Businesses must be cautious when dealing financially with Iran and Korea, says the Office of the Superintendent of Financial Institutions of Canada (OSFI).
In a recent notice, the OSFI shared statements released by Canada’s Financial Action Task Force (FATF). These statements outline the risks of handling transactions and business relationships that are connected to Iran and North Korea. Officials are concerned about the potential risks of money laundering and terrorist financing activities.
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In particular, the OSFI says the FATF is “concerned about Iran’s continuing failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system…The FATF has requested that its members consider possible additional safeguards, or strengthen existing measures.”
The OSFI notice says institutions should:
- Classify clients, banks and other financial institutions connected to Iran as high risk;
- Apply enhanced customer due diligence measures with respect to such clients and entities; and
- Take the FATF’s concerns into account when deciding whether to file a suspicious transaction report in respect of financial transactions emanating from, or destined to Iran.
Further, the OSFI says that despite cooperation between North Korea and Canada’s governments, the FATF says executives in that region may still attempt to use “correspondent relationships…to bypass or evade counter-measures and risk mitigation practices.”
As a result, institutions are encouraged to take the same precautionary measures prescribed for Iran when dealing with North Korean connections.
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Banks should also take caution when doing business with Algeria, Burma (Myanmar), Ecuador, Ethiopia, Indonesia, Kenya, Pakistan, Syria, Tanzania, Turkey, and Yemen. The FATF statements note “these countries are out of compliance with the action plans they made with FATF to address problems and security deficiencies.”
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