Paul|Weiss: IRS Proposes Favorable Changes to Sovereign Wealth Funds’ U.S. Tax Exemption

The IRS issued proposed regulations last week that will make it easier for sovereign wealth funds and other entities controlled by foreign governments to invest in private funds without jeopardizing their exemption from U.S. federal income taxation under Section 892 of the Code.

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Mauritius - Budget 2012: An Overview

“Growth for the greater good and seizing all opportunities to create more wealth for our country and a better life for all our citizens”, this in the words of the Vice-Prime Minister and Minister of Finance and Economic Development, Mr Xavier Luc Duval, is the underlying the philosophy of the 2012 budget. The budget was presented to the National Assembly on 4 November.

The budget outlines an intensive approach for export promotion and market development. Besides promoting the opening of the economy it also makes bold adjustments to tax policy which promotes rather than inhibits growth and social justice. The budget announces institutional reforms to further embed efficiency and good governance.

The economy is forecast to register a growth rate of 4 percent. The budget will raise revenue of Rs 76.9 billion of which Rs 16.4 billion from income taxes, Rs 44.4 billion from indirect taxes, and Rs 3.4 billion rupees from grants and other budget support.

Expenditure will amount to Rs 90.5 billion and as a result, the budget deficit for 2012 will be 3.8 percent of GDP. Government is reducing the public sector debt to GDP ratio to 54.1 percent in 2012 and is well on course to the 50 percent debt to GDP objective set in the law and to be achieved by 2018.

In a bid to boost Mauritius as a quality destination for foreign direct investment aggressive campaigns will be held in traditional markets in Europe and the USA. More focused promotion campaigns are scheduled in India, China, and Africa, where the potential is unfolding at a rapid pace.

As regard the internationalization of the economy two roving ambassadors will be appointed for Africa and the Indian Ocean. They will assist in widening the network of Double Taxation Avoidance Agreements and Investment Promotion and Protection Agreements with African states.

The budget makes provision to broaden the scope for investment at home by Government disinvesting from some of its commercial and industrial assets. The aim is three-fold: make better use of Government assets to generate wealth and employment, raise revenue to invest in new strategic sectors, and offer better facilities to the public.

A Resilience Plan has been designed for the next three years covering enterprises of all sizes with special focus on SMEs, infrastructure development and job creation. It is made up of four strategies: support enterprises at the microeconomic level; investments of Rs 21.2 billion for key infrastructure projects; further build up the stability of our financial system; and setting up of a necessary mechanism for determining, with the Bank of Mauritius, the accepted range of the rate of inflation.

“This is a Budget about making things happen. It is a credible plan to fight exclusion, combat absolute poverty, democratise the economy, create more jobs, bolster the confidence of businesses and set a strong base for sustainable development”, said Mr Xavier Duval.

G20: Tax Havens and Non-Cooperative Jurisdictions

Since 2008, the G20 has been the main political driving force behind action to counter tax havens and non-cooperative jurisdictions. The international conference held by France and Germany in October 2008 followed by the G20 Summit in London in 2009 marked a major milestone by stating for the first time that non-cooperative jurisdictions are a threat to the international financial system and our public finances. Three processes were set up (see details below) to objectively identify non-cooperative jurisdictions and urge them to comply with the international standards on transparency and information exchange.

The G20 in Cannes has fully reviewed these processes. This is an extremely tricky exercise as it calls for a collective judgment on certain extremely reluctant countries.

1. In tax matters, G20 action has prompted a first with the signing of a wave of over 700 tax information exchange agreements. The Global Forum (OECD body working on tax transparency and now counting 105 members) is responsible for checking that each country (i) has a legal framework for the exchange of information for tax purposes (phase 1 review) and (ii) that this legal framework is effective (phase 2 review). To date, 59 jurisdictions have been assessed. Full findings are detailed in the Global Forum’s public report, which identified 11 jurisdictions with serious shortcomings:

• Antigua and Barbuda, Barbados, Botswana, Brunei, Panama, Seychelles, Trinidad and Tobago, Uruguay, and Vanuatu do not have a suitable legal framework for the exchange of tax information and do not qualify for the phase 2 review;
• Switzerland and Liechtenstein do not qualify for phase 2 until they remedy certain deficiencies identified by the Global Forum;
• 24 other jurisdictions have a number of sizeable deficiencies, but are entitled to embark upon the phase 2 review: a further 16 present more minor failings, and eight countries have no shortcomings (including France).

The Global Forum’s assessments cover nearly 400 recommendations, intended for the jurisdictions to conduct the reforms required to increase their tax transparency. For example, Belgium has lifted its banking secrecy, the Cayman Islands have introduced new accounting obligations, and the British Virgin Islands have scaled up their tax administration’s powers. This is a long battle that we need to fight tirelessly if we are to obtain results.

Cannes has also rallied all the G20 countries to the multilateral convention on mutual administrative assistance in tax matters. This new convention is set to have a new knock-on effect, especially on developing countries, as it provides access to a tax information exchange network that includes the leading economies.

