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Volume 3, Edition 1 Chatterbox 07/04/2020

Part Two: Regulatory Response

In Focus: FATF

Firms should cease transactions and cultural artefacts, ivory or other
consider filing a Suspicious Activity items related to protected species, or Mutual evaluations of the
Report where they cannot apply the archaeological, historical, cultural and Republic of Korea (Korea) and
necessary CDD obligations. religious significance. the United Arab Emirates

4. Regulation 30A imposes a new In these situations, the following EDD The FATF and the Asia/Pacific Group
requirement for firms to report any procedures will apply: on Money Laundering jointly assessed
Korea’s measures to combat ML
discrepancies they find between and TF. The Plenary discussed this
the information they hold on their • Firms are required to obtain evaluation and concluded that Korea
customers and that which is held in the additional information on the understands the risks it faces and
Companies House Register, including customer and beneficial owners, has a sound legal and institutional
anomalies in ownership structure, the intended nature of the business framework that is delivering some
beneficial owners and directors. relationship, the source of funds of good results.
the customer and the reasons for the
However, the country needs to
Interestingly the Regulation requires intended transactions; implement AML/CFT measures
this for new customers, but given the and supervision to non-financial
required outcome is for more accurate • Firms will have to carry out businesses, strengthen supervision,
information at Companies House it enhanced monitoring in relation to focus on preventing the misuse of
would seem sensible to extend this to any relevant transaction where either legal persons and arrangements for
reporting on existing customers. of the parties to the transaction ML and TF, and prioritise money
is established in a high-risk third laundering investigations and
5. Regulation 33 concerns the country. prosecutions.
management of high-risk situations. The Plenary also discussed the joint
• There is also now an explicit FATF-MENAFATF assessment of the
Under new rules Enhanced Due requirement to conduct EDD in any United Arab Emirates and concluded
Diligence checks may apply where at case where— that the country has implemented
least one of the following criteria is i. a transaction is complex or unusually many recent measures to strengthen
met: large, its system to combat ML and TF,
ii. there is an unusual pattern of including by developing a national risk
assessment, AML/CFT strategy and
• there are relevant transactions transactions, or effective measures to investigate and
between parties based in high-risk iii. the transaction or transactions prosecute TF.
third countries. have no apparent economic or legal
purpose. However, the country needs to
• the customer is the beneficiary of a refine its understanding of ML/TF
life insurance policy; • Firms will have to obtain senior risks, enhance ML investigations
management approval before entering and prosecutions, and international
• the customer is a third-country it to or continuing with a client cooperation. It should also better
focus on preventing the abuse of
national seeking residence rights or relationship involving a high-risk third legal persons and arrangements,
citizenship in exchange for transfers country. This was previously only supervision, and on ensuring that
of capital, purchase of property, required for PEPs and correspondent assets with links to terror or the
government bonds or investment in banking relationships. financing of weapons of mass
corporate entities; Theoretically, firms should be destruction are frozen without delay.
conducting EDD in such situations,
• non-face to face business but the MLR 2019 have now explicitly The reports were published in April.
relationships or transactions without required this. The full outcome of the February
certain safeguards; and Plenary session can be located here:
http://www.legislation.gov.uk/
• transactions related to oil, arms, uksi/2019/1511/contents/made https://www.fatf-gafi.org/publications/
precious metals, tobacco products, fatfgeneral/documents/outcomes-fatf-
plenary-february-2020.html

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