High-risk Jurisdiction Screening

High-risk jurisdiction screening determines if the customer resides in a high-risk jurisdiction - i.e., a country identified by credible sources. These credible sources (often in consultation with the FATF) determine which jurisdictions are high-risk through mutual evaluation, detailed assessment reports, or published follow-up reports designed to determine the adequacy of jurisdictions’ AML/CFT systems.

The consequence is that—under AML/CTF frameworks around the world—customers residing in high-risk countries are perceived to carry a higher risk of money laundering or terrorist financing and, therefore, shall go through an enhanced customer due diligence process. This requirement derives from the Interpretation Note H (§15) to Recommendation 10 of the FATF Recommendations.

§15. There are circumstances where the risk of money laundering or terrorist financing is higher, and enhanced CDD measures have to be taken. (...) examples of potentially higher-risk situations (...) include the following: (...) Countries identified by credible sources, such as mutual evaluation or detailed assessment reports or published follow-up reports, as not having adequate AML/CFT systems.

High-risk jurisdiction screening through Fractal ID

For the purpose of determining whether a country is deemed a high-risk jurisdiction, Fractal ID monitors and follows the high-risk jurisdiction lists published by the FATF and the European Commission:

• European Commission’s list of high-risk third countries with strategic deficiencies;

• FATF’s list of jurisdictions with strategic AML/CFT deficiencies;

• FATF’s list of jurisdictions subject to a call on its members and other jurisdictions to apply counter-measures or enhanced due diligence to protect the international financial system from ML/FT risks.

Fractal ID’s default High-Risk jurisdictions screening lists may be tailored upon request. The discussion takes place between a Fractal ID account manager and the financial institution.