2. In financial regulation and supervision (banks, insurance and financial markets), the Financial Stability Board (FSB) is assessing the compliance of countries with international standards on cooperation and information exchange between supervisors. The FSB has already analyzed the situation of the 61 countries with the leading financial systems – including all the G20 members. The evaluations to date show that:

• 41 of the 61 countries evaluated satisfactorily apply the international standards;
• 18 are in an intermediate situation (either the assessment of one or more sectors has found shortcomings that are being corrected, or the assessment is incomplete or out of date, but the country is cooperating to bring itself into compliance);
• 2 countries, Libya (former authorities) and Venezuela, refused to talk to the FSB and are accordingly deemed non-cooperative jurisdictions. The FSB continues to seek dialogue with these authorities, but is also prepared to use countermeasures if necessary.

3. In action to counter money laundering and the financing of terrorism, the FATF has identified 12 jurisdictions whose strategic deficiencies constitute a threat to the international financial system and which the States are advised to take into account:

• Iran and North Korea present the most serious deficiencies and the FATF has explicitly called for countermeasures to be taken against these non-cooperative jurisdictions (“enhanced due diligence” procedures by the banks).
• Cuba, Bolivia, Ethiopia, Kenya, Myanmar, Nigeria, Sao Tomé & Principe, Sri Lanka, Syria, and Turkey have made what the FATF considers to be insufficient progress.

In a second document, the FATF lists the 28 countries with strategic deficiencies that have embarked upon a process to solve these deficiencies with the FATF.

In Cannes, the G20 countries have solemnly recommitted to promote compliance with the international tax and financial information exchange standards and to use all the countermeasures available to them to combat tax havens and non-cooperative jurisdictions that do not comply with these standards.

In tax matters, the countermeasures include tax penalties on counterparties in transactions with tax havens.

Taking this action forward, the G20 has called on the FATF and the OECD to step up their joint work on corporate and trust transparency in tax and money laundering matters.

G20 Cannes summit - Tackling tax havens and non-cooperative jurisdictions

We are committed to protect our public finances and the global financial system from the risks posed by tax havens and non cooperative jurisdictions. The damage caused is particularly important for the least developed countries. Today we reviewed progress made in the three following areas:

• In the tax area, the Global Forum has now 105 members. More than 700 information exchange agreements have been signed and the Global Forum is leading an extensive peer review process of the legal framework (phase 1) and implementation of standards (phase 2). We ask the Global Forum to complete the first round of phase 1 reviews and substantially advance the phase 2 reviews by the end of next year. We will review progress at our next Summit. Many of the 59 jurisdictions which have been reviewed by the Global Forum are fully or largely compliant or are making progress through the implementation of the 379 relevant recommendations. We urge all the jurisdictions to take the necessary action to tackle the deficiencies identified in the course of their reviews, in particular the 11 jurisdictions whose framework does not allow them at this stage to qualify to phase 2. We underline in particular the importance of comprehensive tax information exchange and encourage competent authorities to continue their work in the Global Forum to assess and better define the means to improve it. We welcome the commitment made by all of us to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and strongly encourage other jurisdictions to join this Convention. In this context, we will consider exchanging information automatically on a voluntary basis as appropriate and as provided for in the convention;
• In the prudential area, the FSB has led a process and published a statement to evaluate adherence to internationally agreed information exchange and cooperation standards. Out of 61 jurisdictions selected for their importance on several economic and financial indicators, we note with satisfaction that 41 jurisdictions have already demonstrated sufficiently strong adherence to these standards and that 18 others are committing to join them. We urge the identified non-cooperative jurisdictions to take the actions requested by the FSB;
• In the anti-money laundering and combating the financing of terrorism area, the FATF has recently published an updated list of jurisdictions with strategic deficiencies. We urge all jurisdictions and in particular those identified as not complying or making sufficient progress to strengthen their AML/CFT systems in cooperation with the FATF.

We urge all jurisdictions to adhere to the international standards in the tax, prudential and AML/CFT areas. We stand ready, if needed, to use our existing countermeasures to deal with jurisdictions which fail to meet these standards. The FATF, the Global Forum and other international organizations should work closely together to enhance transparency and facilitate cooperation between tax and law enforcement agencies in the implementation of these standards. We also call on FATF and OECD to do further work to prevent misuse of corporate vehicles.

Bedell Trust launches Bedell Management Services (Mauritius) Limited

Bedell Trust is strengthening its presence in Mauritius, widely recognised as an increasingly sophisticated international finance centre.

Bedell Management Services (Mauritius) Limited is a full service management company, providing corporate, trust and fund administration services. Its range of expertise complements the legal advice provided by Bedell Cristin (Mauritius) Partnership, which opened in November 2010 and has swiftly established itself in the region for its expertise in handling complex cross-border transactions.

Bedell Management Services (Mauritius) Limited will be led by Yuvraj Juwaheer, who has over 15 years’ experience in the global finance business sector. Yuvraj was a member of the Mauritian government steering committee set up in 2004 to consider opening the island to international law firms, and was an independent director on the board of a number of Indian funds. He and his team offer a potent combination of local knowledge and the wider, worldwide resources of Bedell.

“Mauritius is a key location for Bedell Trust. OECD ‘whitelist’ status recognises its adherence to best international financial standards, it benefits from many double tax treaties and is a politically stable base for investment into the attractive markets of India, Africa and the Far East,” says Yuvraj. “Bedell Trust’s clients have been showing a keen interest in the services we can provide from Mauritius.”

