ACAMS Updated CAMS Exam Questions and Answers by josie

One of the criteria that the Financial Action Task Force (FATF) uses to define non-cooperative countries and territories (NCCTs) is the lack of adequate rules for the licensing and creation of financial institutions, especially those with no or minimal presence, and the lack of effective systems for checking the backgrounds of managers and beneficial owners of such institutions. This criterion aims to prevent the establishment and operation of shell banks or other entities that can be used for money laundering or terrorist financing purposes. The FATF requires that countries and territories should have laws and regulations that ensure that financial institutions are subject to adequate licensing or registration procedures, that the authorities have the power to deny or revoke licenses or registrations, and that the authorities have access to information on the identity, reputation, and financial soundness of the managers and beneficial owners of financial institutions.

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About the Non-Cooperative Countries and Territories NCCT Initiative, Section “The review and listing process”: “The FATF established at that time four regional review groups (Americas, Asia/Pacific, Europe, Africa/Middle East) consisting of representatives from the FATF member governments that served as the main points of contact with the reviewed country or territory. … The review groups gathered relevant laws, regulations and other relevant information, analysed this information against the 25 NCCT criteria, and drafted a report that was sent to the jurisdictions for comment.”

Annual Review of Non-Cooperative Countries and Territories 2006-2007: Eighth NCCT Review, Annex 1: “List of Criteria for Defining Non-Cooperative Countries or Territories”, Criterion 1: “Licensing and creation of financial institutions, in particular those with no physical presence, and the ability to obtain information on the beneficial ownership and control of such institutions.”

FATF (Financial Action Task Force) Countries 2024 - World Population Review, Section “Blacklisted Countries”: “These are countries which were previously placed on the grey list and advised by the FATF to adopt the recommended financial security procedures, but have either failed or refused to do so. Blacklisted countries may be labeled as Non-Cooperative Countries or Territories (NCCTs).”

According to the FATF Procedures for the Fourth Round of AML/CFT Mutual Evaluations1, jurisdictions that are determined to have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing are subject to the FATF’s International Cooperation Review Group (ICRG) process. The ICRG process involves the following actions for such jurisdictions:

Demonstrate a high-level commitment to swiftly resolve the identified deficiencies in the FATF mutual evaluation report. This commitment should be made in writing to the FATF President and should include an action plan with specific deadlines and milestones to address the deficiencies.

Report to FATF on the implementation of their progress under the enhanced follow-up mechanism. The FATF will monitor the progress of the jurisdiction through regular reports and on-site visits, and will decide whether the jurisdiction has made sufficient progress to exit the ICRG process or whether further actions are required, such as public statements, counter-measures, or suspension of membership.

The other options are not resulting actions for jurisdictions with strategic deficiencies, as they are either not part of the FATF procedures or not consistent with the FATF’s objectives and principles. For example, the FATF does not issue private statements regarding the level of compliance of a jurisdiction, nor does it allow a jurisdiction to appeal for a technical compliance re-rating based on its own criteria. The FATF also does not grant extensions of deadlines for jurisdictions to improve their regimes, as this would undermine the credibility and effectiveness of the mutual evaluation process.

References:

1: Mutual Evaluations - Financial Action Task Force

2: Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations

Economic sanctions are penalties imposed by a country or a group of countries on another country, entity, or individual for foreign policy or security purposes. There are different types of economic sanctions, depending on the scope, objective, and mechanism of the sanctions. Some of the common types are:

Targeted sanctions: These are sanctions that aim to minimize the adverse effects on the general population and the environment, and focus on specific individuals, entities, sectors, or activities that are responsible for or involved in the undesirable behavior or conduct. Targeted sanctions can include travel bans, asset freezes, arms embargoes, and trade restrictions on certain goods or services. For example, the United States and the European Union have imposed targeted sanctions on various officials, entities, and sectors in Russia, Iran, Syria, Venezuela, and other countries for human rights violations, nuclear proliferation, terrorism, corruption, and other reasons.

Sectoral sanctions: These are sanctions that target a specific sector or industry of the economy of the sanctioned country, such as energy, finance, defense, or transportation. Sectoral sanctions aim to disrupt the economic activity and revenue of the targeted sector, and to create pressure on the government or regime to change its policies or behavior. For example, the United States has imposed sectoral sanctions on Iran’s oil, gas, petrochemical, and automotive industries, as well as its central bank and other financial institutions, to curb its nuclear program and support for regional proxies.

Comprehensive sanction: These are sanctions that impose a total or near-total ban on trade, investment, and other economic relations with the sanctioned country. Comprehensive sanctions are the most severe and broadest form of economic sanctions, and they aim to isolate the country from the global market and cause severe economic hardship and social unrest. Comprehensive sanctions are often accompanied by diplomatic isolation and military intervention. For example, the United States has maintained a comprehensive embargo on Cuba since 1962, prohibiting most trade, travel, and financial transactions with the island nation, as well as supporting its political opposition and dissidents.

References:

What Are Economic Sanctions?, Council on Foreign Relations

Types of Economic Sanctions, Profolus

Economic sanctions, Wikipedia

How Economic Sanctions Work, Investopedia

CAMS Certification Package - 6th Edition, ACAMS

CAMS Certifications: How to Get CAMS Certified, ACAMS