FATF Adds New Countries to Financial Crime Prevention Deficiencies List

The Financial Action Task Force (FATF) has updated its list of countries with financial-crime-prevention deficiencies.

The international body announced after its meeting this week that it had added the British Virgin Islands and Bolivia to its list of “Jurisdictions Under Increased Monitoring.”

According to an announcement Monday (June 23) from the U.S. Financial Crimes Enforcement Network (FinCEN), countries on this list are those with “strategic deficiencies” in their anti-money laundering (AML), combatting the financing or terrorism (CFT) and counter-profileration financing (CPF) regimes.

These countries have also “committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline,” the agency said.

The FATF has also removed three jurisdictions from this list: Croatia, Mali and Tanzania, and said its list of “high-risk” jurisdictions is unchanged, with Iran, the Democratic People’s Republic of Korea (DPRK), and Burma subject to calls for action.

“Specifically, the FATF continues to call on jurisdictions to apply countermeasures on Iran and the DPRK,” the announcement said. “Burma remains subject to the application of enhanced due diligence, but not countermeasures.”

In other financial crime-related news, PYMNTS wrote earlier this month about the implications of a series of recent enforcement actions and data breaches on the emergence of the banking-as-a-service (BaaS) model for lending platforms.

“Generally speaking, BaaS links banks and FinTechs to payments and account functionalities, where the API connectivity means that their client firms need not obtain a banking charter,” that report said. “The nature of the third-party relationships — as banks bear liability for their FinTech collaborations — has been spotlighted by recent enforcement actions.”

Regulators have been especially focused on AML and know your customer (KYC) lapses, meaning banks must determine their FinTech partners are complying with relevant laws.

Self-policing has grown more important than ever, the report added, thanks to staffing pressures facing these regulators.

In the most recent audit of the agency, carried out earlier this year, there are remarks that “currently the FDIC faces risks in ensuring that it has examiners with the requisite skillsets to perform IT examinations using existing examination procedures.”

A total of 53% of examiners classified as “advanced IT subject matter experts” were eligible to retire this year, with retirement eligibility climbing to 63% for this population in 2028.

The audit added: “It is critical that the FDIC maps the interconnections of banks and their third parties to understand and examine potential operational points of failure and possible cyber intrusion and contagion.”