He adds that Bedell Trust’s worldwide recognition as a leader in its field opens many doors in the region.

Commenting on the opening of Bedell Management Services (Mauritius), Michael Richardson, Executive Chairman of Bedell Trust said, "Our strong presence in Mauritius is of great value to clients hoping to invest in South Africa, India and the Far East. Yuvraj’s extensive experience and unmatchable local network provide considerable benefits to our clients and to our business worldwide."

Selected, in 2011, for the Top 25 Most Admired Companies list compiled by Private Client Practitioner, Bedell Trust has recently been named Owner-Managed Trust Team of the Year in the STEP Private Client Awards 2011/12.

Mauritius Budget 2012 - Financial Services: the Linchpin of our Economy

The financial services industry will continue to be the linchpin of our economy. We have taken it to great heights of success. But we will not rest on our laurels. We will provide strong support to the financial services industry to weave new business links with the rest of the world, comply fully with international norms and diversify its products.

Legislation has already been passed to promote Limited Partnerships.

We will soon set out the legal framework to promote:

1. Foundations;
2. Private Occupational Pensions; and
3. New concepts of Trusts.

These should significantly widen the spectrum of financial vehicles in our jurisdiction.

The Government of Mauritius will continue to protect our country’s best interest with regards to the India/Mauritius Double Taxation Avoidance Agreement.

The ‘Code Civil Mauricien’ will be amended to provide for an appropriate legal framework which would govern leasing of both immovable and movable property, especially finance leasing.

As regards the insurance sector, we are abrogating legislation that would have allowed local assets to be insured with an insurance company based in a foreign country in 2013.

A solidarity levy will cover Management Companies in the Global Business Sector. The levy will be 10 percent of chargeable income and will be applicable for 2 years ending in 2013.

Ogier - Inaugural IFC Forum Conference

Nick Kershaw, Ogier Group CEO, chaired the first high-level policy conference, International Financial Centres: Sharing Perspectives and Meeting the Challenges organised by The Commonwealth Secretariat and the IFC Forum on 20th and 21st October in London.

The event examined the role of small international financial centres (IFCs) in the global economy and included perspectives from the OECD, governments, business leaders, respected academics and the media. The conference called on the OECD and G20 to adopt a more constructive approach to dealing with small International Financial Centres, which included securing a commitment to work in a more collaborative partnership and the adoption of a more balanced tone which drops the use of words like tax haven.

The IFC Forum was created in 2009 against a backdrop of a world that was becoming increasingly hostile and aggressive towards small international financial centres. It was formed with the purpose of providing policymakers with authoritative and balanced information on the vital role that IFCs play in the global economy and thereby counteracting the negative sentiments which were increasingly gaining traction.

One of the major themes which emerged during the conference was the need for much closer cooperation and partnership between the private and public sector in pressing the case with multi-lateral organisations, including the OECD and G20, for small-state IFCs to continue to operate in the global economy.

Nick Kershaw said "The IFC Forum has played a valuable role in communicating the positive contribution that IFCs make to the world's economy. This conference set out to address another vital element which is that IFCs need to work together in getting their message across and influencing policymakers."

Colin Powell, Adviser - International Affairs, Chief Minister's Department, States of Jersey, spoke at the conference on Technical Assistance and Capacity Building: Challenges facing IFCs. His speech looked at the role IFCs can play in helping with standard setting and compliance assessment, and in helping developing countries build up their domestic and international capacity. Colin Powell said, "The conference was very productive in presenting ways that IFCs working together can influence attitudes particularly through their positive and constructive participation in the relevant international initiatives."

Nick Kershaw said "The IFC Forum will continue to press its case that islands such as Jersey represent a major boon to the global economy in allowing international trade, economic growth and prosperity to increase. At the current time of great economic and financial uncertainty, particularly with Europe’s sovereign debt crisis looming ever larger, it is important that the world’s major economies do not penalise us, with measures which reduce market liquidity and investment, killing off any hopes of economic recovery. As the IFC Forum’s conference in London clearly demonstrated, there is a growing consensus emerging across the private and public sector towards greater partnership and cooperation in addressing these issues.”

The conference was attended by over 120 delegates. This included representatives from the private sector as well as a number of small-state IFC governments including Anguilla, The British Virgin Islands, Barbados, Bermuda, Cayman, The Cook Islands, The Bahamas, Grenada, Guernsey, The Isle of Man, Jersey, Samoa, The Seychelles and St Lucia. The conference was organised in partnership with the Commonwealth Secretariat to discuss the themes of developing global regulatory standards, promoting global prosperity through trade and international finance, as well boosting growth, employment and investment returns in the world’s major economies.

‘International Perception of Asia as a Low-Cost Financial Centre Inaccurate’ – STEP Report

The findings of a report released today by the Society of Trust and Estate Practitioners (STEP) contradict the perception that East Asia is the low cost centre that many in Europe believe it to be.

The findings that emerge from the report, published during this week’s STEP Asia Conference in Singapore, both confirm and contradict several widely held external perceptions about trust and estate practice in East Asia. As the newest and fastest growing region in the world for wealth planning, the report provides useful insight into differences with more established International Financial Centres as well as fresh input into the long running debate on Hong Kong vs Singapore as rival centres of private client wealth management.

