HM Treasury has published a new statutory instrument coming into force on 29th March 2022 which will substitute the list of high risk third countries specified in Schedule 3ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘MLRs’). This list continues to mirror both the Financial Action Task Force’s (FATF) ‘Jurisdictions under increased monitoring’ and ‘High-risk jurisdictions subject to a call for action’ documents. Following its most recent review, the FATF now also identifies the United Arab Emirates as high-risk. Following improvements in its AML regime, Zimbabwe is no longer subject to the FATF’s increased monitoring process.
The MLRs require the UK regulated sector to apply enhanced customer due diligence in relation to high-risk third countries. Regulation 33(1)(b) of the MLRs requires regulated businesses (“relevant persons”) to apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationships with a person established in a high-risk third country or in relation to any relevant transaction where either of the parties to the transaction is established in a high-risk third country. A high-risk third country is defined for the purposes of the MLRs as a country specified in Schedule 3ZA.
For these purposes, regulation 33(3) explains that:
- a relevant transaction means a transaction in relation to which the relevant person is required to apply customer due diligence measures under regulation 27
- being established in a country means:
i) in the case of a legal person, being incorporated in or having its principal place of business in that country, or, in the case of a financial institution or a credit institution, having its principal regulatory authority in that country; and ii) in the case of an individual, being resident in that country, but not merely having been born in that country.
In response to the latest FATF statements, HM Treasury advises firms to consider the following:
|HM Treasury Advice||Jurisdictions|
|The following jurisdictions will be included in Schedule 3ZA of the MLRs||Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, DPRK, Haiti, Iran, Jamaica, Jordan, Mali, Malta, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Senegal, South Sudan, Syria, Turkey, Uganda, United Arab Emirates ,Yemen|