Topics of Interest
Money Laundering
New Anti-Money Laundering Standards Released
OECD press release
Revision of the 40 Recommendations
The Financial Action Task Force (FATF) issued its revised Forty Recommendations to combat money laundering at the conclusion of the final Plenary meeting under the Presidency of Germany. Commenting on the Recommendations, FATF President Jochen Sanio said: "In updating its Forty Recommendations against money laundering, the FATF has accomplished one of the most important tasks it has undertaken since its inception in 1989."
The main priority of the FATF during 2002-2003 (see annual report) has been to complete the revision of the Forty Recommendations, the international anti-money laundering standard. The revision makes significant changes, which when combined with the Eight Special Recommendations, create a comprehensive, consistent and substantially strengthened international framework for combating money laundering and terrorist financing.
The major changes that have been adopted include:
- specifying a list of crimes that must underpin the money laundering
offence;
- the expansion of the customer due diligence process for financial
institutions;
- enhanced measures for higher risk customers and transactions,
including correspondent banking and politically exposed persons;
- the extension of anti-money laundering measures to designated
non-financial businesses and professions (casinos; real estate agents;
dealers of precious metals/stones; accountants; lawyers, notaries and
independent legal professions; trust and company service providers);
- the inclusion of key institutional measures, notably regarding
international co-operation;
- the improvement of transparency requirements through adequate and
timely information on the beneficial ownership of legal persons such
as companies, or arrangements such as trusts;
- the extension of many anti-money laundering requirements to cover
terrorist financing; and
- the prohibition of shell banks.
The revised Recommendations set a new standard, which FATF members will immediately start working to implement. The FATF encourages other countries and jurisdictions to do likewise. The FATF will also be moving promptly to assess members' compliance with this standard as part of its programme of work for FATF-XV (2003-2004). This will occur through a process of self-assessment, which is then to be followed by a further round of mutual evaluations which could start before the end of 2004.
New members of FATF
The FATF also announced that South Africa and the Russian Federation have been admitted as full members of the FATF following a positive outcome to the first mutual evaluations -- which assessed their systems for combating money laundering and terrorist financing. The addition of South Africa and the Russian Federation to its membership strengthens the FATF's representation worldwide.
Non-cooperative countries and territories
The FATF removed St. Vincent and the Grenadines from the list of Non-Cooperative Countries and Territories (NCCTs). In line with past practice, the FATF will continue to monitor closely the implementation of the anti-money laundering system in this jurisdiction.
The current list of NCCTs is as follows: Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines and Ukraine. Accordingly, the FATF calls on its members to update their advisories requesting that their financial institutions give special attention to businesses and transactions with persons, including companies and financial institutions, in listed countries or territories, to take into account the changes in the list.
The FATF welcomed further progress made by some of the jurisdictions on the list. Egypt, Guatemala, and the Philippines will be invited to submit implementation plans to enable the FATF to evaluate the actual implementation of their legislative changes. The FATF welcomes the continued progress of Ukraine to improve its anti-money laundering system and encourages the Ukrainian authorities to pursue their efforts. If Ukraine maintains its current pace of reform it may be asked to submit an implementation plan in the near future. The FATF welcomes Nauru's recent legislative efforts to eliminate offshore shell banks and encourages Nauru to take additional steps to ensure that shell banks cease to operate and cease banking activity. At its next Plenary meeting on 1 to 3 October 2003, the FATF will review again the situation of each NCCT.
Terrorist Financing
The FATF has also actively pursued its activities to counter terrorist financing. In order to assist countries to implement effective measures to combat the financing of terrorism, further interpretation and guidance have been developed since October 2002 on the Eight Special Recommendations, including with respect to informal money transfer systems (SR VI), wire transfer requirements (SR VII) and non-profit organisations (SR VIII).
There has also been a collaborative effort between the FATF, the United Nations and other international organisations, to encourage all countries to implement the Special Recommendations. The Recommendations have now been endorsed by many non-FATF members and international organisations and bodies, and 130 jurisdictions are participating in the FATF self-assessment exercise. This will enable FATF to assist the IMF, World Bank, UN and other donors, including the recently-created Counter Terrorism Action Group, to prioritise their offers of technical assistance with respect to implementing the Eight Special Recommendations on Terrorist Financing.
Collaboration between FATF and the IFIs
Finally, FATF-XIV saw a continuation of the collaborative efforts between FATF and the International Financial Institutions to reinforce global standards. Having earlier recognised the Forty and the Eight Special Recommendations as the international standards for combating money laundering and terrorist financing, the IMF and World Bank formally added them to the list of standards for which Reports on the Observance of Standards and Codes (ROSCs) are prepared. In October 2002, the IMF, the World Bank and the FATF agreed a common methodology to assess compliance with the FATF Recommendations. This methodology has now been used both for FATF mutual evaluations and IMF/World Bank assessments. To assist the Fund and Bank in their work, experts from FATF members or FATF-style regional bodies have been made available for IMF/World Bank-led assessments.
The FATF is an independent international body whose Secretariat is
housed at the OECD. The thirty-one member countries and governments of
the FATF are: Argentina; Australia; Austria; Belgium; Brazil; Canada;
Denmark; Finland; France; Germany; Greece; Hong Kong, China; Iceland;
Ireland; Italy; Japan; Luxembourg; Mexico; the Kingdom of the
Netherlands; New Zealand; Norway; Portugal; the Russian Federation;
Singapore; South Africa; Spain; Sweden; Switzerland; Turkey; United
Kingdom and the United States. Two international organisations are
also members of the FATF: the European Commission and the Gulf
Co-operation Council.
Berlin, Germany
June 20, 2003