Did you know that just doing business with the “wrong” country can increase your bank’s AML risk? That’s the reality in today’s globally connected financial world, where country-specific risks can make or break your AML compliance.
In this power-packed session, we decode Chapter 9 of the KYC AML CFT syllabus — Country Risk in Money Laundering. You’ll learn how cross-border transactions, regulatory differences, and global sanctions affect risk assessments. Plus, we explore FATF’s Black & Grey lists, UN embargoes, and sanctions from major nations like the USA, UK, and EU.
Whether you’re a banker preparing for CCP or JAIIB, or a compliance professional looking to brush up your knowledge, this session is tailored for you!
👉 Watch till the end to gain practical insights that can help you not only clear exams but also shine in your banking role.
👇 Don’t forget to drop your thoughts or questions in the comment section — we love engaging with our learner community!
📺 Before we dive in, watch this video for a complete breakdown:
🧩 Timestamps & Topic-Wise Explanation
⏰ 00:00 – What is Country-Specific Risk in Money Laundering?
Money launderers don’t just move money — they move risk. Criminals shift funds across borders to exploit regulatory loopholes. Why? To hide the source and make tracing harder.
⏰ 01:46 – Financial Regulatory Regimes & Exploitation by Criminals
Each country has its own set of AML regulations. Some are strict, some lax, and some… don’t care at all.
- Example: FATF standards are followed by many, but some countries barely comply — and that’s where criminals park their money.
⏰ 03:01 – Role of FATF: Identifying Risky Jurisdictions
FATF plays the watchdog. It evaluates nations and flags them in two main categories:
- Black List – High-risk jurisdictions needing immediate action
- Grey List – Countries under increased monitoring
Updated three times a year: February, June, October.
⏰ 04:47 – FATF Mutual Evaluation Criteria: The Big Six
If a country fails in these 6 core recommendations, it raises red flags:
- Criminalise money laundering
- Criminalise terrorist financing
- KYC regulations
- Enhanced customer due diligence
- Record keeping
- International cooperation
⏰ 07:20 – The 11 Immediate Outcomes: FATF’s Effectiveness Test
FATF checks: Have the rules made a difference? If 6+ outcomes score “low”, the country is treated as high-risk — even if laws exist on paper.
⏰ 10:36 – FATF Blacklist: The Most Dangerous Countries
As of March 2022, North Korea and Iran are on the Blacklist.
FATF recommends:
- Special attention to transactions
- Applying countermeasures
- Monitoring correspondent relationships
⏰ 16:00 – Grey List: Countries Under Increased Monitoring
Grey list nations are working with FATF to fix their frameworks. Examples include UAE, Pakistan, Turkey, etc.
⏰ 19:04 – UN Embargoes & Global Sanctions
The UN can block entire countries from global dealings due to terrorism, nuclear threats, or human rights violations.
- Arms bans
- Travel bans
- Asset freezes
⏰ 21:35 – Sanctions by USA, UK, and EU
🇺🇸 USA Sanctions:
- Comprehensive: Total ban (e.g., Iran, NKorea)
- Sectoral: Target specific sectors
- Non-Comprehensive: Restrict specific individuals/entities
🇬🇧 UK Sanctions:
- Arms embargo
- Trade bans with specific countries
- List of prohibited individuals (HMT List)
🇪🇺 EU Sanctions:
Focus on directives for peace and AML compliance — includes Iran, Iraq, Syria, etc.
⏰ 27:17 – Country Risk Categorization by Banks
Banks must consider Country Risk while:
- Assessing customer profiles
- Monitoring cross-border transactions
Indicators: Legal framework, terrorism level, FATF status, sanctions, tax laws, etc.
📝 Download PDF Notes of This Session
🎁 Want a handy revision document?
👉 Click here to download the full PDF notes
✅ Conclusion: Key Takeaways & Action Steps
Understanding country-specific risks is crucial — not just for exams, but for real-world banking operations.
🔑 What you should do next:
- Factor country risk into compliance frameworks
- Follow FATF updates
- Implement effective monitoring strategies
👇 Got questions or want to share your thoughts? Leave a comment below!
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