FATF Blacklists Ecuador, Yemen, Vietnam, Upgrades Philippines

By Samuel Rubenfeld

The Financial Action Task Force said Friday (June 22, 2012) it added Ecuador, Yemen and Vietnam to its list of countries that haven't made sufficient progress in tackling money laundering and terrorist financing.

The three countries were slapped with a label saying they either didn't address deficiencies in fighting money laundering and terrorism finance, or that they didn't commit to an action plan with the FATF to deal with the issues.

"The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction," it said in a statement.

Ecuador, Yemen and Vietnam have each, the FATF said, taken some steps toward fixing the problem, though none of them have done enough to prevent the blacklisting.

Countries that fail to implement FATF's recommendations run the risk of being labeled as high-risk or uncooperative jurisdictions, thereby making it even more costly and difficult for those nations to do business with the banking systems of FATF members. The FATF's members include the U.S., Mexico, France and the U.K.

The FATF's last plenary was in February, when it updated its recommendations to include tax evasion and smuggling as "predicate offenses" to money laundering. It met last week in Rome.

Turkmenistan was cited as having "largely met its commitments" under the action plan, and is therefore no longer subject to monitoring by the FATF, it said.

In addition, the FATF added Afghanistan, Albania, Kuwait and the Philippines to its list of countries seen as countries making progress toward implementing plans to fight terrorism finance and money laundering.

The countries on the so-called "gray list" have strategic deficiencies in their systems for fighting the issues, but they have committed to action plans and are making progress in dealing with them.

The Philippines is by far the most notable in the list, because it was identified in February after the last FATF plenary session as not having made sufficient progress, putting it on a so-called "dark gray" list.

This month, the Philippines enacted an amendment to its money laundering law and a law to combat the financing of terrorism, both of which were lauded by the FATF on Friday. It "strongly encourages" the country to pass another pending change to the country's money-laundering law.

The FATF's announcement Friday upgraded the Philippines from the "dark gray" list to the "gray list." More coverage of the Philippines is available here, here and here.

Calling the announcement "positive news…particularly for our overseas workers and our economy," the country's Anti-Money Laundering Council said in a statement that the pending legislation would expand the definition of money laundering under Philippine law and increase the predicate crimes to include bribery, human trafficking, tax evasion and environmental crime.

"The Philippines will continue to contribute and support the global efforts against money laundering and terrorist financing in keeping with its commitment to good governance and upholding peace and order," the statement said. 

Wall Street Journal