Regulation: HKMA tells members of FATF statement.

17 November 2009

The Chief Executive
All authorized institutions

Dear Sir/Madam,

Statement issued by Financial Action Task Force on Money Laundering

I am writing to inform you that on 16 October 2009 the Financial Action Task Force on Money Laundering (FATF) issued an updated statement on Iran, Uzbekistan, Turkmenistan, Pakistan and São Tomé and Príncipe. The statement can be found on the FATF’s website (http://www.fatf-gafi.org).

In the statement, the FATF calls on members and jurisdictions to apply effective counter-measures to protect their financial sectors from the money laundering and terrorist financing (ML/FT) risks emanating from Iran and to guard against the use of correspondent banking relationships to bypass or evade counter-measures and risk mitigation practices. If Iran fails to take concrete steps to improve its anti-money laundering and counter terrorist financing (AML/CFT) regime by February 2010, the FATF will consider strengthening counter-measures.

The FATF also expressed concern that Pakistan's Anti-Money Laundering Ordinance will expire on 28 November 2009. The FATF strongly urged Pakistan to implement a permanent AML/CFT framework before the Ordinance expires. Similarly, failing concrete progress by February 2010, the FATF will consider taking action in February 2010 to protect the financial system from the ML/FT risks emanating from Pakistan.

Whilst the FATF welcomed the progress made by Turkmenistan, São Tomé and Príncipe in improving their AML/CFT frameworks, the FATF still remained concerned about the level of deficiencies in their respective AML/CFT regimes.

The FATF welcomed the significant steps taken by Uzbekistan towards implementing effective AML/CFT measures. The FATF will continue to review the progress made by Uzbekistan and reconsider in February 2010 the measures in place to protect the international financial sector from the risks emanating from Uzbekistan.

AIs should continue to apply the measures specified in the HKMA's circular letter of 13 March 2009 when handling transactions related to these jurisdictions.

Yours faithfully,
Karen Kemp
Executive Director (Banking Policy)