The impact of China as a force for change remains hotly debated as does the assertion that increasing regulatory initiatives – especially tax compliance – will make practitioners’ lives more difficult.

STEP Chief Executive David Harvey said: “The picture that emerges from this research is of an industry confidently taking its own path of development into a future that is both similar to, and quite different from, the route followed by more established International Financial Centres.”

The report can be viewed online here

Jersey Finance: TIEA with India is a welcome development

The signing of the Tax Information Exchange Agreement (TIEA) with India is a welcome development in Jersey’s progress in establishing closer commercial ties with the country.

Geoff Cook, chief executive, Jersey Finance Limited, commented:

‘For the last five years or so Jersey Finance has been building its links with India by hosting visits in which we showcase our services and highlight the quality of our regulatory regime. Senior politicians and regulators have joined us on some of our trips to meet formally with Government officials and regulators in India. Earlier this year, Jersey Finance cemented its presence further by appointing representatives in both Mumbai and Delhi.

The signing of the TIEA is a boost to that growing commercial relationship and from an industry perspective gives further confidence to practitioners in both Jersey and India that there is mutual recognition about the quality of the standards of compliance and co-operation between regulators and tax authorities.’

Jersey remains well placed to provide the investment vehicles to conduit international capital into India for the infrastructure projects it undertakes. It possesses similar company entities to enable Indian businesses to expand internationally and access capital on foreign exchanges, including the London Stock Exchange and it has investment structures which are ideal for servicing the needs of the growing high net worth sector in India.

Companies from emerging giants China and Russia most likely to bribe abroad

Bribing public officials when doing business abroad is a regular occurrence, according to a survey of 3,000 business executives from developed and developing countries.

Transparency International’s 2011 Bribe Payers Index, released today, ranks 28 leading international and regional exporting countries by the likelihood of their firms to bribe abroad. Companies from Russia and China, who invested US $120 billion overseas in 2010, are seen as most likely to pay bribes abroad. Companies from the Netherlands and Switzerland are seen as least likely to bribe.

Addressing foreign bribery is a priority issue for the international community. A year ago the group of 20 leading economies (G20) committed to tackling foreign bribery by launching an anti-corruption action plan. The progress report of the working group monitoring the action plan, which G20 leaders are expected to approve at tomorrow’s Cannes summit, will recognise steps taken by G20 countries China, Russia, Indonesia and India in criminalising foreign bribery. Transparency International welcomes the report and calls for swift implementation of the further anti-corruption measures that it calls for.

“In their meeting in Cannes this week, G20 governments must tackle foreign bribery as a matter of urgency. New legislation in G20 countries is an opportunity to provide a fairer, more open global economy that creates the conditions for sustainable recovery and the stability of future growth. Governments can press home the advances made by putting resources behind investigations and prosecutions of foreign bribery, so that there is a very real deterrent to unethical and illegal behaviour,” said Transparency International Chair, Huguette Labelle.

THE IMPACT OF BRIBERY

In the survey, international business leaders reported the widespread practice of companies paying bribes to public officials in order to, for example, win public tenders, avoid regulation, speed up government processes or influence policy.

However, companies are almost as likely to pay bribes to other businesses, according to today’s report, which looks at business-to-business bribery for the first time. This suggests that corruption is not only a concern for the public sector, but for the business sector as well, carrying major reputational and financial risks for the companies involved.

“It is clear that bribery remains a routine business practice for too many companies and runs throughout their business dealings, not just those with public officials. And companies that fail to prevent bribery in their supply chains run the risk of being prosecuted for the actions of employees and business partners,” said Labelle.

The 2011 Bribe Payers Index also looks at the likelihood of firms in 19 specific sectors to engage in bribery and exert undue influence on governments:

• Public works and construction companies scored lowest in the survey. This is a sector where bypassed regulations and poor delivery can have disastrous effects on public safety.
• Oil and gas is also a sector seen as especially prone to bribery. The extractives industry has long been prone to corruption risk. Companies operating in oil-rich Nigeria have already been fined upwards of US $3.2 billion in 2010-2011 for bribery of public officials.

CDP: Launching a new offshore fund?

Anyone who ever arrived at a busy airport to catch a flight has been exposed to the frequently stressful experience of being caught up in a distribution hub –airports are distribution points where passengers are screened, directed and transported to their respective destinations. Time is of the essence and efficiency is absolutely required. All airports look vaguely familiar regardless of country or local language – but frequent travelers quickly differentiate the good from the bad.

Offshore financial centres are no different. Their frequent users are international asset and hedge fund managers whose mission is to efficiently deploy investment monies. These managers need their funds, whatever the currency, to travel from origin to investment destination safely and efficiently. Time lost in the distribution process translates directly into lost money.

Given a choice, investment fund and hedge fund managers have incentive to seek out the most efficient and secure offshore jurisdictions. They will choose to use only those jurisdictions that are efficient, secure and hospitable. Only the most efficient offshore financial centres are going to be selected to implement sophisticated international investment strategies.

