Protecting international financial system from abuse

“current situation: Angola is a country of origin for women and children trafficked internally for the purpose of domestic servitude and young men trafficked for the purpose of forced agricultural labor; women and children, primarily, are trafficked to South Africa, the Democratic Republic of the Congo, Namibia, and Portugal; young boys are trafficked to Namibia to herd cattle; children are also forced to act as couriers in cross-border trade between Namibia and Angola as part of a scheme to skirt import fees”

“CIA World fact Book: Ecuador

Illicit drugs:

significant transit country for cocaine originating in Colombia and Peru, with much of the US-bound cocaine passing through Ecuadorian Pacific waters; importer of precursor chemicals used in production of illicit narcotics; attractive location for cash-placement by drug traffickers laundering money because of dollarization and weak anti-money-laundering regime; increased activity on the northern frontier by trafficking groups and Colombian insurgents (2008)”

“CIA World fact Book: Ethiopia

Illicit drugs:

transit hub for heroin originating in Southwest and Southeast Asia and destined for Europe, as well as cocaine destined for markets in southern Africa; cultivates qat (khat) for local use and regional export, principally to Djibouti and Somalia (legal in all three countries); the lack of a well-developed financial system limits the country's utility as a money laundering center”

“CIA World fact Book: Pakistan

Illicit drugs:

significant transit area for Afghan drugs, including heroin, opium, morphine, and hashish, bound for Iran, Western markets, the Gulf States, Africa, and Asia; financial crimes related to drug trafficking, terrorism, corruption, and smuggling remain problems; opium poppy cultivation estimated to be 2,300 hectares in 2007 with 600 of those hectares eradicated; federal and provincial authorities continue to conduct anti-poppy campaigns that utilizes forced eradication, fines, and arrests”

“CIA World fact Book: Turkmenistan

Illicit drugs:

 

transit country for Afghan narcotics bound for Russian and Western European markets; transit point for heroin precursor chemicals bound for Afghanistan”

The Financial Crimes Enforcement Network (FinCEN) is issuing this advisory to inform banks and other financial institutions operating in the United States of the risks associated with jurisdictions identified by the Financial Action Task Force (FATF)1 on June 25, 2010, as having deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes.2

The FATF public statement comes in response to the G-20 leaders' call for the FATF to reinvigorate its process for assessing countries' compliance with international AML/CFT standards and to publicly identify high risk jurisdictions.3 Also, in June 2010, the G-20 leaders called for FATF to issue regular updates on jurisdictions with strategic deficiencies.4 Specifically, the FATF's International Cooperation Review Group (ICRG) is tasked with leading this process to identify and examine uncooperative jurisdictions and jurisdictions that are failing to implement effective AML/CFT systems. At the June 2010 FATF Plenary, the FATF adopted the recommendations of the ICRG and publicly identified jurisdictions with strategic AML/CFT deficiencies. The FATF public statement classified these jurisdictions into two different categories based on their level of political commitment to address these deficiencies. The FATF public statement, which is reprinted below and can be found on the FATF website, cites specific concerns regarding each of the jurisdictions and calls for action on the part of FATF's members. This is an important step in our collective efforts to protect the international financial system from abuse.

Please note that the countries on this advisory have changed since our last pass through advisory. In particular, Angola, Ecuador, Ethiopia, Pakistan, and Turkmenistan have moved to a separate but related FATF document identifying jurisdictions with strategic AML/CFT deficiencies but which have provided a high-level political commitment to work with the FATF to address the deficiencies. Also note that FinCEN is issuing today a complementary advisory, FIN-2010-A009,5 which addresses jurisdictions identified in this separate FATF document.

FATF PUBLIC STATEMENT 25 June 2010

The Financial Action Task Force (FATF) 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 ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and, along with the FATF-style regional bodies (FSRBs), works with them to address those deficiencies that pose a risk to the international financial system. The FATF and the relevant FSRBs will continue to work with the jurisdictions below and report on their progress in addressing the identified deficiencies.”