On 31 August, the FCA published a statement on its website reminding firms about the financial crime risks linked to Afghanistan. The FCA reminds firms that they must establish and maintain systems and controls to mitigate the risk that they could be used to further financial crime. The FCA also cites the obligations under the following pieces of legislation: Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLRs’ as amended).
Specifically in regards to the MLRs, the FCA points out that presently for those purposes, Afghanistan is not listed as a high risk country. However, firms are required by Regulation 33(1)(a) to apply risk sensitive enhanced due diligence measures where there is a high risk of money laundering or terrorist financing, Regulation 33(6) sets out factors that firms may use in their assessment including, but not limited to, country risks.
In the current context, the FCA has asked firms to:
- ensure that they appropriately monitor and assess transactions to Afghanistan to mitigate the risks if their firm being exploited to launder money or finance terrorism
- continue to ensure that suspicious activity is reported to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA) and that they meet their obligations under Money Laundering Regulations and terrorist financing legislation.
To view the FCA statement on its website, please click here.