This article is available in PDF Format, click below to view:

Launching a new offshore fund?

FATF identifies jurisdictions with strategic deficiencies

In order to protect the international financial system from money laundering and terrorist financing, the FATF has published the following public documents, identifying countries with strategic deficiencies regarding anti-money laundering and combating the financing of terrorism (AML/CFT).

FATF Public Statement on jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies

The FATF has updated its public statement issued in June 2011 which identifies jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies.

Improving Global AML/CFT Compliance: on-going process

As part of its ongoing review of compliance with the AML/CFT standards, the FATF has identified jurisdictions which have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF.

FATF Public Statement

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions*.

Iran Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies**. The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Cuba** Bolivia Ethiopia Kenya Myanmar Nigeria São Tomé and Príncipe Sri Lanka Syria Turkey

* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.

**Cuba has not engaged with the FATF in the process.

Iran

The FATF, with a renewed urgency, is particularly and exceptionally concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, despite Iran’s engagement with the FATF.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. Due to the continuing terrorist financing threat emanating from Iran, jurisdictions should consider the steps already taken and possible additional safeguards or strengthen existing ones.

The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transactions reporting (STR) requirements. If Iran fails to take concrete steps to improve its CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in February 2012.

Democratic People's Republic of Korea (DPRK)

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies.

The FATF reaffirms its call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies and financial institutions. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the DPRK. Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and take into account ML/FT risks when considering requests by DPRK financial institutions to open branches and subsidiaries in their jurisdiction.

The FATF remains prepared to engage directly in assisting the DPRK to address its AML/CFT deficiencies, including through the FATF Secretariat.

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Cuba

Cuba has not committed to the AML/CFT international standards, nor has it constructively engaged with the FATF. The FATF has identified Cuba as having strategic AML/CFT deficiencies that pose a risk to the international financial system. The FATF urges Cuba to develop an AML/CFT regime in line with international standards, and is ready to work with the Cuban authorities to this end.

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Bolivia

Bolivia has taken steps towards improving its AML/CFT regime, including by enacting new CFT legislation. However, despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan.

Ethiopia

Despite Ethiopia’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Ethiopia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ethiopia should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework and procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Ethiopia to address its remaining deficiencies and continue the process of implementing its action plan.

Kenya

Despite Kenya’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Kenya should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Kenya to address its remaining deficiencies and continue the process of implementing its action plan, including by implementing the AML legislation and setting up its FIU.

Myanmar

Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Nigeria

Nigeria has taken steps towards improving its AML/CFT regime, including by enacting AML/CFT legislation. However, despite Nigeria’s high-level political commitment to work with the FATF and GIABA to address its strategic AML/CFT deficiencies, Nigeria has not made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. Nigeria should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring that relevant laws or regulations address deficiencies in customer due diligence requirements and that they apply to all financial institutions (Recommendation 5); and (4) continuing to improve the overall supervisory framework for AML/CFT (Recommendation 23). The FATF encourages Nigeria to address its remaining deficiencies and continue the process of implementing its action plan.

São Tomé and Príncipe

Despite São Tomé and Príncipe’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, São Tomé and Príncipe has not made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. São Tomé and Príncipe should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) ensuring that financial institutions and DNFBPs are subject to adequate AML/CFT regulation and supervision, and that a competent authority or competent authorities have been designated to ensure compliance with AML/CFT requirements (Recommendations 23, 24 and 29); (4) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17); and (5) taking the necessary action to gain membership of GIABA. The FATF encourages São Tomé and Príncipe to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Sri Lanka has taken steps towards improving its AML/CFT regime, including by enacting AML/CFT amendments. However, despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing and addressing the remaining deficiencies with regard to the criminalisation of money laundering (Special Recommendation II and Recommendation 1); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken significant steps towards improving its AML/CFT regime, including by improving the legal arrangements for freezing terrorist assets. However, despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring that financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring that appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by submitting CFT legislation to Parliament. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

FATF - Improving Global AML/CFT Compliance: on-going process

As part of its on-going review of compliance with the AML/CFT standards, the FATF has to date identified the following jurisdictions which have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. While the situations differ among each jurisdiction, each jurisdiction has provided a written high-level political commitment to address the identified deficiencies. The FATF welcomes these commitments.

A large number of jurisdictions have not yet been reviewed by the FATF. The FATF continues to identify additional jurisdictions, on an on-going basis, that pose a risk to the international financial system. The FATF has additionally begun initial reviews of a number of other jurisdictions as part of this process and will present its findings next year.

The FATF and the FSRBs will continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified deficiencies. The FATF calls on these jurisdictions to complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members to consider the information presented below.

Algeria

In October 2011, Algeria made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Algeria has taken steps towards improving its AML/CFT regime. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Algeria will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendations I and II); (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets (Special Recommendation III), (3) improving and broadening CDD measures and ensuring that they apply to all financial institutions (Recommendation 5); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit, in particular addressing the operational autonomy of the FIU and the authority of the FIU to request and access information (Recommendation 26); and (5) enacting and implementing appropriate mutual legal assistance legislation (Special Recommendation V). The FATF encourages Algeria to address its deficiencies and continue the process of implementing its action plan.

