Navigating FINTRAC's Advisory: Managing Financial Transactions with FATF High-Risk Countries

Staying informed about evolving global anti-money laundering (ML) and anti-terrorist financing (TF) risks is essential to maintaining your organization's integrity. On November 18, 2024, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) issued a detailed advisory following the Financial Action Task Force (FATF) plenary on October 2024, highlighting high-risk jurisdictions, enhanced due diligence requirements, and recent geopolitical developments. Here’s a breakdown of key takeaways and actionable insights for reporting entities.

High-Risk Jurisdictions Subject to a Call for Action

1. Democratic People’s Republic of Korea (DPRK)

The FATF continues to express grave concerns over DPRK’s persistent ML/TF deficiencies and its illicit activities, including the financing of weapons of mass destruction. Reporting entities must:

• Treat all transactions involving DPRK as high risk.

• Adhere to FINTRAC’s Ministerial Directive and operational alerts, ensuring heightened vigilance.

2. Iran

All transactions originating from or destined to Iran must be treated as high-risk. Reporting entities are required to:

• Treat every financial transaction originating from or bound for Iran, regardless of its amount, as a high-risk transaction

• Verify the identity of any client (person or entity) requesting or benefiting from such a transaction in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations

• Exercise customer due diligence, including ascertaining the source of funds or virtual currency in any such transaction, the purpose of the transaction and, where appropriate, the beneficial ownership or control of any entity requesting or benefiting from the transaction

• Keep and retain a record of any such transaction, in accordance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations; and

• Report all such transactions to FINTRAC

3. Myanmar

With increasing concerns about AML/ATF risks, transactions related to Myanmar demand enhanced due diligence. Entities must:

• Determine whether you are required to file a suspicious transaction report in respect of 1 or more financial transaction(s) or attempted financial transaction(s) emanating from, or destined to Myanmar; and

• Consider the geographic location of a person's or entity's activities as part of your risk assessment and to undertake mitigating measures, as applicable

Jurisdictions Under Increased Monitoring

FATF’s grey list identifies jurisdictions with significant deficiencies but committed to reform including Algeria, Angola, Bulgaria, Burkina Faso, Cameroon, Côte d’Ivoire, Croatia, Democratic Republic of the Congo, Haiti, Kenya, Lebanon, Mali, Monaco, Mozambique, Namibia, Nigeria, Philippines, South Africa, South Sudan, Syria, Tanzania, Venezuela, Vietnam, and Yemen, while Senegal is no longer subject to increased monitoring.

Key Geopolitical Updates Impacting Compliance

• Islamic State Designation: Canada expanded its list of terrorist entities to include the Islamic State and its affiliates. Businesses must report any property or transactions linked to these entities under the Criminal Code or UN resolutions.

• Sanctions Evasion Reporting: As of August 2024, reporting suspected sanctions evasion to FINTRAC is mandatory. This adds to existing obligations, such as monitoring for suspicious transactions, verifying client identities, and ascertaining the source of funds.

• High-Risk Jurisdictions: Enhanced due diligence is required for transactions involving regions like Afghanistan, Russia, and parts of the Middle East, where terrorist financing and money laundering risks are prevalent.

How Can Platino Consulting Help

To ensure compliance with FINTRAC's guidance and FATF advisories, Platino Consulting provides services in many areas of AML compliance, such as:

• Updating AML Policies & Procedures: Incorporating the latest jurisdictional risks into your risk assessment framework.

• Enhancing Training: Educating staff from our years of experience on detecting and reporting transactions involving high-risk jurisdictions.

• Strengthen Monitoring Systems: Use transaction monitoring tools to flag and review activities linked to flagged jurisdictions or entities.

• Sanctions Program Development: Build a sanctions compliance framework that aligns with Canada’s laws and FATF guidelines.

Why This Matters

With a deep understanding of Canada’s AML/ATF regulations and a proven track record of delivering results, we provide practical, actionable strategies to protect your business from regulatory penalties and reputational harm.

Don’t let compliance challenges hold your business back. At Platino Consulting, we specialize in helping businesses navigate complex ML/TF compliance landscapes. Contact us today to ensure your organization meets your regulatory responsibilities with confidence. Together, we’ll build a safer financial future for your organization.