When registering a UK company, your country of residence – and in some cases your citizenship – can mean extra compliance checks under anti-money laundering rules. This page explains what “high-risk jurisdictions” are, why enhanced due diligence may be required, and what information and documents you may be asked to provide before your UK company formation can be approved.
- Enhanced due diligence is mandatory for clients from high-risk jurisdictions to mitigate anti-money laundering risks.
- Transactions involving high-risk clients are subject to increased scrutiny by the service providers.
- The UK maintains a list of high-risk jurisdictions, regularly updated by HM Treasury.
- The FATF identifies jurisdictions with strategic AML/CFT deficiencies, categorising them as high-risk or under increased monitoring.
Why does a customer’s jurisdiction matter?
Before accepting a non-resident customer, any financial or corporate service provider is required to conduct due diligence measures to identify and assess the risks associated with that customer. Among other things, it is essential to find out the client’s country of residence and/or citizenship, who the company’s beneficial owners and main business partners will be – whether individuals and/or a body corporate including, in the latter case, that company’s country of incorporation – and the geographical scope of their operations.
This is necessary because the interaction with persons or entities originating from or otherwise associated with certain countries or territories may carry the risk of involvement in the laundering of money which has been obtained by illegal means. This is why most countries’ competent authorities and international bodies maintain lists of countries which are recognised as high-risk for the purposes of anti-money laundering and countering the financing of terrorism (AML/CFT).
The United Kingdom’s list
When establishing requirements for their regulated entities, individual countries are free to maintain and amend their own jurisdiction lists for AML/CFT purposes. In most cases they are also guided by the current FATF list.
For example, the United Kingdom’s list of high-risk third countries is outlined in Schedule 3ZA of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and usually includes the same countries as in the FATF list.
- Algeria
- Angola
- Bolivia
- British Virgin Islands
- Bulgaria
- Cameroon
- Côte d’Ivoire
- Democratic People’s Republic of Korea
- Democratic Republic of the Congo
- Haiti
- Iran
- Kenya
- Kuwait
- Lao PDR
- Lebanon
- Monaco
- Myanmar
- Namibia
- Nepal
- Papua New Guinea
- South Sudan
- Syria
- Venezuela
- Vietnam
- Yemen
His Majesty’s Treasury (HM Treasury) publishes and regularly updates the UK’s list of high-risk jurisdictions within the relevant advisory notice on the gov.uk website.
All regulated UK businesses are required to apply enhanced customer due diligence measures and enhanced ongoing monitoring in any business relationship with a person established in or associated with a high-risk third country.
In addition, as part of our own risk assessment, we currently also treat Russia and Belarus as high-risk across our client relationships because the current sanctions landscape and related financial restrictions can increase compliance risk and make verification more complex.
FATF list
The Financial Action Task Force (FATF), as an inter-governmental body which sets international standards in this area, regularly identifies jurisdictions with strategic AML/CFT deficiencies and publishes the relevant lists of countries.
The FATF list of countries for the purposes of AML/CFT falls into two groups: “High-risk jurisdictions subject to a call for action” (also referred to as the “black list”) and “Jurisdictions under increased monitoring” (also referred to as the “grey list”).
The lists of countries presented above are regularly updated depending on the progress achieved by particular countries in addressing their strategic deficiencies.
What if a client is from a high-risk jurisdiction?
- If a person belongs to a high-risk third country then the regulated entity, e.g. a bank or a corporate service provider, that is establishing business relations with such a person must apply enhanced due diligence measures.
- If such a client is accepted for service then their transactions will be the subject of increased attention.
- Uniwide Formations applies enhanced due diligence measures to customers from high-risk jurisdictions listed by HM Treasury. If you reside in or are a citizen of any of these countries, then please submit this form before placing an order through our website.
