High-risk third countries for AML purposes
The list of high-risk countries is set out in schedule 3ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
The list was amended on 29 March 2022 by the Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2022.
The high-risk third countries are:
- Burkina Faso
- Cayman Islands
- Democratic People's Republic of Korea (DPRK)*
- South Sudan*
- United Arab Emirates
The United Arab Emirates has been added to the list and Zimbabwe has been removed.
*These jurisdictions are subject to financial sanctions measures, which require firms to take additional measures.
On 17 March 2022, HM Treasury published an advisory notice about risks posed by jurisdictions with unsatisfactory money laundering controls.
The advisory notice is intended to provide clarification where industry has raised uncertainty or concerns.
Under the UK’s Money Laundering Regulations (regulation 33(1)(b)), any business relationship with a person established in a high-risk third country must be subject to enhanced due diligence (EDD).
Until the end of the Brexit transition period, the list of high-risk countries was determined by the European Union (EU).
From 1 January 2021, the UK has had its own standalone list. Since then, any amendments to the EU list do not have effect in the UK.
The UK is entitled to amend its own list of high-risk countries under section 49 of the Sanctions and Anti Money Laundering Act 2018.
The list continues to mirror both the Financial Action Task Force's (FATF) jurisdictions under increased monitoring and high-risk jurisdictions subject to a call for action.
Schedule 3ZA consolidates these lists into a single list of countries, as all countries included in either of the FATF's lists have significant shortcomings in their anti-money laundering, counter-terrorist financing and counter-proliferation financing controls.
The aim remains tackling strategic deficiencies in the identified countries with regards to their national anti-money laundering and counter-financing of terrorism regimes.
You must apply EDD measures in any transaction or business relationship with a person established in a high-risk third country.
For more guidance on appropriate EDD measures, see our guide to customer due diligence and the anti-money laundering guidance for the legal sector.
The list was later amended in four delegate regulations:
Since the end of the Brexit transition period, the list has been amended in:
- July 2021 by the Money Laundering and Terrorist Financing (Amendment) (No 2) (High-Risk Countries) Regulations 2021
- November 2021 by regulation 2 of the Money Laundering and Terrorist Financing (Amendment) (No 3) (High-Risk Countries) Regulations 2021