As part of the Government of Jersey's programme of combatting financial crime, guidance has been produced on specific countries that may present a higher risk of facilitating terrorist financing (TF). This is a key area as Jersey implements its obligations under international standards set by the Financial Action Task Force (FATF).
This guidance sets out the methodology employed to create the list of higher risk TF countries along with the results of applying the methodology. The list identifies specific countries where greater care should be taken, when forming business relationships or undertaking one off transactions with persons that have, or are associated with persons that have, a connection to them. The risks associated with each are very different, as will be the approach to addressing those risks. The measures that need to be deployed depend on which area of risk is being addressed.
This list represents the output of the recent work focussing on national threat as part of the TF risk assessment work and is published in line with paragraph 7.5.8 of the Update on Terrorist Financing National Risk Assessment, published May 2023.. To maintain this list as a useful advisory tool it will be updated regularly. However, there may also be a need to update it on an ad hoc basis due to specific events.
The Jersey Financial Services Commission (JFSC) already publishes details of country risk, which are regularly updated and are used by industry as a tool for completing customer and business risk assessments:
- the list of countries which FATF considers require the highest level of countermeasures or enhanced due diligence (Appendix D1), and
- more than 140 countries which have a degree of risk in certain sectors, according to a range of international sources (Appendix D2)
Industry are reminded that when using Appendix D2 and this guidance they are expected to exercise their own judgement in relation to how they interpret and use the documents. As each business is unique, the considerations required will also be unique.
The FATF standards do not say that higher risk business should be refused, but that risks should be recognised and mitigated appropriately.
The publication of this list is in line with the recommendations of the overall National Risk Strategy, the rolling programme of National Risk Assessments, and other measures such as the Jersey Finance series of seminars that focus on specific countries, including those with a recognised higher risk profile.
Terrorist financing methodology for determining countries which may present a higher TF risk
Terrorist financing can affect any country. Jersey is no exception. Terrorists need money to finance their operations, and to achieve this they attempt to abuse financial services and the regulated sectors' products and services, delivery channels etc.
The FATF Terrorist Financing Risk Assessment Guidance, makes reference to adhering to the Monaco (MONEYVAL) guidance. It seeks to better understand and apply the different challenges that IFCs, generally with a low domestic terrorism risk, may face.
Against this background, a TF operational working group utilised nine open source indices and several data sets to determine the final list of countries. The sources included the Basel AML Index, Jersey Terrorist Financing Cross Border Threat Assessment 2023, and the FATF mutual evaluation reports list, and jurisdictions under increased monitoring. The data sets included the Egmont Group, as well as several local and UK sources (including the Financial Intelligence Unit's SARs data and that from other Island agencies).
This has resulted in a repeatable methodology that produces a relevant and publishable list of higher risk terrorist financing countries focusing on the threat that relates to Jersey as an IFC.
List of terrorist financing higher risk jurisdictions
This list was prepared in September 2023: