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  1. Licensees and businesses
  2. AML
  3. Notices
  4. High-risk third countries
Changes to legislation

High-risk third countries

24 May 2024

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (opens in a new tab) (the MLRs 2017) have been amended as result of The Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024 (opens in a new tab) (the MLRs 2024).

The MLRs 2017 require the UK regulated sector to apply enhanced customer due diligence measures in relation to high-risk third countries.

Enhanced customer due dilligence

Regulation 33(1)(b) of the MLRs 2017 requires regulated businesses to apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationships with a person established in a high-risk third country or in relation to any relevant transaction where either of the parties to the transaction is established in a high-risk third country.

A high-risk third country was previously defined for the purposes of The MLRs 2017 as a country specified in Schedule 3ZA of The MLRs 2017. Government policy has been that this Schedule should align with lists published by the Financial Action Task Force (FATF) of ‘Jurisdictions Under Increased Monitoring’ and ‘High-Risk Jurisdictions subject to a Call for Action’.

For these purposes, Regulation 33(3) explains that:

  • a relevant transaction means a transaction in relation to which the relevant person is required to apply customer due diligence measures under regulation 27
  • being established in a country means:
    • in the case of a legal person, being incorporated in or having its principal place of business in that country, or, in the case of a financial institution or a credit institution, having its principal regulatory authority in that country
    • in the case of an individual, being resident in that country, but not merely having been born in that country.

Legislative change

The MLRs 2024 have amended the definition of a high-risk third country and removed Schedule 3ZA containing the list of high-risk third countries under the MLRs 2017.

Instead of referring to a separate Schedule, Regulation 33(3)(a) of the MLRs 2017 now defines a high-risk third country as:

  • a country named on either of the following lists published by the Financial Action Task Force as they have effect from time to time -
    1. High-Risk Jurisdictions subject to a Call for Action;
    2. Jurisdictions under Increased Monitoring.

In order to keep abreast of which countries are high-risk third countries, casinos will now have to refer directly to the lists published by the Financial Action Task Force (‘FATF’) of ‘Jurisdictions Under Increased Monitoring’ and ‘High-Risk Jurisdictions subject to a Call for Action’. These lists are updated 3 times a year on the final day of each FATF Plenary meeting, which is held every February, June and October.

The dates of these meetings are published several months in advance, in the events calendar on the FATF website (opens in new tab). The FATF list of countries are updated and published in full on the FATF website (opens in new tab).

Guidance

HM Treasury will continue to publish advisory notices following each plenary meeting.

Further information can be found in HM Treasury’s guidance on high-risk third countries: Money Laundering Advisory Notice: High Risk Third Countries (opens new tab).

Casinos should consider whether their money laundering and terrorist financing risk assessments, as well as their policies, procedures and controls, need to be amended as a result of these changes.

The Gambling Commission’s, ‘The prevention of money laundering and combating the financing of terrorism’ publication will be updated to include these changes in due course.

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