US COMPILES LIST OF COUNTRIES WITH MONEY LAUNDERING RISK

The US Department of State has compiled a new list of countries which pose a significant risk of money laundering and processing of profits from serious crimes and drug trafficking, showing that financial institutions in major economies such as the UK, the USA and Germany are all likely to see significant amounts of money laundering activity.

Last week the US Department of State released its annual International Narcotics Control Strategy Report (INCSR), containing the results of new research into the extent of money laundering occurring in 200 countries around the world.

The report listed 66 countries as “Countries of Primary Concern”, including several of the largest economies in the world, such as the USA, the UK, Australia, Germany, France, Hong Kong, Japan and Canada. A further 68 countries were listed as “Countries of Concern”, and a 76 others were labeled as “Other Countries Monitored”.

The countries identified as primary concern are jurisdictions “whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking.”. Countries regarded as being a concern were judged on “…the extent to which the jurisdiction is or remains vulnerable to money laundering.” Countries that were listed as monitored do not pose any immediate threat of money laundering, but will continue to be watched in the future.

In the latest report, the countries of Argentina, Curacao and St. Maarten were elevated from jurisdictions of concern to a primary concern, due to a perceived increase in the risk and extent of money laundered. Mongolia, the Marshall Islands and Djibouti were moved from monitored to jurisdictions of concern. Palau and Samoa were moved from concerning to monitored due to a perceived decrease in the amount of money laundering flowing through their financial institutions.

South Sudan was included in the report for the first time this year as a monitored jurisdiction, following the country declaring its independence in 2011. The Vatican was also included on the list as a country of concern.

The report noted that the listings were not based on each countries’ legal framework for combating money laundering or its willingness to cooperate in international efforts to fight money laundering, but were a judgment of the extent and occurrence of money laundering in each of the jurisdictions.

The countries identified as being of primary concern were:

Afghanistan, Antigua and Barbuda, Argentina, Australia, Austria, Bahamas, Belize, Bolivia, Brazil, British Virgin Islands, Burma, Cambodia, Canada, Cayman Islands, China, People’s Republic of, Colombia, Costa Rica, Curacao, Cyprus, Dominican Republic, France, Germany, Greece, Guatemala, Guernsey, Guinea-Bissau, Haiti, Hong Kong, India, Indonesia, Iran, Iraq, Isle of Man, Israel, Italy, Japan, Jersey, Kenya, Latvia, Lebanon, Liechtenstein, Luxembourg, Macau, Mexico, Netherlands, Nigeria, Pakistan, Panama, Paraguay, Philippines, Russia, Singapore, Somalia, Spain, St. Maarten, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, Zimbabwe.

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