The Financial Action Task Force (FATF) has removed Indonesia, the Philippines and the Cook Islands from its blacklist of countries and territories it considers to have insufficient safeguards against money laundering and other illicit financial transactions.

This means that just three countries - Myanmar, Nauru and Nigeria - remain on the blacklist, facing the prospect of a raft of sanctions that would include the rejection by the world's major banks of letters of credit (L/Cs) issued by local banks.

Effective implementation

After two days of meetings that ended 11 February, the Paris-based anti-money laundering watchdog said the three countries removed from its blacklist are now "effectively implementing anti-money laundering measures to remedy deficiencies previously detected."

In 2001 FATF had listed a total of 20 non co-operative countries and territories (NCCTs). The task force calls upon international financial institutions to scrutinise transactions with persons, businesses and banks in NCCTs.

Reactions

Philippine's President Gloria Arroyo declared the decision an "important milestone for the whole nation in the fight against corruption, money laundering and terrorist financing."

In Indonesia, the government hopes the FATF decision will lead to an upgrade of the country's sovereign credit ratings.

L/C risks

The three countries that remain on the FATF blacklist risk several sanctions.

These include higher risk premiums imposed on local firms making international transactions, termination of correspondent banking arrangements between local banks and banks in FATF member countries and the rejection of L/Cs issued by local banks.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.