High-risk countries, regions and groups
As part of your AML/CTF program and reporting obligations, you should be aware of which countries, regions and groups that may pose a high-risk of money laundering or terrorism financing.
High-risk countries and regions
Customers from any of these places, and transactions to or from these places, require careful monitoring. You should have risk-based systems and controls in place for these customers and transactions.
When dealing with high-risk countries and regions, you may need to:
- apply enhanced customer due diligence procedures
- take the risk into account when monitoring transactions
- make suspicious matter reports.
Countries and regions may be considered high-risk if they are one or more of the following:
- deemed a high-risk or non-cooperative jurisdiction by the Financial Action Task Force (FATF)
- prescribed foreign countries
- subject to sanctions
- known tax havens
- known to provide support to terrorist organisations.
High-risk and non-cooperative jurisdictions according to FATF
Australia is a member of the Financial Action Task Force (FATF), an inter-governmental body that sets AML/CTF standards, monitors the progress of members, and identifies vulnerabilities that could expose the international financial system to misuse. FATF provides regular statements about high-risk or non-cooperative jurisdictions. These are jurisdictions that have inadequate AML/CTF regimes and have financial systems that are open to criminal abuse.
Prescribed foreign countries
Countries can be declared as ‘prescribed foreign countries’ by way of a regulation made under the AML/CTF Act because they pose a high risk of money laundering or terrorism financing.
Prescribed foreign countries are usually countries which FATF recommends other countries apply ‘countermeasures’ to.
Iran and North Korea (the Democratic People's Republic of Korea or DPRK) are the only two prescribed foreign countries.They are prescribed in the Anti-Money Laundering and Counter-Terrorism Financing (Prescribed Foreign Countries) Regulations 2018.
You must apply enhanced customer due diligence to a customer who is making a transaction to an individual, business or organisation located in a prescribed foreign country. You must also treat transactions associated with prescribed foreign countries as high-risk for the purposes of transaction monitoring.
Sanctions are restrictions that the Australian Government or the United Nations Security Council (UNSC) impose on activities relating to countries, goods and services, people or entities.
You should be aware of sanctions so you can decide whether you should make a suspicious matter report or suspect transaction report. Your AML/CTF program should accommodate new and existing sanctions.
Tax havens are countries, regions or states that have minimal tax for non-residents and do not share financial or banking information with foreign tax authorities. Tax havens can be exploited to conceal income and evade tax obligations.
You should look out for signs that someone is trying to evade tax or commit other tax offences – such as multiple international funds transfers to or from known tax havens – and consider making a suspicious matter report or suspect transaction reports.
High risk groups: Terrorist organisations
Under Australian law, a terrorist organisation is defined as a group directly or indirectly engaged in preparing, planning, assisting, fostering or advocating a terrorist act – regardless of whether or not that act occurs.
Known terrorist organisations are listed on the Australian National Security website.
Offences related to listed terrorist organisations include:
- directing a terrorist organisation’s activities
- being a member of a terrorist organisation
- recruiting for a terrorist organisation
- providing or receiving funds to or from a terrorist organisation, whether directly or on behalf of another individual or organisation
- providing support to a terrorist organisation
- associating with a terrorist organisation.
As part of your AML/CTF program you should be aware of listed terrorist organisations and your program should include how you identify customers or transactions linked to terrorist organisations.
The content on this website is general and is not legal advice. Before you make a decision or take a particular action based on the content on this website, you should check its accuracy, completeness, currency and relevance for your purposes. You may wish to seek independent professional advice.