More risky than we thought

I am still catching up on my reading from last month, so please forgive me.  But a more eagle-eyed reader in Jersey spotted that the UK’s financial regulator, the Financial Conduct Authority, chose the summertime – 18th July to be precise – to publish its own list of high risk countries.  According to the FCA’s own press release on the matter, “We categorise the following countries in accordance with the current level of risk they pose to the FCA’s financial crime objectives linked to tackling money laundering, sanctions systems and controls, terrorist financing, and bribery and corruption.  Our assessment also considers the size of a country’s economy (GDP) or financial markets.”  There are two surprising things about this list, and one unsurprising thing.

The first surprising thing is that it is the FCA publishing the list, and not HM Treasury.  After all, it is HMT that transposes the FATF’s naughty list into UK obligation (as they did most recently here).  So what does this list mean for those covered by the UK’s AML regime but not regulated by the FCA – is it irrelevant, or will its very existence count against them if they have not thought to check FCA as well as HMT and their own trade body?  And what about other regulators in both the UK and overseas?  Will they start their own lists too?  And will they match?

The second surprising thing is the enormous length of the list.  There are 95 countries on it, out of a possible 200-ish in the world – so according to the FCA, half the world is high risk.  I know it’s not an exact science, but the basic bell-curve of distribution suggests that this is a bit much.

The unsurprising thing is that the US is not on the list, even with half the world making it on there.  Well, it’s surprising, when the US is the largest money laundering jurisdiction in the world, but it’s not surprising.  Oh, you know what I mean.   And I nearly forgot to give you the link to the list: here it is.

This entry was posted in AML, Due diligence and tagged , , , , , , , , . Bookmark the permalink.

12 Responses to More risky than we thought

  1. James Barclay says:

    Thanks for that Sue,

    I’d missed the press release myself, despite considering myself as having “eagle eyes” with regards all things regulatory. Typical FCA, buying such an important press release within the rest of their more mundane releases. Fair point regarding the USA but I can see the UK ever publically acknowledging that the US as a jurisdiction lacks sufficiently robust AML controls and standards.

    Best regards


    *From:* I hate money laundering [] *Sent:* 07 August 2014 11:25 *To:* *Subject:* [New post] More risky than we thought

    ihatemoneylaundering posted: “I am still catching up on my reading from last month, so please forgive me. But a more eagle-eyed reader in Jersey spotted that the UK’s financial regulator, the Financial Conduct Authority, chose the summertime – 18th July to be precise – to publish its”

  2. guernseyrose says:

    Reblogged this on compliance addict and commented:
    This might put things into a bit more of a spin from a UK licensed firm’s point of view – if the Financial Action Task Force don’t consider a country as high risk but the FCA does, there could suddenly be an awful lot of jurisdictions you deal with which are suddenly put into scope…

  3. Absolutely right, Guernseyrose – it’s the lack of clarity and concurrence that concerns and confuses me. (May have been carried away with the alliteration there!) We need to know the status of this list, and pronto.
    Best wishes from Susan

  4. I have just had the following comments from a client in Guernsey:

    “Firstly, there are the Countries which the FCA list which the Guernsey Financial Services Commission lists as good jurisdictions from an AML point of view (as they appear in the Appendix C Jurisdictions list): Bulgaria; Cayman Islands; Latvia; and South Africa.

    “Secondly, there is the notable omission in respect to the Central African Republic which appears on the UN sanctions list and on HM Treasury and EU sanctions lists but does not appear on the FCA list.

    “Thirdly, there are the total surprises which do not seem to be flagged by any other notable international authority, places such as Malaysia, Israel, UAE, Bahrain, and the Vatican City (maybe the FCA is the only authority hard enough to mess with God!).

    “And finally there are less reputable tax havens which seem to have been overlooked: Cook Islands, Belize, Delaware and Vanuatu to name but a few.”

    As predicted, the FCA list has caused more confusion than clarification.

  5. Pingback: Cayman news: Government “astounded” at being included on UK high-risk country list | Financial Secrecy Media Monitor

  6. Pingback: Now you see it… | I hate money laundering

  7. Gary OBrien says:

    I note that the High Risk Countries List mentioned is not currently available on the FCA site. Does anybody know why this is? Has anybody got a saved copy?

    • Hello Gary
      Yes: the FCA withdrew the list pretty sharpish after all the outcry. But I have truffled around for you, and this article about the list re-lists all of the countries:
      But do be aware that this is no longer the view of the FCA – they are remaining quiet about the issue of their view on which countries are high risk. This was their opinion in July 2014, but they are no longer expressing any opinion (publicly).
      Best wishes from Susan

      • Gary OBrien says:

        Thank you for the speedy reply and link to the associated article above.
        I also note the exchange of letters between FCA and Cayman Islands authorities (pingback above) and the FCA reply dated 12 August 2014 where they stand by their opinion and confidently affirm that the List is available to view on their website. I wonder when and why it was removed?

  8. It’s a bit of a mystery all round, Gary! James Barclay’s comment on this post might help:
    Best wishes from Susan

  9. Pingback: The FCA rows into high risk waters again | I hate money laundering

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.