High-risk Jurisdiction
Overview
A high-risk jurisdiction is a country or territory identified as having weak AML/CFT controls or higher exposure to financial crime. The FATF regularly publishes lists of high-risk jurisdictions, and regulators require enhanced due diligence when dealing with customers or transactions linked to them.Financial institutions must apply stricter checks, monitor transactions more closely, and sometimes restrict dealings altogether. This reduces exposure to money laundering, terrorism financing, and sanctions violations. Banks, fintechs, and insurers are particularly cautious when handling cross-border payments from these jurisdictions.
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FAQ
What is a high-risk jurisdiction?
A country with poor AML/CFT controls or higher financial crime risks.
Why does it matter in compliance?
Transactions linked to such regions are more likely to involve money laundering.
Who defines these lists?
The FATF, along with local regulators and international bodies.
What must institutions do?
Apply EDD and sometimes avoid or restrict transactions.