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More about the International Co-operation Review Group (ICRG)

Why is the FATF dealing with high-risk and non-cooperative jurisdictions?

The FATF’s primary role is to set global AML/CFT standards and ensure the effective implementation of these standards in all jurisdictions. Enhanced global compliance with the standards reduces the ML/FT risks to the international financial system, and increases transparency and effective international co-operation. In addition to the FATF’s and FATF-style regional bodies’ mutual evaluation programmes and follow-up processes, the FATF uses additional mechanisms to identify and to respond to jurisdictions with strategic deficiencies in their AML/CFT regimes that pose a risk to the international financial system and impede efforts to combat money laundering and terrorist financing.

The results of the FATF's ongoing efforts in this area are communicated following each Plenary meeting.

The NCCT process (2000-2006)

Between 2000 and 2006, the FATF conducted the process on non-co-operative countries and territories (NCCTs).  During this process, 23 jurisdictions were listed due to a lack of an effective AML/CFT system.  The process was highly successful; all of the 23 jurisdictions that had been identified as NCCTs in 2000 and 2001, made significant progress, and the last country was removed from the list in October 2006.

• More information on the NCCT process.

The International Co-operation Review Group, ICRG (from 2007)

Since 2007, the FATF’s International Co-operation Review Group (ICRG) has analysed high-risk jurisdictions and recommended specific action to address the ML/FT risks emanating from them. Throughout 2008 and 2009, the FATF issued a series of public statements expressing concerns about the significant deficiencies in the AML/CFT regimes of a number of jurisdictions. For two of these jurisdictions, Iran and DPRK, the FATF took the additional step of calling upon its members and urging all jurisdictions to apply counter-measures to protect their financial sectors from money laundering and terrorist financing risks emanating from them.  Based on continued lack of progress by both Jurisdictions, the FATF reiterated its call for countermeasures at each subsequent Plenary meeting.

In 2009, the Leaders of the Group of 20 specifically called on the FATF to reinvigorate its process for assessing countries’ compliance with international AML/CFT standards and to publicly identify high-risk jurisdictions by February 2010. This call reinforced the revision process already underway within the FATF and led to the FATF’s adoption in June 2009 of new ICRG procedures. Since that time, the G20 has called for the continuation of FATF efforts to fight against money laundering and terrorist financing and to regularly update the public list of jurisdictions with strategic deficiencies.

The revised ICRG procedures

Initial referral to the ICRG is based primarily on the results of the jurisdiction’s mutual evaluation. Jurisdictions whose mutual evaluation reveals a significant number of key deficiencies are referred to the ICRG for a preliminary or prima facie review conducted by one of four ICRG regional review groups. This initial review includes outreach to each jurisdiction, including the opportunity to comment on the draft prima facie report. Based upon that report, the FATF decides whether it should conduct a more in-depth review of the jurisdiction’s key strategic AML/CFT deficiencies. Each reviewed jurisdiction is provided an opportunity to participate in face-to-face meetings with the regional review group to discuss the report, including developing an action plan with the FATF to address the deficiencies identified. The FATF specifically requests high-level political commitment from each reviewed jurisdiction to implement these action plans.

Based upon the results of this process, the FATF issued two public documents in February 2010—the “Public Statement” and “Improving Global AML/CFT Compliance: Ongoing process.” 

Since February 2010, both documents have been updated (see boxes below) and will be updated at each subsequent FATF Plenary.

While the FATF published the revised FATF Recommendations: “International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation” on 16 February 2012, the FATF has reviewed the identified jurisdictions based on the FATF 40+9 Recommendations of 2003. Therefore, references to specific Recommendations or Special Recommendations (e.g. “R.1”, “SR.II”, etc.) in the Public Statement and the document Improving Global AML/CFT Compliance: Ongoing process refer to the FATF 40+9 Recommendations of 2003.

FATF Public Statement

The February 2012 Public Statement reaffirmed the FATF’s Public Statements since 25 February 2009 which called on its members and other jurisdictions to apply effective counter-measures to protect their financial sectors from ML/FT risks emanating from Iran. In addition, this statement also reiterated its 25 February 2011 call on FATF members and other jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the Democratic People’s Republic of Korea (DPRK).

In February 2012, the FATF confirmed that the following nine jurisdictions with strategic AML/CFT deficiencies already identified in the Public Statement in October 2011 had still not made sufficient progress in addressing the deficiencies identified in their action plan: Bolivia, Ethiopia, Kenya, Myanmar, Nigeria, Sao Tome and Principe, Sri Lanka, Syria, and Turkey. Ghana, Indonesia, Pakistan, Tanzania and Thailand were now also added to the Public Statement as countries that despite their high-level commitment, have not yet made sufficient progress in implementing their action plans, and certain strategic deficiencies remain. In addition, since June 2011, Cuba is identified in the Public Statement as a jurisdiction with strategic AML/CFT deficiencies that has not committed to an action plan developed by the FATF to address the deficiencies. For all of these jurisdictions, the FATF called upon its members to consider the risks arising from the deficiencies associated with each of the jurisdictions.

Improving Global AML/CFT Compliance: On-going Process

In the February 2012 “Improving Global AML/CFT Compliance: On-going Process" document, the FATF identified overall 23 jurisdictions with strategic AML/CFT deficiencies that have provided a high-level political commitment to address the deficiencies through implementation of an action plan developed with the FATF. The situation differs in each jurisdiction and therefore they present different degrees of ML/FT risks.

The FATF will continue to closely monitor the implementation of these action plans and encouraged its members to consider the information presented in this public document. These jurisdictions are: Algeria, Angola, Antigua and Barbuda, Argentina, Bangladesh, Brunei Darussalam, Cambodia, Ecuador, Kyrgyzstan, Mongolia, Morocco, Namibia, Nepal, Nicaragua, Philippines, Sudan, Tajikistan, Trinidad & Tobago, Turkmenistan, Venezuela, Vietnam, Yemen, and Zimbabwe.
With regard to four of these jurisdictions, Ecuador, Philippines, Vietnam and Yemen, the FATF is not yet satisfied that they have made sufficient progress on their action plans agreed upon with the FATF.

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

The FATF welcomed Honduras’ and Paraguay’s significant progress in improving their AML/CFT regime and noted that Honduras and Paraguay have largely met their commitments in their Action Plans regarding the strategic deficiencies that the FATF had identified in October 2010 respectively February 2010. Honduras and Paraguay are therefore no longer subject to FATF’s monitoring under its on-going global AML/CFT compliance process.

The FATF will continue to work with the jurisdictions during the implementation of their action plans until adequate progress has been made and jurisdictions can be removed from public identification. This was the case for Azerbaijan and Qatar in October 2010, Greece in June 2011, Ukraine in October 2011 and, as mentioned above, Honduras and Paraguay in February 2012. Five of these jurisdictions were mentioned in this public document when it was first issued in February 2010 while Honduras was first publicly identified by the FATF in October 2010.

The FATF will also continue, on an ongoing basis, to identify additional jurisdictions which pose ML/FT risks to the international financial system. On the basis of a more in-depth or targeted review to be conducted prior to June 2012, the FATF will decide in June 2012 whether it is warranted to publicly identify a number of these jurisdictions.