FATF Public Statement

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 works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions*.

Iran

Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies** The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Bolivia
Cuba**
Ethiopia
Kenya
Myanmar
Sri Lanka
Syria
Turkey


* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.
**Cuba has not engaged with the FATF in the process.


Iran

The FATF remains concerned by Iran’s failure to meaningfully address the on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. The FATF remains particularly concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2011.

Cuba

Cuba has not committed to the AML/CFT international standards, nor has it constructively engaged with the FATF. The FATF has identified Cuba as having strategic AML/CFT deficiencies that pose a risk to the international financial system. The FATF urges Cuba to develop an AML/CFT regime in line with international standards, and is ready to work with the Cuban authorities to this end.

Bolivia

Despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Ethiopia

Despite Ethiopia’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Ethiopia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ethiopia should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework and procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Ethiopia to address its remaining deficiencies and continue the process of implementing its action plan.

Kenya

Despite Kenya’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Kenya should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Kenya to address its remaining deficiencies and continue the process of implementing its action plan, including by implementing the AML legislation and operationalising the new AML Advisory Board.

Myanmar

Myanmar has taken steps towards improving its AML/CFT regime, including by clarifying the scope of the ML offence. Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken steps towards improving its AML/CFT regime, including by improving the ML and TF offences. Despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by working on CFT legislation. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

BIMSTEC agree on convention against terror

India and six other members of a grouping of South Asia and South East Asia today agreed to firm up by November a convention to deal collectively with terrorism which is haunting these two regions.

Under the proposed convention, the member-countries of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) would cooperate in intelligence sharing, legal and law enforcement issues, combating financing of terrorism and prevention of illicit trafficking of narcotic drugs, psychotropic substances and precursor chemicals.

"We expressed the hope that the draft BIMSTEC Convention be finalised as soon as possible for signing during the next BIMSTEC Summit," said the grouping which comprises India, Bangladesh, Sri Lanka, Myanmar, Nepal, Bhutan and Thailand in a joint statement issued after Foreign Ministerial meeting here.

The next Summit is expected to be held here in November this year.

In the field of trade and investment, the grouping resolved to conclude the negotiations on trade in goods under the proposed FTA at an early date, preferably before the next BIMSTEC Summit.

The Ministerial meeting also approved memoranda of association for setting centres for energy, weather and climate in India, tourism working group and BIMSTEC joint working group. PTI

Source: The Press Trust of India

Terror funds from across border

International Islamic terror is funded by a huge financial system. It has penetrated deep into the Indian system as well. The parallel economy has a lot to contribute to it.

There is nexus between smuggling, drug rackets, arms peddlers and hawala. Some part is played by black money also. The Financial Action Task Force (FATF), an inter-Governmental organization, to study terror finance has found that the terror masters use all financial and banking routes to support their activities. In other words, they use the international or national banking and financial systems. The FATF has been trying to cut the terror funding. So far, India is not a member of this organization.

Significantly, the terror financial mechanism extends to almost all activities. The terror outfits also raise funds from the public. Even black money is supposed to have a role in its sustenance. Besides, the role of charity and human rights organizations need to be under the scanner. It has been found that terrorists spend more on preparations so that the cost of the actual operations could be reduced, according to the FATF 2008 report.

The terror outfits have been investing in the Mumbai stock exchange and are stated to be active players in real estate. Their linkage with various building and construction companies needs to be probed. Does the real estate boom have a terror link?

International money laundering too has close links with terror and crime. It is estimated that 50 per cent of the US $950 billion money laundered is done by terror-related organizations. According to the UN Monitoring Committee estimates, smuggling funds 29 per cent, drugs 26 per cent, organized crime 24 per cent and financial frauds 21 per cent.

Importantly, the economics of terror extends to many activities in India . Sadly, however the Indian investigative agencies have done little either to study or penetrate these outfits. After 9/11 the US broke the funding links. The UK also has done it. But this is nowhere on the radar of our anti-terror mechanism.

