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UK banks warned to watch for terrorist-related money-laundering risks

This week amid the military evacuation chaos of Afghanstian, UK’s watchdog warned banks to be vigilant against potential money-laundering risks related to concerns of rising terrorism, FATF slapped Japan’s wrist for AML weaknesses; and it emerges that nearly 30% of Brazil gold exports are illegal.

Napier AI
September 3, 2021

This week amid the military evacuation chaos of Afghanistan, UK’s watchdog warned banks to be vigilant against potential money-laundering risks related to concerns of rising terrorism, FATF slapped Japan’s wrist for AML weaknesses; and it emerges that nearly 30% of Brazil gold exports are illegal.

FCA warns banks to guard against Afghanistan money-laundering risks

The UK’s financial regulator issued a warning to banks shortly after the last evacuation flight left Afghanistan this week, urging organisations to review the risk of financial crime as fears of terrorist activity rising grows.

The notice was issued as US military troops withdrew from Afghanistan, and the Taliban took control of the country.  

The FCA said “Firms should be aware of the possible impact these events may have on patterns of financial activity when they assess risks related to particular customers and flows of funds.

We expect firms to establish and maintain systems and controls to counter the risk they might be used to further financial crime”.  

Last month the US warned that with the collapse of the Afghanistan government and the Taliban back in control, there is greater possibility that terrorist groups may regroup.  

Although the FCA recognises that Afghanistan is not currently listed as a high-risk jurisdiction, it urged firms to apply risk sensitive enhanced due diligence measures; and as sanctions are already in place against Afghanistan, the notice also reminded firms to continue to screen against the UK sanctions list.  

For more on this story see The Guardian.

FATF urges Japan to step up anti-money laundering efforts

On Monday, FATF concluded a 14-month peer review of Japan by releasing a report that urged the nation to improve their AML and CFT approach.  

The report suggested that Japan "designate a joint-agency body responsible for setting national anti-money laundering and counter-terrorist financing policies and activities" to improve cooperation between their various government agencies in the fight against financial crime.  

The report acknowledged that there was generally good adherence to the FATF’s requirements in Japan and that the country has a good legal structure overall, but among other failings there is a disconnect between the low number of prosecutions for money laundering and terrorist financing compared with the high rates of organised crime and drug consumption.

Japan’s response to the FATF report was to announce a three-year action plan aimed at escalating supervision of financial institutions and outlining plans for an inter-agency task force to tackle money laundering.  

Receptive to the FATF report and its critiques, finance minister Taro Aso, described anti-money laundering as "essential to our strategy to make Japan an international financial hub open to the world."

Read the full report here or read coverage from Reuters.

Nearly 30% of Brazil's gold exports are illegal, report says  

A report from public prosecutors and the Federal University of Minas Gerias  discovered that roughly 28% of Brazilian gold exports originate from illegal mines. The report only considered gold that was registered with the federal government in order to pay taxes on the precious metal and cross referenced that data with satellite images on the supposed locations of the mines.

The report also states that the amount of gold coming out of the areas in question goes beyond the capacity of their sources.  

An environmental management professor at the Federal University of Minas Gerais and an author of the report, Raoni Rajao said, "There was an attempt to launder this gold, to hide its real origin. But by cross referencing it with images, there is no way this gold came from the declared origin."

Most of this illegal gold originates from illegal mining in protected nature reserves and indigenous land. This mining is done without regard to environmental regulations and is driving deforestation in the Amazon and has also been show to poison rivers with mercury.  

Find out more on Reuters.

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