Angola

In June 2010, Angola made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since June 2011, Angola has taken steps towards improving its AML/CFT regime, including by issuing CDD regulations to banks. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Angola should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (3) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets (Special Recommendation III). The FATF encourages Angola to address its remaining deficiencies and continue the process of implementing its action plan.

Antigua and Barbuda

In February 2010, Antigua and Barbuda made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since June 2011, Antigua and Barbuda has taken steps towards improving its AML/CFT regime, including by commencing off-site inspections of its financial institutions. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Antigua and Barbuda should continue to work on implementing its action plan to address these deficiencies, including by: (1) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (2) continuing to improve the overall supervisory framework (Recommendation 23). The FATF encourages Antigua and Barbuda to address its remaining deficiencies and continue the process of implementing its action plan.

Argentina

In June 2011, Argentina made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since then, Argentina has taken steps towards improving its AML/CFT regime, including by addressing some of the concerns the FATF expressed regarding its June 2011 amendments to its AML legislation, submitting draft CFT legislation to National Congress, issuing a decree dealing with evaluating effectiveness of its AML/CFT measures; and issuing an FIU Resolution enhancing CDD measures for the financial and foreign exchange sectors. The FATF has determined that strategic AML/CFT deficiencies remain. Argentina will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing and addressing the remaining deficiencies with regard to the criminalisation of money laundering (Special Recommendation II and Recommendation 1); (2) establishing and implementing adequate procedures for the confiscation of funds related to money laundering and identifying and freezing terrorist assets (Recommendation 3 and Special Recommendation III); (3) enhancing financial transparency (Recommendation 4); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements (Recommendation 13, Special Recommendation IV and Recommendation 26); (5) implementing an adequate AML/CFT supervisory programme for all financial sectors (Recommendations 17, 23 and 29); (6) improving and broadening CDD measures for the non-banking or non-foreign exchange sectors (Recommendation 5); and (7) establishing appropriate channels for international co-operation and ensuring effective implementation (Recommendation 36, Recommendation 40 and Special Recommendation V). The FATF encourages Argentina to address its remaining deficiencies and continue the process of implementing its action plan.

Bangladesh

In October 2010, Bangladesh made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since June 2011, Bangladesh has taken steps towards improving its AML/CFT regime, including by issuing AML/CFT guidance notes for the insurance sector. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Bangladesh should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) improving suspicious transaction reporting requirements (Recommendation 13 and Special Recommendation IV); and (6) improving international co-operation (Recommendations 36 and 39 and Special Recommendation V). The FATF encourages Bangladesh to address its remaining deficiencies and continue the process of implementing its action plan.

Brunei Darussalam

In June 2011, Brunei Darussalam made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since then, Brunei Darussalam has taken steps towards improving its AML/CFT regime, including by enacting an Anti-Terrorism Order in July 2011. However, the FATF has determined that strategic AML/CFT deficiencies remain. Brunei Darussalam should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) establishing and implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) improving suspicious transaction reporting requirements (Recommendation 13 and Special Recommendation IV); (5) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (6) enacting and implementing appropriate mutual legal assistance legislation (Recommendation 36 and Special Recommendation V). The FATF encourages Brunei Darussalam to address its remaining deficiencies and continue the process of implementing its action plan.

Cambodia

In June 2011, Cambodia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that strategic AML/CFT deficiencies remain. Cambodia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) establishing and implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (5) establishing and implementing effective controls for cross-border cash transactions (Special Recommendation IX). The FATF encourages Cambodia to address its remaining deficiencies and continue the process of implementing its action plan.

Ecuador

In June 2010, Ecuador made a high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Ecuador should continue to work on implementing its action plan to address these deficiencies, including by: (1) ensuring adequate criminalisation of terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); and (4) reinforcing and improving co-ordination of financial sector supervision (Recommendation 23). The FATF encourages Ecuador to address its remaining deficiencies and continue the process of implementing its action plan.

Honduras

In October 2010, Honduras made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since that time, Honduras has demonstrated progress in improving its AML/CFT regime, including by adopting legislation that aims to address issues relating to criminalisation of terrorist financing and freezing of terrorist assets and implementing resolutions that aim to improve CDD measures. The FATF will conduct an on-site visit to confirm that the process of implementing the required reforms and actions is underway to address deficiencies previously identified by the FATF.

Kyrgyzstan

In October 2011, Kyrgyzstan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. Kyrgyzstan has taken steps towards improving its AML/CFT regime. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Kyrgyzstan will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets (Special Recommendation III) (3) establishing and implementing adequate measures for the confiscation of funds related to money laundering (Recommendation 3); (4) establishing effective CDD measures for all financial institutions (Recommendation 5); and (5) implementing an adequate and effective AML/CFT supervisory programme for all financial sectors (Recommendation 23). The FATF encourages Kyrgyzstan to address its deficiencies and continue the process of implementing its action plan.

Mongolia

In June 2011, Mongolia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that strategic AML/CFT deficiencies remain. Mongolia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) establishing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) establishing suspicious transaction reporting requirements (Recommendation 13 and Special Recommendation IV); (5) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (6) demonstrating effective regulation of money service providers. The FATF encourages Mongolia to address its remaining deficiencies and continue the process of implementing its action plan.

