High-risk country
high-risk jurisdiction
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A country with strategic deficiencies in combating money laundering and terrorist financing, in particular according to the FATF lists.
The FATF publishes two lists three times a year: jurisdictions subject to a call for action and jurisdictions under increased monitoring. The EU also maintains its own list of high-risk third countries.
In practice
The FATF lists and the corresponding EU list change several times a year. In practice, checking country risks at onboarding is therefore not enough: whenever the lists change, the existing client base should be re-checked automatically – residences, nationalities, the seats of companies and the countries from which payments originate. Links to high-risk countries trigger enhanced due diligence, and how it was carried out is documented in the file.
Distinctions and common mistakes
A link to a high-risk country is not limited to the client's residence: nationality, the seat of companies in the structure, the origin of funds and payment counterparties also count. A common mistake is to check country risk only at onboarding and not again when the lists change.
Relevant in: Switzerland · Germany · Austria · Liechtenstein · EU-wide
Related terms
- FATF
- International body that sets standards for combating money laundering and terrorist financing and assesses how countries implement them.
- Enhanced due diligence
- Additional measures where the money-laundering risk is higher, for example for PEPs, high-risk countries or unusually complex structures.
Mentioned in these guides
- The risk-based approach in a family officeHow the risk-based approach under Swiss, German and Austrian AML law and the FATF works: risk factors, risk classes, graduated due diligence and documentation.
- Enhanced due diligence in practiceWhen enhanced due diligence applies and what to do in practice: PEPs, high-risk countries, complex structures, senior management approval, source of wealth.
- Due diligence obligations under the Swiss Anti-Money Laundering ActDue diligence under the Swiss AMLA: identifying the contracting party, establishing the beneficial owner, special clarifications, records – and practice.
- Transaction monitoring in a family officeHow a family office monitors transactions in line with risk: criteria for anomalies, clarification, documentation and the link to the reporting obligation.