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Money Laundering: High risk countries and sanctions

by LLB Reporter
15th Dec 22 9:19 am

As part of the required risk based approach to money laundering that UK firms are obliged to implement the country of origin of the customer, transaction and ultimate beneficiary must be considered as well as if either the customer or ultimate beneficiary has any form of sanction against them.

The UK government keeps a record of high risk countries and individuals and organisations that currently have sanctions against them. Any transaction, customer or ultimate beneficiary that goes through a high risk country should be seriously considered as a money laundering risk and may not be suitable to do business with.

Firms are required to enact enhanced due diligence in these cases and should it be decided no money laundering risk is presented, it is prudent to record the reason why in detail and store this information. Should any individual or organisation appear on a sanctions list it is advisable to not conduct any business with them.

As a member of the UN Security Council any sanctions imposed by the UN are automatically recognized by the UK government. In addition to this, the UK government also issues and enforces additional sanctions.

High Risk Countries for Money Laundering due to Lack of Regulation

Countries that do not have a satisfactory level of anti-money laundering checks ,legislation or enforcement are considered to be high risk; and companies are required to perform enhanced due diligence on any business activities involving an individual, entity or transaction from one of these countries.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 lists these countries in section 3ZA. If a company is implemented in a money laundering scheme involving any high risk countries and is found to have not met their due diligence requirements they will be prosecuted as being complicit.

High risk countries are (information correct as of December 2022):

  • Albania
  • Barbados
  • Burkina Faso
  • Cambodia
  • Cayman Islands
  • Democratic People’s Republic of Korea
  • Democratic Republic of Congo
  • Gibraltar
  • Haiti
  • Iran
  • Jamaica
  • Jordan
  • Mali
  • Morocco
  • Mozambique
  • Myanmar
  • Panama
  • Philippines
  • Senegal
  • South Sudan
  • Syria
  • Tanzania
  • Turkey
  • Uganda
  • United Aran Emirates
  • Yemen

High Risk Countries by Sanction

The UK government maintains sanctions against countries and individuals for reasons including: corruption, terrorism and military aggression. Often these are financial and trade sanctions. Doing business in breach of these sanctions is a major crime and are punished by large fines (frequently over £1 million) and up to seven years in prison.

Countries that currently have UK sanctions against them are (information correct as of December 2022):

  • Afghanistan
  • Belarus
  • Bosnia & Herzegovina
  • Burundi
  • Central African Republic
  • Democratic People’s Republic of Korea
  • Democratic Republic of Congo
  • Guinea
  • Republic of Guinea-Bissau
  • Iran
  • Iraq
  • Libya
  • Mali
  • Nicaragua
  • Russia
  • Somalia
  • South Sudan
  • Syria
  • Venezuela
  • Yemen
  • Zimbabwe

High Risk Individuals

The UK government currently maintains sanctions against thousands of individuals across a multitude of countries and organisations. A breach of any of these sanctions is punishable by large fines (frequently over £1 million) and up to seven years in prison.

How to Protect Your Business Against Dealing with High Risk Countries and Individuals

It is a requirement under UK law that sufficient due diligence be carried out to uncover if any transaction involves a high risk/sanctioned country, organisation or individual and the punishments are severe.

To perform this due diligence manually is effectively not possible and it is imperative that a company has sufficient software in place to flag any potential breach.

Red Flag Alert can help by providing an AML check software that supplies:

  • Unbeatable match rates
  • Advanced due diligence
  • A full suite of risk checks
  • Real time PEPs and sanctions checks
  • Time and cost saving automation
  • Ongoing support for users

Check, onboard and monitor, all with one comprehensive platform. Remain compliant and reduce AML risk, Try Red Flag Alert today.

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