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Welcome to EQUITY ISSUES, a short note on a relevant issue in the private equity and venture capital industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.


Claire Cummings

020 7585 1406


HM Treasury publishes Advisory Notice:

Money Laundering and Terrorist Financing controls in higher risk jurisdictions

The Money Laundering, Terrorist Financing and Transfer of Funds Regulations require UK regulated firms to put in place policies and procedures in order to prevent activities related to money laundering and terrorist financing. UK regulated businesses are also required to apply enhanced customer due diligence and enhanced ongoing monitoring on a risk-sensitive basis in certain defined situations and in “any other situation, which by its nature can present a higher risk of money laundering or terrorist financing”. Further, UK regulated businesses must apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationship or transaction with a person established in a high-risk third country (as identified by the EC in MLD4).
The Regulations also require that relevant persons must take into account “geographical risk factors” when assessing risk and the extent of measures which should be taken to manage and mitigate that risk. These risk factors are stated as including whether a country is identified by a credible source, including reports published by the FATF, as not implementing requirements to counter money laundering and terrorist financing that are consistent with FATF recommendations.
HM Treasury Advisory Notice

FATF is the international AML/CFT standard-setter and regularly publishes statements that identify high-risk countries based on assessments of their AML/CFT regimes. In line with the Regulation, HM Treasury has advised the regulated sector to review the latest publication by FATF on high risk jurisdictions which identify jurisdictions with strategic deficiencies in their AML/CFT regimes.

As a result of the FATF publication, HM Treasury has made the following advisories:
  • Firms are advised to consider DPRK as high risk and apply counter measures and enhanced due diligence measures in accordance with the risks.
  • Firms are advised to consider Iran as high risk and apply enhanced due diligence measures in accordance with the risks.
  • Firms are advised to take appropriate actions to minimise the associated risks, which may include enhanced due diligence measures in high risk situations in respect of the following countries:
  1. Ethiopia;

  2. Iraq;
  3. Serbia;
  4. Sri Lanka;
  5. Syria;
  6. Trinidad and Tobago;
  7. Tunisia;
  8. Vanuatu; and
  9. Yemen.

This document is for general guidance only. It does not contain definitive advice.


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Cummings Law
42 Brook Street
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United Kingdom

25 05 2019

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