Morocco

In February 2010, Morocco made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Since then, Morocco has demonstrated progress in improving its AML/CFT regime, including by adopting amendments to extend the scope of the money laundering and terrorist financing offences; to broaden customer due diligence requirements and taking steps to operationalise the Financial Intelligence Unit. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Morocco should continue to work on implementing its action plan to address these deficiencies, including by adequately criminalising terrorist financing (Special Recommendation II).

Namibia

In June 2011, Namibia made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. Namibia has taken steps towards improving its AML/CFT regime, including by securing the information held in the FIU. However, the FATF has determined that strategic AML/CFT deficiencies remain. Namibia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing an adequate AML/CFT supervisory programme with sufficient powers (Recommendation 23 and 29); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit, in particular addressing the operational autonomy of the FIU (Recommendation 26); (5) implementing effective, proportionate and dissuasive sanctions in order to deal with non-compliance with the national AML/CFT requirements (Recommendation 17); and (6) implementing the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Namibia to address its remaining deficiencies and continue the process of implementing its action plan.

Nepal

In February 2010, Nepal made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since June 2011, Nepal has taken steps towards improving its AML/CFT regime, including by approving an AML/CFT National Strategy. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Nepal should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); and (4) enacting and implementing appropriate mutual legal assistance legislation (Recommendation 36). The FATF encourages Nepal to address its remaining deficiencies and continue the process of implementing its action plan.

Nicaragua

In June 2011, Nicaragua made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since then, Nicaragua has taken steps towards improving its AML/CFT regime, including by establishing an agency responsible for regulating and supervising the microfinance industry. However, the FATF has determined that strategic AML/CFT deficiencies remain. Nicaragua should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing effective CDD measures and record-keeping requirements, in particular entities not currently regulated by the supervisory authority (Recommendation 5 and Recommendation 10); (2) establishing adequate STR reporting obligations for ML and FT (Recommendation 13 and Special Recommendation IV); (3) implementing an adequate AML/CFT supervisory programme for all financial sectors (Recommendation 23); (4) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (5) establishing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III)The FATF encourages Nicaragua to address its remaining deficiencies and continue the process of implementing its action plan.

Paraguay

In February 2010, Paraguay made a high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies. Since that time, Paraguay has taken steps towards improving its AML/CFT regime, including enacting CFT legislation and issuing regulations prohibiting anonymous accounts. The FATF will conduct an on-site visit to confirm that the process of implementing the required reforms and actions is underway to address deficiencies previously identified by the FATF.

Philippines

In October 2010, the Philippines made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since June 2011, the Philippines has taken steps towards improving its AML/CFT regime, including by capacity building in the areas of supervision and regulation. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. The Philippines should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) implementing adequate procedures to identify and freeze terrorist assets and confiscate funds related to money laundering (Special Recommendation III and Recommendation 3); (3) enhancing financial transparency (Recommendation 4); and (4) extending coverage of reporting entities (Recommendations 12 and 16). The FATF encourages the Philippines to address its remaining deficiencies and continue the process of implementing its action plan.

Sudan

In February 2010, Sudan made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Since June 2011, Sudan has taken steps towards improving its AML/CFT regime, including by improving the overall infrastructure of the FIU and the supervisory framework. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Sudan should continue to work on implementing its action plan to address these deficiencies, including by: (1) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) ensuring that financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) implementing a supervisory programme for the regulators to ensure compliance with the provisions of the new law and regulations (Recommendation 23). The FATF encourages Sudan to address its remaining deficiencies and continue the process of implementing its action plan.

Tajikistan

In June 2011, Tajikistan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. The FATF has determined that strategic AML/CFT deficiencies remain. Tajikistan should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures for the confiscation of funds related to money laundering and identifying and freezing terrorist assets (Recommendation 3 and Special Recommendation III); (3) enhancing financial transparency (Recommendation 4); (4) ensuring a fully operational, and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements (Recommendation 13, Special Recommendation IV, and Recommendation 26); and (5) improving and broadening CDD measures (Recommendation 5). The FATF encourages Tajikistan to address its remaining deficiencies and continue the process of implementing its action plan.

Turkmenistan

In June 2010, Turkmenistan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. Since June 2011, Turkmenistan has taken steps towards improving its AML/CFT regime, including by establishing a legal framework to freeze terrorist assets. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Turkmenistan should continue to work on implementing its action plan to address these deficiencies, including by: (1) developing collaboration between the FIU and domestic counterparts, including supervisory authorities; and (2) strengthening international co-operation in the areas of investigation and confiscation/repatriation of funds. The FATF encourages Turkmenistan to address its remaining deficiencies and continue the process of implementing its action plan.

Trinidad and Tobago

In February 2010, Trinidad and Tobago made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since June 2011, Trinidad and Tobago has taken steps towards improving its AML/CFT regime, including by completing the registration process of the listed businesses and initiating the supervision of the listed entities. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Trinidad and Tobago should continue to work on implementing its action plan to address these deficiencies, including by (1) implementing adequate procedures to identify and freeze terrorist assets without delay (Special Recommendation III); and (2) establishing a fully operational and effectively functioning Financial Intelligence Unit, including supervisory powers (Recommendation 26). The FATF encourages Trinidad and Tobago to address its remaining deficiencies and continue the process of implementing its action plan.

