Anti-Money Laundering Newsletter – April 2021 | Risk jurisdictions in relation to AML/TF

The lists of the FATF and the European Commission on non-cooperative jurisdictions in the field of money laundering and terrorist financing prevention are updated by in relation to countering have been updated

On March 8, 2021 the Spanish Public Treasury published the updated list of high-risk jurisdictions in relation to countering money laundering and terrorist financing included on the FATF and EU lists. The comunication can be found here.

FATF LIST

The FATF list following the statement issued in February 2021 remains the same as in February 2020. However, the February 2021 statement does not necessarily reflect the most recent status of the systems for countering money laundering and terrorist financing in Iran and in the Democratic People's Republic of Korea.

The FATF keeps the following on the “black” list of high-risk countries which show strategic deficiencies in relation to countering money laundering and terrorist financing:

• The Democratic People's Republic of Korea (DPRK or North Korea): The FATF again reports the existence of significant deficiencies in its AML/CFT regime and the serious threats those deficiencies pose to the international financial system. It also expresses its concern about the threat posed by illicit activities related to the proliferation and financing of arms of mass destruction. It urges all jurisdictions to apply countermeasures and targeted financial sanctions in accordance with U.N. Security Council Resolutions and EU Regulations (the financial sanctions against North Korea are contained in Council Regulation (EU) 2017/1509 of 30 August  2017 concerning restrictive measures against the Democratic People's Republic of Korea), to protect their financial sectors.
• Iran: Due to considering that it has not carried out all the reforms launched in its 2016 Action Plan, the FATF has decided to lift fully the suspension of countermeasures and to call on all jurisdictions to apply effective countermeasures in line with FATF Recommendation 19 and the EU Regulations (the latest amendment to Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive commercial and financial measures against Iran was made by Enforcement Regulation (EU) 2020/1695 of the Commission of 12 November 2020).

On its grey list of countries with strategic money laundering and terrorism financing deficiencies, subject to an action plan to resolve their deficiencies, during a plenary session, the FATF added four new countries to the watch list: Morocco, Burkina Faso, Senegal and the Cayman Islands. The list now has 19 countries: Albania, Barbados, Botswana, Burkina Faso, Cambodia, Cayman Islands, Ghana, Jamaica, Mauritius, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Senegal, Syria, Uganda, Yemen and Zimbabwe.

LIST OF HIGH-RISK COUNTRIES DEFINED BY THE EUROPEAN UNION

Pursuant to article 11 of Law 10/2010 of 28 April, on the prevention of money laundering and terrorist financing, Spain must apply enhanced due diligence measures in relation to the countries designated in the updated version of Commission Delegated Regulation 2016/1675 of 14 July 2016 identifying high-risk third countries with strategic deficiencies, in accordance with article 9 of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 20 2015.

On January 18, 2021 the European Commission published Commission Delegated Regulation (EU) 2021/37 of 7 December 2020, amending and updating the list of high-risk countries in Commission Regulation 2016/1675. Mongolia was removed from the list because, following its assessment by the FATF, it no longer had strategic deficiencies in its AML/CFT regime.

The updated list of the EU contains references to North Korea and Iran, pointing to the specific treatment as high-risk countries which the FATF itself applies to these jurisdictions, and alongside these it also lists as countries with strategic deficiencies: Afghanistan, Bahamas, Barbados, Botswana, Cambodia, Ghana, Iraq, Jamaica, Mauritius, Myanmar, Nicaragua, Pakistan, Panama, Syria, Trinidad and Tobago, Uganda, Vanuatu, Yemen and Zimbabwe.

Spain will not include Gibraltar on the list of tax havens after the entry into force of the tax agreement

Spain has notified the removal of Gibraltar from its blacklist of tax havens, created in 1991, following the entry into force of the International Agreement on Taxation and Protection of Financial Interests regarding Gibraltar between Spain and United Kingdom in that territory.

This treaty, published in the BOE, seeks to reaffirm the application in Gibraltar of rules consistent with the European rules on tax transparency and countering money laundering following the United Kingdom’s departure from the EU; it also seeks to enhance cooperation and the exchange of information to prevent Gibraltar from acting as a refuge for Spanish tax evaders.

This agreement, which came into force on March 4, 2021, sets out the rules to determine when an individual or legal entity is considered tax resident in Spain: “Natural persons shall be tax resident only in Spain, when they spend 183 overnight stays of the calendar year in Spain; when their spouse, dependent ascendants or descendants reside in Spain; when their only permanent home is in Spain; or when two thirds of their net assets are in Spain. Companies are considered to be Spanish if the majority of their income derives from sources in Spain; or the majority of their directors or shareholders are tax resident there. This does not apply to companies incorporated in Gibraltar before 16 November 2018”.

Tax information is to be exchanged every six months, and over the next four months Gibraltar must provide all tax information from January 2014 to the present date.

The European Council adds Dominica to the EU list of non-cooperative jurisdictions for tax purposes and removes Barbados

The European Council has decided to add Dominica to the EU list of non-cooperative jurisdictions for tax purposes and to remove Barbados.

The EU list of non-cooperative jurisdictions for tax purposes was adopted in December 2017 and forms part of the EU’s external tax strategy. Its objective is to contribute to the current efforts to promote tax good governance throughout the world and it includes jurisdictions around the world that have not engaged in constructive dialogue with the EU regarding tax governance or have not fulfilled their commitments to implement the necessary reforms to comply with a set of objective criteria regarding tax good governance.

Jurisdictions are assessed on the basis of a set of criteria established by the Council in 2016, covering tax transparency, fair taxation and implementation of international standards designed to prevent tax base erosion and profit shifting. 

Changes in the list take into consideration the ratings recently published by the OECD Global Forum on Transparency and Exchange of Information (Global Forum) in relation to the exchange of information on request. For the purposes of this list, the EU requires jurisdictions to be at least largely compliant with the international standard on transparency and exchange of information on request (EOIR).

Dominica has been included on the EU list after it received a “partially compliant” rating from the Global Forum and has not yet resolved this issue.

Barbados was added to the EU list in October 2020 after it received a “partially compliant” rating from the Global Forum. It has now been granted a supplementary review by the Global Forum and has therefore been moved to a state-of-play document (Annex II of the Council conclusions) while awaiting the result of this review.

More information here.