FATF grey lists Bulgaria, approves UAE, Gibraltar for exit inspections

  • By:Melissa Speigner

The Financial Action Task Force (FATF) has grey listed Bulgaria and approved the UAE, Gibraltar among others for exit compliance inspection as four jurisdictions, namely Albania, the Cayman IslandsPanama and Jordan came off the list at the conclusion of its October 2023 plenary in Paris.

Grey listed South Africa was among the countries with a substantial  still ‘to-do’ list  despite having “taken steps towards improving its AML/CFT regime”.

The AML watchdog said in a statement on 27 October that 22 countries had their progress reviewed by the FATF since June 2023.

These were Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Democratic Republic of Congo, Gibraltar, Haiti, Jamaica, Jordan, Mali, Mozambique, Nigeria, Panama, Philippines, Senegal, South Africa, South Sudan, Tanzania, Turkey, UAE, and Uganda.

Cameroon, Croatia, Syria, and Vietnam “chose to defer reporting”, while following review, “the FATF now also identifies Bulgaria” for increased monitoring on the grey list.

FATF said Bulgaria had made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, and that since the adoption of its MER in May 2022, the EU country had made progress on its MER’s recommended actions to improve its international cooperation.

Bulgaria would implement FATF action plan by:

(1) implementing its national AML/CFT Strategy through adopting a comprehensive action plan;

(2) addressing the remaining technical compliance deficiencies;

(3) demonstrating initial implementation of risk-based supervision for postal money operators, currency exchange providers and real estate agents and establishing market entry controls for VASPs and postal money operators;

(4) ensuring that the beneficial ownership information held in the Register is accurate and up-to-date;

(5) completing the implementation of the automated system to ensure more automated prioritisation of STRs;

(6) improving investigations and prosecutions of different types of money laundering in line with risks, including high-scale corruption and organised crime;

(7) ensuring that confiscation is pursued as a policy objective;

(8) ensuring the ability to conduct parallel financial investigations in all terrorism investigations;

(9) addressing gaps in the TF and PF targeted financial sanctions (TFS) frameworks; and

(10) identifying the subset of NPOs most vulnerable to TF abuse and demonstrating initial implementation of risk-based monitoring to prevent abuse for TF purposes.

For the UAE , the FATF October 2023 plenary made the initial determination that it has “substantially completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future”.

UAE had made the following key reforms, including:

(1) increasing outbound MLA requests to facilitate ML/TF investigations;

(2) improving its understanding of ML/TF risks and implementation of risk-based CDD for DNFBP sectors, applying effective and proportionate sanctions for AML/CFT noncompliance involving FIs and DNFBPs, and increasing STR filing for those sectors;

(3) developing a more granular understanding of risk of abuse of legal persons and implementing risk-based mitigating measures to prevent their abuse;

(4) providing additional resources to the FIU to increase its capacity to provide financial intelligence to LEA and making greater use of financial intelligence, including from foreign counterparts, to pursue high-risk ML threats;

(5) increasing investigations and prosecution of ML in line with the country’s risk profile;

(6) ensuring effective implementation of TFS by sanctioning noncompliance among reporting entities and demonstrating a better understanding of UN sanctions evasion among the private sector.

Ahmed Ali Al Sayegh, UAE Minister of State, said he welcomed the on-site visit to verify the completion of the UAE’s International Co-operation Review Group Action Plan.

“The UAE looks forward to welcoming the FATF assessment team to the UAE, and further demonstrating the enhanced and sustained effectiveness of our AML/ CFT framework. Cooperation with strategic international partners is critical to contributing to the global effort to detect and disrupt all forms of financial crime.”

For Gibraltar the FATF made the similar initial determination that it had “substantially completed its action plan and warrants an on-site assessment to verify that the implementation of AML/CFT reforms has begun and is being sustained and that the necessary political commitment remains in place to sustain implementation in the future”.

Gibraltar had made the following key reforms, including: (1) applying effective, proportionate, and dissuasive sanctions for AML/CFT breaches in non-bank financial institutions and DNFBPs sectors; and (2) pursuing final confiscation judgments commensurate with the risk and context of Gibraltar.

In early reaction Nigel Feetham, Gibraltar’s Minister for Justice, Trade and Industry said: “Everyone in Gibraltar will be delighted by this news and warmly welcome this highly positive outcome,”

“I wish to thank all of those authorities who have worked tirelessly in this process and continue to support us in our work to address these action points and remove Gibraltar from the grey list at the earliest possible opportunity.

“We now look forward to welcoming the inspectors for the onsite visit in the coming months and the subsequent confirmation by FATF of Gibraltar’s removal from the grey list in February 2024.”

“We have totally committed to this process, and look forward to continuing to engage with the FATF as we further develop our strategies in our fight against economic crime.”

Elsewhere, South Africa had “taken steps towards improving its AML/CFT regime including by addressing technical deficiencies in its targeted financial sanction regime related to proliferation financing.”

But FATF further said South Africa “should continue to work on implementing its action plan to address its strategic deficiencies” with an eight point list of issues to address.

The full October 27 FATF updates on the 22  grey listed countries can be found here.

Posted in: Compliance & AML