Especially against the background that the Indian agencies are aware of the different modules that fund terror. The Mumbai police investigations found that the founder of the Indian Mujahideen Riyaz Bhatkal, had set-up a recruiting agency for the Gulf countries. He had recruited over 500 youth. This had earned him a huge sum both from the recruits and their employers. The agencies have not investigated whether the employers have links with terror outfits.

Not only that. The Madhya Pradesh Police found that SIMI's chief coordinator Safdar Nagori had held a youth camp at Indore in 2007. He had set a target of raising Rs one crore through donations and charity by mobilizing the youth.

In addition, major funding comes through fake currencies purportedly printed in neighbouring countries and circulated through them. In April last, one Naushad Alam Khan was held in Dhaka with Rs 50 lakh fake Indian currency notes. Khan, it was found, was a close aide of the Harket-ul-Jihadi's (HUJI) Bangladesh Chief Abdul Hanan. Many such fake currencies have been found in Nepal as well.

An ex-Punjab terrorist Kashmir Singh too was arrested in April with 50 kg heroin worth several crores in the international market. He is believed to be working for terror organizations. In the recent Mumbai attack, the terrorists used credit cards apart from other sources of funding.

The Taliban and Al Qaeda have always been raising funds through drug and arms peddling. It is said that it controls the drug triangle and the Myanmar-India-Afghanistan-Europe route.

Their operations reportedly have close links with different insurgent groups in Jammu & Kashmir, Manipur, ULFA and other insurgent groups in Assam and Tripura. They operate with close cooperation from their shadow organizations in Nepal and Bangladesh .

Additionally, the Naxalites get arms from myriad sources including China , Pakistan and Afghanistan . Not much study has been done of the finances of the Naxalites. Mere extortions and the poor-exploited people do not fund the billions of rupees spent by the Naxalites in their operations.

The US Commission for Studying the Funding Pattern of Terrorists has come out with a 155-page report. According to the US Federal Bureau of Investigation terrorists in the US have used almost all the available financial services at one time or the other. The US could confiscate properties worth US $850,000 having links to the Al Qaeda and related terror organizations.

The Commission revealed another pattern: terror outfits are acquiring properties and possibly are even active players in the real estate business. The US Administration is looking into the sub-prime crisis from this angle as well. It is also trying to find out how the penetration of these organizations had affected its economy.

Various estimates suggest that terror outfits spent about US $750,000 on eight operations. The US security agencies estimated, as per a Washington Times report on Nov 18 2001, that the 9/11 World Trade Centre attacks cost the terror outfits US $500,000. The UK home office said that the 7/7/2005 London transport system attacks cost the terrorists British pound 8,000. In 2004, the UN Monitoring Team estimated that the Madrid train blast cost US $10,000; the Istanbul truck blasts US $40,000; Jakarta Marriott Hotel blast US $30,000; Bali explosions US $50,000; and the attacks on the US embassies in Kenya and Tanzania US $50,000.

Clearly, India needs to do a study on the terror financial resources and swoop down on it. It needs a detailed and specific study to pinpoint the lacunae in the legal and financial system so that such funding could be throttled.

Shivaji Sarkar, -INFA

Source: Central Cronicle

India has working groups with 27 countries to counter terror

There are Joint Working Groups (JWGs) on Counter-Terrorism between India and 27 countries and regional organisations including the US, Germany, Pakistan and the European Union, Lok Sabha was told today.

As part of its global cooperation to counter terror, JWGs have been established with 27 countries and regional organisations to provide a forum to share information and assessments, technologies and strengthening of multi-lateral efforts to combat terrorism, Minister of State for External Affairs Preneet Kaur said while replying to a question.

Noting that JWG has served as a useful platform, she said it addresses common concerns such as drug-trafficking, financing of terrorism, bio-terrorism, aviation security, cyber security and extradition.

Other countries with which India have JWGs include France, Australia, Italy, Singapore, China, the UK, Egypt, Poland and Russia.

Nepal: Strip maps pertaining to 96 per cent of the Nepal-India boundary have been jointly finalised and initialled, Kaur said.

