LONDON – The UK Treasury has warned UK firms about the risks posed by unsatisfactory money laundering controls in Iran, Pakistan, Uzbekistan, Turkmenistan, Azerbaijan, and São Tomé and Príncipe. Separately, the Financial Action Task Force (FATF) has published a report on the rising risk of financial crime in the securities sector. The Treasury says it shares the concerns expressed by the FATF, which has drawn attention to deficiencies in these countries. The UK fully supports the work of the FATF and agrees with its assessment of the dangers of doing business with the listed countries, Treasury officials says. Iran is a big concern and firms should treat all transactions with it as “situations that can present a higher risk of money laundering or terrorist financing, and which therefore require increased scrutiny, enhanced due diligence and ongoing monitoring, particularly where correspondent relationships are involved, which have been highlighted as a particular risk,” the Treasury says. The Treasury has also called on financial firms to cease all business relationships and transactions with Bank Mellat and Islamic Republic of Iran Shipping Lines. The FATF has been concerned about Iran’s lack of co-operation and its failure to address ongoing and substantial deficiencies in its anti-money laundering (AML) and financial crime regime. It says firms should apply effective countermeasures to protect their financial sectors from risks emanating from Iran and protect themselves against the use of correspondent banking relationships that bypass or evade counter-measures and risk mitigation practices. The Treasury says firms should act on this advice in their systems and controls to counter financial crime and take appropriate actions to minimise risks. It reminds firms that UK AML regulations require them to put in place policies, procedures and systems to prevent money laundering or terrorist financing. They must apply enhanced customer due diligence and ongoing risk monitoring in “any situation that by its nature can present a higher risk of money laundering or terrorist financing,” the Treasury says. The FATF has expressed concerns about the approaching expiry of Pakistan’s Anti-Money Laundering Ordinance, and has urged Pakistan to implement a permanent AML/counter-terrorism financing (CTF) framework before the ordinance expires. The FATF also warns it would consider taking action to protect the financial system from money laundering and terrorist financing risk emanating from Pakistan in February 2010 if progress has not been made by that date. The UK Treasury points to continuing deficiencies in AML/CTF controls in Azerbaijan, Uzbekistan, Turkmenistan, and São Tomé and Príncipe, and says firms must take appropriate action to avoid risks. Securities sector risks In a separate report the FATF warns of the increasing threat of criminal and money-laundering activities in the securities sector. The recently published report, Money laundering and terrorist financing in the securities sector, outlines how criminals can use securities firms to launder money and finance terrorism, and how illicit funds can be generated through fraudulent activities. The report includes case studies that illustrate the risks associated with the various types of intermediaries, products, payment methods and clients involved in the securities industry. The report aims to show that the securities sector provides opportunities criminals can exploit due to the speed at which transactions are executed, the sector’s global reach and its adaptability. New products and services are constantly being developed in response to investor demand, market conditions and advances in technology, it says. Product offerings are vast and often complex, with some intended for sale to the general public and others tailored to the specific needs of a single purchaser. “A considerable number of transactions are conducted electronically and across international borders. All these characteristics make the securities sector attractive to those who would abuse it for illicit purposes.” More information about this report is available from the FATF secretariat. Email email@example.com....
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