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Newsroom & speeches
21 November 2000
The Regulations permit UK financial institutions to rely on business being conducted with, or introduced by, countries with equivalent legislation and financial sector standards in a number of cases.
EU and FATF members
All member countries of the European Union (which, for this purpose, includes Gibraltar) are required to enact legislation and financial sector procedures in accordance with the European Money Laundering Directive. All EU member states therefore can be considered to have equivalent anti-money laundering measures to the UK unless otherwise stated below. In addition, countries which belong to the Financial Action Task Force (FATF) have committed themselves to implementing the FATF Forty Recommendations which in several respects are more wide ranging in nature than the provisions of the European Money Laundering Directive. Unless otherwise stated all FATF members can be assumed to pass the "equivalence test". All members of the European Union are also members of FATF. The EU/FATF countries judged to have equivalence status to the UK are listed below.
EU/FATF COUNTRIES/TERRITORIES WITH EQUIVALENT LEGISLATION AND FINANCIAL SECTOR PROCEDURES TO THE UK
| Argentina | France |
| Japan | Singapore |
| Luxembourg | Germany |
| Belgium | Spain |
| Mexico | Gibraltar |
| Brazil | Sweden |
| Netherlands* | Greece |
| Canada | Switzerland |
| New Zealand | Hong Kong |
| Denmark | Turkey |
| Norway | Iceland |
| Finlan | United Kingdom |
| Portugal | Ireland |
| Australia | United States of America |
| Italy |
*Including Netherlands Antilles and Aruba
The Isle of Man, Guernsey, and Jersey have all enacted 'All Crimes' anti-money laundering legislation and financial sector regulatory measures that are equivalent to the UK. They have also recently undergone positive mutual evaluations, approved by the OGBS Council. In view of this, and the fact that the three Crown Dependencies have not been classified as non-cooperative, the Isle of Man, Guernsey and Jersey can continue to be classed as having equivalence status with the UK.
2. Non-Cooperative Countries and Territories. In February 2000, FATF published a Report setting out the criteria for identifying those countries and territories which are not cooperative in the international fight against money laundering. In June 2000, following an evaluation of a number of countries against this set of criteria, the FATF published a list of jurisdictions that have been judged to meet these criteria, and which have therefore been identified as non-cooperative. The 15 jurisdictions are set out below. The FATF will continue its dialogue with these countries and the list will be reviewed on an on-going basis.
In October 2000, the FATF recognised the progress made by seven of the listed jurisdictions that have taken legislative steps to address the weaknesses identified in the FATF's report. The FATF set out details of these steps in its 5th October press release (link below).
When constructing their internal procedures, financial institutions should have regard to the need for additional due diligence for countries on this list. Additional monitoring procedures will also be required in respect of correspondent relationships with financial institutions from countries on the non-cooperative country list. Following its review, the FATF concluded that the original fifteen jurisdictions remain listed but UK financial institutions, in considering business relations with entities in the listed jurisdictions, may take into account the recent legislative changes when considering the need for additional due diligence.
NON-COOPERATIVE COUNTRIES AND TERRITORIES
| Bahamas* |
Nauru |
| Cayman Islands* | Niue |
| Cook Islands* | Panama* |
| Dominica | Philippines |
| Israel* | Russia |
| Lebanon | St. Kitts and Nevis |
| Liechtenstein* | St Vincent and the Grenadines* |
| Marshall Islands |
* Countries who have recently undertaken legislative changes, as identified by FATF.
In addition, three countries with material deficiencies in their anti-money laundering procedures have been the subject of advisory notices from FATF and the UK Government in recent years. One notice has since been rescinded (Seychelles). Financial institutions considering business relations and transactions with individuals and institutions based in those jurisdictions should be aware of the specific recommendations contained in these advisory notices when considering whether to accept business from them and whether to make suspicious transaction reports. The MLRO is not obliged to report all transactions from these countries to NCIS if they do not regard them as suspicious, and financial institutions are not required to avoid this business altogether. But where the economic purpose of the transaction is not clear, they should file a suspicious transaction report in the normal way.
It is incumbent upon institutions to ensure that due diligence procedures are rigorous when accepting business from any jurisdiction, whether listed below or otherwise, which does not have equivalent anti-money laundering legislation, and the principle that you should Know Your Customer should be central to all introduced business.
ANTIGUA AND BARBUDA
On 19 April 1999, HM Treasury issued a formal notice to financial institutions drawing attention to deficiencies in the anti-money laundering system in the Caribbean state of Antigua and Barbuda, affecting offshore institutions and institutions for which the Antiguan authorities have sole supervisory authority. Concern was expressed about amendments to the anti-money laundering law and to legislation governing international financial services in the state. These amendments strengthened bank secrecy, restricted co-operation with overseas law enforcement authorities and seriously eroded the ability of Antigua to counter the threat from money launderers. There were also, in HM Treasury's view, serious concerns about the independence and integrity of the system of financial regulation. Antigua and Barbuda have not been included on the FATF list of non-cooperative countries. Since the advisory notice was issued in April 1999, the government has enacted legislation aimed at removing the detrimental practices identified, with a view to securing the lifting of the advisory notice. In particular, the International Financial Services Regulatory Authority have been strengthened, with the introduction of an independent Board and Executive Director.
HM Treasury recognises the considerable efforts that the Government of Antigua and Barbuda has made since April 1999 to strengthen the system of supervision and control, with a particular view to strengthening anti-money laundering systems. Although it is too early to judge whether these new systems have been fully successful, it is clear that there has been a step-change in the culture of combating money laundering in the Government and supervisory structures. But as has been recognised by the Government of Antigua and Barbuda, there is still room for further improvement before the jurisdiction meets the highest standards of international anti-money laundering laws and practice.
While waiting for the new systems to bed down, and the final legislative changes to be made, the UK still believes that financial institutions should continue to undertake additional due diligence when accepting new business from the financial institutions in Antigua and Barbuda. In particular, UK financial institutions should be aware of concerns that there are serious risks associated with involvement in transactions linked to the off-shore gaming industry.
HM Treasury will continue to review the progress made in implementing reforms in Antigua and Barbuda.
AUSTRIA
In February 2000 the FATF expressed its deep concern regarding Austria's failure to take action to eliminate the anonymous savings 'passbook' accounts for which identification requirements are waived. FATF consequently called on all financial institutions to give special attention to transactions with bank cheques issued by Austrian banks and denominated in Austrian schillings. Austria has now issued a public statement and introduced legislation that contains a programme of measures that will eventually lead to the elimination of the anonymous passbook accounts. However, the first of the measures will not be implemented until 31 October 2000, and others not until June 2002. Consequently, the need to be cautious about bank cheques involving Austrian banks and denominated in Austrian schillings continues. The situation will be monitored to assess Austria's progress. SEYCHELLES. In June 1996 the FATF advised that in the light of the Seychelles Economic Development Act all transactions to or from the Seychelles should be subject to additional scrutiny to ensure that money laundering is not suspected. This act has now been repealed, and there is now no FATF or UK advice specific to the Seychelles.
Regular updates to Appendix D can be anticipated and these will be posted on the BBA public website (link below) and the BBA member website. MLROs are encouraged to review this website on a regular basis. We understand that, in due course, the FSA will be issuing its own advisory notes on the equivalence status of other countries.
