Regulatory: FinCen withdraws warnings re: northern Cyprus
The USA's FinCEN yesterday moved to withdraw the "advisory" or warning that it issued in March 2008 in relation to the Turkish region of Cyprus. However, although the formal notice is withdrawn, FinCEN says that the risks that the notice addressed are not removed.
FinCEN has responded - albeit belatedly - to the FATF's review of the situation in Northern Cyprus in October 2008. The USA has a tendency to impose restrictions either before or immediately upon the issue of notices by the FATF - but to delay, sometimes for years, its withdrawal of the restrictions even after the FATF removes countries from any form of cautionary notice.
The original FinCEN notice was FIN-2008-A003 published 20 March 2008. FinCEN says that since that notice was issued, the FATF has "welcomed the significant progress made in the northern part of Cyprus and noted that it had substantially addressed the anti-money laundering / counter financing of terrorism (AML/CFT deficiencies that [the] FATF had identified."
But the notice withdrawing the original "advisory" contains a warning: "The withdrawal of Advisory FIN-2008-A003 does not relieve financial institutions of their pre-existing and continuing obligation to report suspicious activity, as set forth in regulations issued by FinCEN and by the federal banking regulatory agencies, as well as their obligation to comply with all other applicable provisions of law. In complying with their suspicious activity detection and reporting obligations, U.S. financial institutions may wish to consider that transactions involving banks in the northern part of Cyprus may not be readily apparent because banks operating in the northern part of Cyprus do not have the ability to initiate or receive wire transfer instructions using standardised messaging systems without the assistance of third-country based
financial institutions." (edited)
In short this means that banks in Northern Cyprus are not linked to SWIFT and therefore must operate via a mix of correspondent and more routine banking relationships in order to make and receive international payments. Therefore US financial institutions must look through those transactions to see what is happening behind them.
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