Changes to the UK’s definition of High Risk Third Countries

UK Money Laundering Regulations require firms to carry out enhanced due diligence (EDD) in relation to High Risk Third Countries (HRTC). A HRTC was previously defined as a country specified in Schedule 3ZA of the UK MLRs, however this definition has now changed.

A new statutory instrument, the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024, enters into force on 23 January 2024.  These Regulations amend the definition of a High Risk Third Country in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (UK MLRs).

The amendment removes Schedule 3ZA from the MLRs and the MLRs will instead define an HRTC as:

“a country named on either of the following lists published by the Financial Action Task Force as they have effect from time to time -

(i) High-Risk Jurisdictions subject to a Call for Action;

(ii) Jurisdictions under Increased Monitoring”

Through this amendment, no additional or different countries come into scope of enhanced due diligence obligations. However, it will require firms to update their policies, procedures and risk assessments to reflect the change.

In order to keep abreast of which countries are HRTCs, firms will now have to refer directly to lists published by the Financial Action Task Force (‘FATF’). These lists are updated three times a year, on the final day of each FATF Plenary meeting, held every February, June and October. The FATF list of countries are updated and published in full on the FATF website, here.

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