The Financial Action Task Force (FATF) published this year a “Guidance on Counter Proliferation Financing – The Implementation of Financial Provisions of United Nations Security Council Resolutions to Counter the Proliferation of Weapons of Mass Destruction” (FATF Guidance). The FATF Guidance can be found at the FATF website: .
2 The FATF Guidance aims to strengthen the effective implementation of relevant United Nations Security Council Resolutions (UNSCRs) by improving public and private sector stakeholders’ understanding of their obligations under the UNSCRs. Financial institutions (FIs) should study the FATF Guidance carefully and incorporate it as appropriate within their internal risk management processes. Of relevance to FIs would be the call to, among others:
a. Identify higher-risk customers and transactions by:
i. Considering contextual factors, circumstances and information which may be indicative of customers and transactions posing higher proliferation financing and sanctions evasion risks;
ii. Reviewing existing customer and transactional information against relevant information provided by authorities, as well as proliferation financing typologies and red flag indicators;
b. Subject higher-risk customers and transactions to appropriate monitoring and follow-up actions to prevent prohibited transactions. Such actions should include the timely review and reporting of suspicious transactions and freezing of accounts, where appropriate.
3 MAS expects senior management of FIs to adequately manage proliferation financing risks and ensure effective implementation of UNSCRs. FIs are reminded to remain vigilant to the risk of establishing or maintaining business relationships with representatives, nominees or companies, including front or shell companies, which are used to circumvent UN sanctions.
4 FIs should regularly review their risk management controls to take into account developments including new typologies noted, information provided by the authorities, or significant legislative changes, and test the controls for effectiveness. FIs should also have adequate processes to review and disseminate in a timely manner relevant proliferation financing typologies and red flag indicators to all relevant officers within the FI.