue to work with the FATF to sustain its improvements,” the task force says, highlighting the need for risk-based oversight of non-profit organizations to be in line with its standards.
Both Türkiye and Jamaica, which was also removed from the grey list, “have completed their action plans to resolve the identified strategic deficiencies within agreed timeframes and will no longer be subject to the FATF’s increased monitoring process.”
Good results in India, shortcomings in Kuwait
The meeting in Singapore also adopted mutual evaluation reports on India and Kuwait.
“India has reached a high level of technical compliance with the FATF requirements,” the statement says. The country is “achieving good results” in several areas. “However, improvements are needed to strengthen the supervision and implementation of preventive measures in some of the non-financial sectors.
“India also needs to address delays relating to concluding (money laundering) and (terrorist financing) prosecutions.”
In addition, the task force urges India to take risk-based approaches to non-profits from being abused for terrorist financing.
With regard to Kuwait, the plenary session concludes that the Gulf state has an “adequate legal and supervisory framework” to address money laundering, as well as terrorist and proliferation financing.
“But serious shortcomings remain,” the statement adds, “in terms of delivering effective outcomes.”
Kuwait should refine its understanding of risks, enhance investigations and prosecutions, and “ensure that assets with links to terror or the financing of weapons of mass destruction can be legally frozen without delay.
“Kuwait should also focus on preventing the misuse of legal persons and on applying targeted risk-based measures to protect the non-profit sector from (terrorist financing) abuse.”
The task force, it says, will publish reports on India and Kuwait after completing quality and consistency reviews.
North Korea, Iran countermeasures
On North Korea, the task force says the ability to assess proliferation financing risks has been “hampered” by the UN Security Council failing to extend the mandate of an expert panel following a Russian veto in May.
“Thus, the FATF will monitor the measures to comply with (North Korea) targeted financial sanctions and the implementation of countermeasures against,” the taskforce shares. “The FATF encourages its members and all countries to apply enhanced due diligence to (North Korea) and its ability to facilitate transactions on its behalf.”
As for Iran, the country will remain blacklisted until it completes an FATF action plan. “If Iran ratifies the Palermo and Terrorist Financing Conventions, in line with the FATF standards, the FATF will”, it says, “decide on next steps, including whether to suspend countermeasures.”
Until then, however, “the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system.”
Myanmar faces possible countermeasures
On Myanmar, the task force warns of possible countermeasures against the country in October if it doesn’t make progress in addressing deficiencies.
Blacklisted since 2021, the country is subject to “enhanced due diligence measures proportionate to the risks arising from the jurisdiction” rather than the more severe countermeasures imposed on Iran and North Korea.
“Myanmar’s overall progress,” the task force points out, “continues to be slow.” As part of enhanced due diligence, financial institutions are supposed to, it adds, “increase the degree and nature of monitoring of the business relationship to determine whether those transactions or activities appear unusual or suspicious.
“When applying enhanced due diligence measures, countries should ensure that flows of funds for humanitarian assistance, legitimate (non-profit) activity and remittances are not disrupted. If no further progress is made by October 2024, the FATF will consider countermeasures.”
The FATF was set up by the G7 in 1989. After Russia’s suspension last year, the task force now has 39 member countries, including nine in the Asia-Pacific region – Australia, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, New Zealand and Singapore. Thailand is notably absent.
Thai banks found financing junta
In a report released on June 26, the UN Human Rights Council found that exports of weapons and related items from Singapore-registered entities to Myanmar fell from almost US$120 million in 2022 to about US$10 million in 2023.
Over the same period, exports from Thailand-registered entities more than doubled – from just over US$60 million to nearly US$130 million.
“Many (State Administration Council) purchases previously made from Singapore-based entities, including parts for Mi-17 and Mi-35 helicopters used to conduct airstrikes on civilian targets,” the UN report notes, “are now being sourced from Thailand.”
Thai banks were found to have played “a crucial role in this shift”. The value of transactions related to Myanmar military procurement facilitated by Siam Commercial Bank alone were found to have jumped from US$5 million in 2022 to over US$100 million in 2023.
On June 28, the Thai Bankers Association reportedly said that “all” banks comply with Bank of Thailand and the Anti-Money Laundering Office regulations.
“Thai commercial banks,” the association was quoted as saying, “have a clear policy against supporting Myanmar’s military in purchasing weapons or military equipment.”
