June 2025 FATF report on Complex Proliferation and Sanctions Evasion Schemes

The FATF's new report on Complex Proliferation and Sanctions Evasion Schemes provides a comprehensive overview of global trends and evasion methods.

The FATF's new report on Complex Proliferation and Sanctions Evasion Schemes highlights several critical points that financial institutions (FIs) should be aware of:

1. Global Vulnerabilities: The report reveals significant vulnerabilities in the global financial system regarding countering proliferation financing (PF). Only 16% of countries assessed by the FATF have demonstrated high or substantial effectiveness in implementing targeted economic sanctions.
2. Evolving Threats: The report analyses evolving methods and techniques used to evade PF-related sanctions. This includes sourcing dual-use goods, technologies, and knowledge through procurement networks and front companies.
3. Key Actors: The Democratic People’s Republic of Korea (DPRK) is a significant PF actor. The report highlights the DPRK's increasing financial connectivity and diverse revenue generation methods, including cyberattacks targeting virtual asset-related companies.
4. Typologies: The report outlines four major typologies used in sanctions evasion: The typologies cover:
• Enlisting Intermediaries to Evade Sanctions: This involves using third parties to conduct transactions or activities that would otherwise be prohibited.
• Obscuring Beneficial Ownership Information (BOI): Techniques to hide the actual ownership of assets or entities to gain access to the financial system.
• Using Virtual Assets and Other Technologies: Leveraging cryptocurrencies and other digital technologies to move funds covertly.
• Exploiting the Maritime and Shipping Sectors: Utilising complex shipping routes and practices to disguise the origin and destination of goods
5. Recommendations: The FATF emphasises the need for both the public and private sectors to bolster technical compliance and effectiveness to prevent the exploitation of weaknesses in existing controls.

Understanding these points can help financial institutions identify and mitigate the risks associated with proliferation financing and sanctions evasion.

These typologies are crucial for financial institutions to understand and mitigate the risks associated with proliferation financing and sanctions evasion.

References

FATF Report highlights significant gaps in global response to Proliferation ...https://www.fatf-gafi.org/en/publications/Financingofproliferation/complex-proliferation-financing-sanction-evasion-schemes.html

 Treasury Endorses New International Payments Standards, Supports FATF ...https://home.treasury.gov/news/press-releases/sb0172