Four jurisdictions, including the Cayman Islands and Morocco, will undergo increased monitoring as they face pressure from a global watchdog to address deficiencies in their anti-money-laundering efforts.
The Financial Action Task Force, a Paris-based organization that sets anti-money-laundering law standards, on Thursday added Burkina Faso, the Cayman Islands, Morocco and Senegal to its list of jurisdictions under increased monitoring, joining 15 other countries. The identified deficiencies vary for each jurisdiction, but they include maintaining comprehensive beneficial ownership information and expanding the operations of countries’ financial intelligence units, according to FATF.
For instance, FATF in a report said the Cayman Islands government needs to impose effective administrative penalties and enforcement actions against entities involved in money-laundering violations, as well as implement adequate sanctions in cases where accurate and timely beneficial ownership information isn’t provided.
“The Cayman Islands are a major financial center; we expect from countries who have higher risks, we expect commensurate measures against these risks,” FATF President Marcus Pleyer said during a virtual press conference Thursday.
Being added to the so-called “grey list” means the four countries and territories will work with FATF on plans to address identified deficiencies in their counter-terror-financing regimes within agreed time frames and subject to extra checks, FATF said.
Pakistan, another country on the grey list, has made significant progress in improving its frameworks to counter illicit finance, including demonstrating that its law enforcement agencies were identifying and investigating terrorist finance activities and taking enforcement actions against violations of targeted financial sanctions, FATF said in a report. But Pakistan will remain on the list for increased monitoring; the country still needs to address deficiencies related to terrorist financing, according to FATF.
The Cayman Islands Monetary Authority and the Washington embassies for Morocco, Senegal and Pakistan didn’t immediately respond to requests for comment.
FATF, which evaluates anti-money-laundering and counter-terrorism-financing laws of 205 jurisdictions around the world, said the Covid-19 pandemic has impacted its evaluations of countries, delaying some of its on-site reviews.
“The FATF continues to monitor the risks of money laundering and terrorist financing connected with Covid-19 financial crimes,” Mr. Pleyer said.
The organization, however, was able to discuss a mutual evaluation report on New Zealand virtually, Mr. Pleyer said. After 14 months of work, the watchdog found that New Zealand’s measures to combat money laundering and terrorist financing are doing well, particularly in the areas of confiscation and recovery of criminal proceeds and international cooperation. But the country needs to focus on improving the availability of beneficial ownership information, according to FATF.
FATF also plans to release an update to its 2019 guidance on cryptocurrency regulations. Current guidance states that countries should adopt regulations requiring virtual currency companies—including exchanges and wallet providers—to collect information about their customers and share it with other institutions, including other crypto firms, that receive fund transfers.
The organization said that while the public and private sectors have made progress in implementing necessary cryptocurrency-related measures, it also revealed a need for guidance to address specific areas. FATF plans to publish the draft in March for public consultation and expects to approve the final guidance in June.
“We welcome the FATF’s actions to enhance operational efforts designed to identify terrorist financiers and develop additional guidance in consultation with the private sector on virtual assets and proliferation finance, two key priorities of the United States,” Treasury Secretary Janet Yellen said in a statement Thursday.