Learn what countries, regions and groups may pose a high risk of money laundering, terrorism financing and proliferation financing.
As part of your anti-money laundering and counter-terrorism financing (AML/CTF) program, you need to know and understand which countries, regions and groups you do business with may pose a high risk of money laundering, terrorism financing and proliferation financing. We refer to these as ML/TF risks.
High-risk countries and regions
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.
If you do carry out business activities with a high-risk country or region you’ll need to have appropriate systems and controls detailed in your AML/CTF program for these customers and transactions, as they are likely to require enhanced ongoing monitoring.
If you decide to deal with a high-risk country or region, it is likely you may need to:
- apply enhanced customer due diligence procedures
- take the risk into account when monitoring transactions
- submit suspicious matter reports.
FATF high risk and non-cooperative jurisdictions
Australia is a member of the Financial Action task Force (FATF). FATF is an inter-governmental body that:
- sets AML/CTF standards for its members worldwide
- monitors the progress of members in their implementation of those standards
- identifies and communicates to its members vulnerabilities that could expose the international financial system to misuse.
They also provide regular statements about high-risk or non-cooperative jurisdictions. These are jurisdictions they have identified as having :
- inadequate AML/CTF regimes
- financial systems that are susceptible to criminal abuse.
If you are dealing with high-risk countries and regions, you can consider the FATF statements to assist in developing your AML/CTF program and processes for when to submit a suspicious matter report.
Under the Act you must conduct enhanced CDD if any of the following are physically present in, or formed in, a high-risk jurisdiction that the FATF has called for enhanced CDD to be applied:
- your customer
- any beneficial owner of the customer
- any person on whose behalf the customer is receiving the designated service, such as a beneficiary of a trust or foreign equivalent
- any person acting on behalf of the customer.
- a body corporate or legal arrangement
Global watch lists
The FATF provides updates about jurisdictions that may pose a risk to the international financial system. Visit the FATF website to see the latest updates.
You should use the FATF updates to guide your risk assessments, compliance programs and decisions about submitting suspicious matter reports to us.
Prescribed foreign countries
Countries can be declared ‘prescribed foreign countries’ under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act) because they pose high ML/MT risks.
Iran and the Democratic People’s Republic of Korea (North Korea) are the only foreign countries currently prescribed under the Anti-Money Laundering and Counter-Terrorism Financing (Prescribed Foreign Countries) Regulations 2018.
Sanctions
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 must not deal with assets owned or controlled by a person designated for targeted financial sanctions. You also must not make assets available to them. Learn more about dealing with persons designated for targeted financial sanctions.
The Department of Foreign Affairs and Trade (DFAT) has information about sanctions. You can’t provide any designated services to people on the DFAT consolidated list of sanctions.
Tax havens
Tax havens are countries, regions or states that have minimal tax for non-residents. They also don’t share financial or banking information with foreign tax authorities. Criminals often exploit tax havens to conceal income and evade tax obligations.
We expect you to look out for unusual transactions or behaviours that could indicate someone is trying to evade tax or commit other tax offences. This includes multiple international funds transfers to or from known tax havens. If you have reasonable grounds to suspect someone is trying to evade tax or commit another tax offence, submit a suspicious matter report.
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. It doesn’t matter if that act occurs.
Australian National Security keeps a list of terrorist organisations.
There are offences related to listed terrorist groups, including:
- 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.
Depending on your ML/TF risks, your AML/CTF program may need to include how you identify customers or transactions linked to terrorist organisations.
You may be required to make a suspicious matter report if you suspect a customer or transactions are linked to terrorist organisations.
Related pages
This guidance sets out how we interpret certain Australian legislation, along with associated Rules and regulations. Australian courts are ultimately responsible for interpreting these laws and determining if any provisions of these laws are contravened.
The examples and scenarios in this guidance are meant to help explain our interpretation of these laws. They’re not exhaustive or meant to cover every possible scenario.
This guidance provides general information and isn't a substitute for legal advice. This guidance avoids legal language wherever possible and it might include generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.