Policy background Enhanced due diligence: designation of high-risk countries
The UK’s High-Risk Third Countries list (the List) is an important part of the government’s anti-money laundering, counter-terrorism financing and proliferation financing (AML/CFT/CPF) regime. The List is defined in Schedule 3ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), and sets out those countries identified as having strategic deficiencies in their AML/CFT/CPF regimes, thus posing a high risk to the UK. To protect the UK’s financial system, regulations stipulate that certain transactions with and all customers established in high risk jurisdictions must undergo enhanced checks by the UK’s regulated businesses.
	The List mirrors and is updated in accordance with those countries identified in public lists by the Financial Action Task Force (FATF), the global standard setter for AML/CFT/CPF, as having strategic deficiencies in their AML/CFT/CPF regimes.
	When the List was introduced in March 2021, the government committed to updating the List to mirror the periodic changes made by the FATF to its public lists. These updates to the List are made up to three times a year, following updates by the FATF. As per the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), the List can only be updated through made-affirmative procedures. Since introduction of the List, the Government has laid seven statutory instruments to make these updates. The administrative and parliamentary process for amending the List via secondary legislation however prolongs the time taken for necessary, routine updates, while creating uncertainty and delays in the implementation of requirements for the regulated sector to apply enhanced checks.
	This measure will streamline the process of updating the List, by allowing regulations to refer directly to the lists of countries published by the FATF. Any countries included in the FATF lists will therefore automatically trigger obligations to conduct enhanced checks in the UK, unless otherwise specified. This will ensure the List remains up-to-date with latest findings, allowing the UK to respond swiftly to the latest economic crime threats and provide greater clarity to businesses on which jurisdictions are deemed to be high risk at the speed necessary.
	The measure includes a transitionary period to allow consequential amendments to regulations to be made within 6 months of royal assent under the made affirmative procedure, to allow these automatic updates to be implemented as soon as possible. Any changes made after that period will be subject to the draft affirmative procedure.