Both the countries have also agreed to establish local level mechanisms to address any boundary concerns, she said.

Myanmar: India and Myanmar are in discussions to undertake road projects including one from Zawkhather (Mizoram)/Rhi into Myanmar, Kaur said.

Besides providing a valuable cross-border link between India and Myanmar, these roads also enhance bilateral trade and tourism, she added.

Source: Business Standard

Myanmar private bank owner charged under money laundering laws

A Myanmar major private bank owner has been taken action under two domestic laws for being linked with narcotics and money laundering, the local Weekly Eleven News reported Monday.

U Tin Sein, owner of the Universal Bank sealed by the government in August 2005, was charged under the country's Narcotic Drugs and Psychotropic Substances Law and the Control of Money Laundering law, the report quoted Myanmar Police Chief Brigadier-General Khin Yi as saying.

Two other private banks, Myanmar Mayflower Bank (MMB) and Asia Wealth Bank (AWB), were closed earlier in March 2005 for being judged with linking with money laundering after investigation into the banks was made for the second time by a five-member preliminary investigation body headed by a deputy home affairs minister, Khin Yi said.

The two banks, established in 1994 and 1995 respectively, was first investigated by an eight-member government-formed investigation body in December 2003, the report said, adding that despite 15 months' probe into the matters, no firm evidence was found to prove the offense.

The U.S. Treasury Department, in November 2003, charged the two private banks with being institutions of "primary money laundering concern" and proposed that counter-measures be taken under the USA Patriot Act.

The then U.S. statement also accused Myanmar of taking no remedial action to address deficiencies in anti-money laundering system.

In June 2002, Myanmar promulgated a law to control money laundering, and financial institutions such as banks were set to report to the Central Control Board (CCB) their clients' fiscal activities and report any cashes exceeding 100 million kyats (100, 000 U.S. dollars) and any other suspicious account activities.

Meanwhile, the state-run Myanmar Economic Bank has rejected to offer bank services to deposits suspected as money laundering since December last year.

Private banks were nationalized in Myanmar in 1963 during the previous government but after the country started to adopt the market-oriented economic system in late 1988, private banks were allowed to operate again since 1992, and since then there had been 20 such banks across Myanmar with a total of 350 branches.

With the take-over of the three banks by the government and the merger of three other cooperative banks to become a public-listed bank in recent years, there remained 15 of such banks in operation as of the end of 2005.

Source: Xinhua

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ASEAN leaders agree to put teeth into group

By Bill Tarrant

CEBU, Philippines (Reuters) - Leaders of the Association of Southeast Asian Nations adopted on Friday bold proposals that could turn a group often derided as a talk shop to a rules-based bloc with bite.

The 10 leaders, whose members range from an absolute monarchy and military juntas to parliamentary democracies and one-party communist states, have agreed to start drafting a charter that would give ASEAN a legal basis for the first time since it was founded at the height of the Vietnam war nearly 40 years ago.

At a news conference to announce the decision, an ASEAN "Eminent Persons Group" said they studied the European Union as a reference, but that ASEAN would not become another Brussels.

"Since visiting the EU, I've become more conservative with ASEAN, because we learned that the EU is not that good an organisation that can be transferred to ASEAN," said former Malaysian deputy premier Musa Hitam.

The group will still take decisions by consensus for sensitive issues, but will conduct voting over non-controversial issues, according to a summary of the proposals.

The most ground-breaking proposal gives ASEAN the power to suspend, or in extreme cases, expel members for serious breaches of the charter.

Panel chairman and former Philippines president Fidel Ramos said an ASEAN charter will allow the group to compete as a bloc in the "new order" of the 21st century.

"We must reposition ourselves to be more competitive in a globalised economy and the new order of the 21st century."

CARING AND SHARING

The ASEAN leaders arrived in the central Philippines city of Cebu for a summit -- rescheduled from last month amid typhoon and terrorist warnings -- that aims to create a "caring and sharing" community in the region.