Venezuela

In October 2010, Venezuela made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since then, Venezuela has taken steps towards improving its AML/CFT regime, including by improving the independence of the FIU and the regulations for the banking and securities sectors. However, the FATF has determined that certain strategic deficiencies remain. Venezuela should continue to work with the FATF and CFATF on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendations I and III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) implementing adequate CDD guidelines for all sectors (Recommendation 5); and (5) establishing adequate STR reporting obligations for ML and FT (Recommendation 13 and Special Recommendation IV). The FATF encourages Venezuela to address its remaining deficiencies and continue the process of implementing its action plan.

Vietnam

In October 2010, Vietnam made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Vietnam should continue to work with the FATF and APG on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) making legal persons subject to criminal liability in line with FATF Recommendation 2 or demonstrating that there is a constitutional prohibition to prevent this; (4) improving the overall supervisory framework (Recommendation 23); (5) improving and broadening customer due diligence measures and reporting requirements (Recommendation 5, 13, and Special Recommendation IV); and (6) strengthening international co-operation (Recommendations 36, 40). The FATF encourages Vietnam to address its remaining deficiencies and continue the process of implementing its action plan.

Yemen

In February 2010, Yemen made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic deficiencies remain. Yemen should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (2) conducting outreach to sensitise reporting institutions of their AML/CFT obligations (Recommendation 25); (3) developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the FIU, to ensure compliance by financial institutions with their STR obligations, especially in relation to FT (Recommendation 23); and (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26). The FATF encourages Yemen to address its remaining deficiencies and continue the process of implementing its action plan.

Zimbabwe

In June 2011, Zimbabwe made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. The FATF has determined that strategic AML/CFT deficiencies remain. Zimbabwe should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation I and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) ensuring that financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); (5) enacting and implementing appropriate mutual legal assistance legislation (Special Recommendation V); and (6) implementing the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Zimbabwe to address its remaining deficiencies and continue the process of implementing its action plan.

Ukraine

The FATF welcomes Ukraine’s significant progress in improving its AML/CFT regime and notes that Ukraine has largely met its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Ukraine is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Ukraine will work with MONEYVAL as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report, and further strengthen its AML/CFT regime.

Jurisdiction not making sufficient progress

The FATF is not yet satisfied that the following jurisdictions have made sufficient progress on their action plan agreed upon with the FATF. The most significant action plan items and/or the majority of the action plan items have not been addressed. If these jurisdictions do not take sufficient action to implement significant components of their action plan by February 2012, then the FATF will identify these jurisdictions as being out of compliance with their agreed action plans and will take the additional step of calling upon its members to consider the risks arising from the deficiencies associated with the jurisdiction.

Ghana

Despite Ghana’s high-level political commitment to work with the FATF and GIABA to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that Ghana has made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ghana should work with the FATF and GIABA on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate measures for the confiscation of funds related to money laundering (Recommendation 3); (3) establishing effective CDD measures (Recommendation 5); (4) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (5) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Ghana to address its remaining deficiencies and continue the process of implementing its action plan.

Indonesia

Despite Indonesia’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that Indonesia has made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Indonesia should work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); and (3) amending and implementing laws or other instruments to fully implement the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Indonesia to address its remaining deficiencies and continue the process of implementing its action plan.

Pakistan

Despite Pakistan’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that Pakistan has made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Pakistan failed to provide a satisfactory response to the FATF’s particular concern about the lack of implementation regarding Pakistan’s terrorist financing offence expressed in June 2011 and its calls upon Pakistan to demonstrate specific action in this regard. Pakistan should work on implementing its action plan to address these deficiencies, including by (1) demonstrating adequate criminalisation of terrorist financing and addressing the remaining deficiencies with regard to the criminalisation of money laundering (Special Recommendation II and Recommendation 1); (2) demonstrating adequate procedures to identify, freeze and confiscate terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) demonstrating effective regulation of money service providers, including an appropriate sanctions regime, and increasing the range of ML/FT preventive measures for these services (Special Recommendation VI); and (5) improving and implementing effective controls for cross-border cash transactions (Special Recommendation IX). The FATF encourages Pakistan to address its remaining deficiencies and continue the process of implementing its action plan.

Tanzania

Despite Tanzania’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that Tanzania has made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. Tanzania should work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets as well as implementing the UNSCR 1267 and 1373 through law, regulations or other enforceable means (Special Recommendation III); (3) establishing effective CDD measures (Recommendation 5); (4) establishing adequate record-keeping requirements (Recommendation 10); (5) establishing a fully operational and effectively functioning national Financial Intelligence Unit (Recommendation 26); and (6) designating competent authorities to ensure compliance with AML/CFT requirements (Recommendation 23). The FATF encourages Tanzania to address its remaining deficiencies and continue the process of implementing its action plan.

Thailand

Despite Thailand’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that Thailand has made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. Thailand should work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); and (3) further strengthening AML/CFT supervision (Recommendation 23). The FATF encourages Thailand to address its remaining deficiencies and continue the process of implementing its action plan.