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Update on High-Risk Third Countries: HM Treasury’s Latest Advisory Notice

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On 22 January 2024, HM Treasury issued a crucial update regarding High-Risk Third Countries (HRTC), marking significant changes to the definition and identification of such jurisdictions. This advisory notice, which came into force immediately, emphasises the need for financial institutions and businesses to stay informed and compliant with the latest regulations.

New Definition of High-Risk Third Countries

The recent amendment removes Schedule 3ZA, which previously contained the list of High-Risk Third Countries in the Money Laundering Regulations (MLRs). Instead, Regulation 33(3)a now defines HRTC based on lists published by the Financial Action Task Force (FATF). Specifically, a country is considered an HRTC if it appears on either of the following FATF lists:

  1. High-Risk Jurisdictions subject to a Call for Action.
  2. Jurisdictions under Increased Monitoring.

Firms are now required to directly refer to the FATF’s lists of ‘Jurisdictions Under Increased Monitoring’ and ‘High-Risk Jurisdictions subject to a Call for Action’ for up-to-date information on HRTCs.

FATF List Updates

The FATF updates its lists three times a year, coinciding with the conclusion of each FATF Plenary meeting in February, June, and October. HM Treasury will continue to release advisory notices following each plenary meeting, ensuring that businesses have the latest information to adapt their compliance measures accordingly.

Current High-Risk Third Countries

As of the most recent update on 27 October 2023, HM Treasury identifies the following countries as ‘High-Risk Third Countries’:

  • Barbados
  • Bulgaria
  • Burkina Faso
  • Cameroon
  • Croatia
  • DPRK (North Korea)
  • Democratic Republic of the Congo
  • Gibraltar
  • Haiti
  • Iran
  • Jamaica
  • Mali
  • Mozambique
  • Myanmar
  • Nigeria
  • Philippines
  • Senegal
  • South Africa
  • South Sudan
  • Syria
  • Tanzania
  • Turkey
  • Uganda
  • United Arab Emirates
  • Vietnam
  • Yemen

Financial Sanctions Measures

Additionally, certain jurisdictions are subject to financial sanctions measures, requiring firms to implement additional measures. These countries include:

  • DPRK (North Korea)
  • Democratic Republic of the Congo
  • Iran
  • Mali
  • Myanmar
  • South Sudan
  • Syria
  • Yemen

In light of these changes, it is imperative for businesses to regularly monitor the FATF lists and stay informed about updates from HM Treasury. Adhering to the new definition and promptly implementing necessary compliance measures will not only ensure legal adherence but also contribute to a robust global effort against money laundering and terrorist financing.

Neopay remains committed to providing support and guidance to firms navigating these regulatory landscapes to foster a secure and compliant financial environment. We can assist you in ensuring your systems and controls are adhering to the regulatory requirements and provide support in updating your financial crime framework. Contact us here to find out more.

 

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