Men in traditional island gear stood atop a new convention centre in Cebu blowing conch horns. Women in flowing green gowns danced and twirled red umbrellas on the ground as presidents, prime ministers, a king and former generals pulled up in limousines.

Searchlights raked the night, filled with the sounds of beating drums and shrieking whistles in a cacophonous Filipino welcome.

A sudden downpour did little to dampen spirits for the biggest event in Cebu since Ferdinand Magellan ended his circumnavigation of the globe here in 1521, slain by a chieftain unhappy that his land was being claimed in the name of Spain.

The Philippines was on high alert after three bombings on Wednesday night, hundreds of miles to the south of the venue, killed eight people and wounded dozens.

Officials suspected Islamic militants and said the blasts were designed to embarrass the Philippines ahead of the ASEAN meetings and a broader East Asia summit next week. More than 13,000 police and troops have been deployed in and around Cebu.

The series of ASEAN meetings began with foreign ministers rebuking Myanmar on Thursday for dragging its feet on democratic reforms it has promised ASEAN it would take.

The new charter proposals could theoretically put Myanmar's membership in jeopardy if the junta continued to be recalcitrant.

The grouping, with a population the size of Europe's, plans to bring forward the establishment of an economic community from 2020 to 2015, according to a draft declaration.

ASEAN leaders will also discuss poverty alleviation in countries that have some of the globe's smallest per capita incomes, and disaster prevention in a region that has seen a devastating tsunami, earthquakes, volcanic eruptions, floods, forest fires and pandemics over the last couple of years.

Southeast Asian leaders will also sign a counter-terrorism agreement that will clamp down on the movement of arms and fighters between its remote islands through information exchange, border controls and a crackdown on terrorist financing.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

(Additional reporting by Carmel Crimmins, Manny Mogato, Chris Buckley, and Rosemarie Francisco)

© Reuters 2007. All Rights Reserved.

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Myanmar state bank rejects deposits suspected as money laundering

The state-run Myanmar Economic Bank (MEB) has rejected to offer bank services to deposits suspected as money laundering, the local Voice journal reported Monday, quoting the bank sources.

Previously, some MEB made no investigation on sources of money with which depositors opened their accounts, the report said.

In June 2002, Myanmar promulgated a law to control money laundering and financial institutions such as banks were set to report to the Central Control Board (CCB) their clients' fiscal activities and report any cashes exceeding 100 million kyats (100, 000 US dollars) and any other suspicious account activities.

In 2005, the Myanmar authorities closed three local private banks -- the Myanmar Mayflower Bank, the Asia Wealth Bank and the Universal Bank for allegedly linking with money laundering and the banks' operation has been taken over by the State Economic Bank.

Meanwhile, The CCB of Myanmar and the Anti-Money Laundering Office of Thailand reached a MoU on such cooperation in July 2005, which covers exchanging information on financial intelligence relating to money laundering.

Another MoU with Indonesia on the same purpose is also being expected to be initiated soon, local reports said, adding that once the document is formally signed, Indonesia will become another member country of the Association of Southeast Asian Nations (ASEAN) with which Myanmar cooperates in combating money laundering after Thailand.

As one of the international assistance in suppressing money laundering, Australia is funding Myanmar a 15-month project of developing guidelines for financial investigators of the country since October 2005, which has been under implementation by the Australian Transaction Reports and Analysis Center, according to the Financial Intelligence Unit of the Myanmar Home Ministry.

The project covers a series of workshops to train Myanmar officials in terms of technique for investigating money laundering, courses on online banking, electronic reporting, data analyzing systems and combating financial terrorism.

As part of its increased international cooperation in the aspects, Myanmar joined in signing the UN Convention Against Transnational Organized Crime in April 2004.

Private banks were nationalized in Myanmar in 1963 during the previous government but after the country started to adopt the market-oriented economic system in late 1988, private banks were allowed to operate again since 1992 and since then there had been 20 such banks across Myanmar with a total of 350 branches.

With the take-over of the three banks by the government and the merger of three other cooperative banks to become a public-listed bank in recent years, there remained 15 of such banks in operation as of the end of 2005.

Source: Xinhua

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