12 Nov Understanding High-Risk Third Countries and AML Obligations

Posted at 13:06h in Companies by

 

As a business owner or professional dealing with financial transactions, you may have heard the term High-Risk Third Countries in the context of Anti-Money Laundering (AML) obligations. But what does this really mean for your business, and why is it important to stay compliant?

In simple terms, high-risk third countries refer to countries or jurisdictions that are considered to have weak or insufficient controls against money laundering and terrorist financing. These countries pose a higher risk for businesses that deal with international transactions, and therefore, more stringent AML measures are required.

What Are High-Risk Third Countries?

  • Definition: High-risk third countries are nations that do not comply with international standards to prevent financial crimes like money laundering and terrorism financing.
  • List of countries: The Financial Action Task Force (FATF), an international organization, maintains a list of these high-risk countries. It’s important to regularly check this list to ensure your business isn’t exposed to unnecessary risks.

For more details on the latest list of high-risk third countries, you can refer to the FATF website.

Why Should You Care About High-Risk Third Countries?

If your business deals with clients or transactions involving high-risk third countries, you have specific obligations under the UK’s AML regulations. These regulations require businesses to take extra precautions to ensure that their operations are not being used for money laundering or financing terrorism.

Here’s why staying compliant matters:

  • Avoid Penalties: Failing to meet AML obligations can result in hefty fines or even criminal charges for your business.
  • Maintain Trust: Keeping your business free from financial crime protects your reputation and maintains trust with your clients and partners.
  • Protect Your Business: By ensuring compliance, you reduce the risk of your business being involved in illegal activities.

AML Obligations for High-Risk Countries

If your business is involved with clients or transactions linked to high-risk third countries, you must follow strict AML procedures, such as:

  • Enhanced Due Diligence (EDD): This means carrying out additional checks and verifying the source of funds for customers based in or dealing with high-risk countries.
  • Ongoing Monitoring: Constantly monitor transactions and business relationships with high-risk clients to spot suspicious activity.
  • Reporting Suspicious Activity: If you detect anything unusual or suspicious, you must report it to the UK Financial Intelligence Unit (UKFIU).

Steps to Ensure Compliance

Here’s what your business can do to stay compliant with AML regulations:

  1. Stay Updated on FATF Lists: Regularly check for updates on high-risk countries. This ensures you’re always aware of any changes that may affect your AML procedures.
  2. Review Your Client Base: Identify if any of your clients are from high-risk countries or are engaging in transactions linked to these regions.
  3. Implement Enhanced Due Diligence (EDD): Make sure your compliance team is following the necessary procedures to assess the risk of clients from high-risk countries.
  4. Train Your Team: Educate your staff on AML procedures and the importance of complying with regulations to avoid fines and criminal charges.
  5. Use Technology: Invest in AML software or tools to help streamline the identification of high-risk transactions and reduce manual work.

UK list of High-Risk third countries

As of 13 June 2025, the FATF published the most recent update to its lists, with the following jurisdictions considered ‘High-Risk Third Countries’ as defined by Regulation 33 of the MLR:

  • Algeria
  • Angola
  • Bolivia
  • British Virgin Islands
  • Bulgaria
  • Burkina Faso
  • Cameroon
  • Côte d’Ivoire
  • Democratic People’s Republic of Korea
  • Democratic Republic of the Congo
  • Haiti
  • Iran
  • Kenya
  • Lao PDR
  • Lebanon
  • Monaco
  • Mozambique
  • Myanmar
  • Namibia
  • Nepal
  • Nigeria
  • South Africa
  • South Sudan
  • Syria
  • Venezuela
  • Vietnam
  • Yemen.

Of these jurisdictions, the following are also subject to financial sanctions measures which require companies to take additional measures:

  • Democratic People’s Republic of Korea
  • Democratic Republic of the Congo
  • Haiti
  • Iran
  • Myanmar
  • South Sudan
  • Syria
  • Venezuela
  • Yemen.

 

If you’re unsure about how to handle high-risk countries or need help with your AML procedures, contact us today for a consultation.

Tags:
Print page