Efren Marquez Alba is an Engagement Director with Treliant. His areas of expertise include a range of AML, sanctions, and other financial crime domains, including regulatory program and program management, risk identification and measurement, suspicious activity investigations, Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), systems and technology administration…
- Source: state.gov
Financial institutions should identify and measure inherent geographic money laundering and terrorist financing (ML/TF) risk when they conduct the periodic risk assessment process, monitor for high-risk country funds transfers within an automated transaction monitoring system, and in the assessment of customer and third-party risk. Financial institutions should be aware of changes in inherent risk as identified by commonly used key risk indices, such as the annual U.S. State Department INCSR report Volume II, and ensure that source data used by vendor country risk models – which utilize numerous risk indices – is reasonable, and that models are calibrated appropriately to adjust for unexpected values.
On March 1, 2022, the U.S State Department released the 2022 International Narcotics Control Strategy Report (INCSR), an annual report by the Department of State to Congress prepared in accordance with the Foreign Assistance Act. The report describes the efforts of key countries to attack all aspects of the international drug trade in the most recent calendar year. Volume I covers drug and chemical control activities. Volume II covers money laundering and financial crimes and is a commonly used ML/TF country risk data source.
The total number of jurisdictions designated as of Major Money Laundering Concern dropped from the previous year total of 80 to 79 countries. The only change to the list was the unexpected dropping of Russia as a designated country. The media note provided on the 2022 INCSR by the U.S. State Department did not provide any specific information on the material included within Volume II, including the State Department’s rationale for the omission of Russia as a Country of Major Money Laundering Concern.