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FATF CONSULTATIVE FORUM
MEETING WITH THE BANKING, INSURANCE AND
SECURITIES SECTORS
30 September 2009
Opening remarks by the FATF President
Ladies and Gentlemen,
I am very pleased to chair this first meeting “new style” of the FATF Consultative Forum. Let me start by thanking the British Bankers’ Association for hosting our meeting, as well as the International Banking Federation and the Wolfsberg Group for their support in preparing it. I am confident that our discussions will lead to a productive dialogue and that we will achieve some concrete results.
The Consultative Forum - a tool to strengthen the relationship between the FATF and the private sector
As you know, the Consultative Forum was established in 2007 as a mechanism to pursue a further strengthening of the exchange of information and views between the FATF and private sector bodies across the globe. I personally believe that the Forum should also have the ambition to facilitate a real partnership approach between the FATF and private sector counterparts.
A number of important pieces of work have been undertaken under the umbrella of the Forum: in particular I like to mention the nine sectoral Guidance papers on the Risk-Based Approach. Most recently the FATF adopted Guidance for money service businesses and at our October Plenary in 2 weeks from now we expect to adopt Guidance for life insurance companies and intermediaries. All the guidance has been prepared in close collaboration with the relevant private sector bodies.
Last year, the FATF consulted all Forum members on the issues that you felt were important and which should be addressed. This consultation has resulted in the establishment of an expert group to analyse the issue of the third party reliance concerning CDD. This project is still ongoing.
The Consultative Forum has also proved its value as a consultation mechanism on other issues, such as the typologies report on Proliferation Financing.
From our collaboration to date I am pleased to observe the clear commitment that you have shown to engage and liaise closely on a range of AML/CFT issues, and I would like our interaction to continue to grow. The strong interest shown in participating in this meeting is a clear signal to me that you see a real value, not only in having meetings of the Forum such as this one, but in engaging more generally in a close and constructive dialogue.
I am fully aware that the way in which the Forum has been functioning until now, which is primarily through a secure website, does have its limitations. This is why it was decided to organise regular meeting of the Forum, on at least an annual basis, either with the full set of members, or like today with a more targeted audience. I am convinced that our discussions today will be mutually beneficial, and I look forward to benefit from the knowledge, experience and views of the FATFs banking, securities and insurance partners.
The FATF initiative related to the global financial crisis
One of the key issues of common interest is the present global crisis. Over the last 12 months the world has been facing one of the most serious economic and financial crises in recent history. Although we are still working hard to establish the exact causes, it is already clear that the enormous growth in the size and complexity of the financial sector over the past decades has made a substantial contribution.
I can assure you that the FATF is well positioned and prepared to play its part in fighting the undesirable consequences of the crisis. Well positioned and prepared in terms of mandate, geographical coverage and established procedures. For example, the G20, the FSB and the OECD are looking at the FATF model in their search for mechanisms and instruments that could help them to handle the crisis in other areas such as prudential regulation and tax.
Last February, the FATF Plenary decided to launch an initiative to assess the impact of the global financial and economic crisis on AML/CFT.
In April, the G20 Leaders agreed at their London summit to take action against non cooperative jurisdictions’ and asked the FATF to revise and reinvigorate the review process for assessing compliance by jurisdictions with AML/CFT standards. Moreover, they called upon the FATF to report to the next G20 Finance Ministers and Central Bank Governors’ meeting in September on adoption and implementation by countries. We were put on the shopping list of the G20!
In response to those calls the FATF started analysing the consequences of the financial and economic crisis with the objective of identifying new vulnerabilities that have become apparent through the financial crisis. We are looking in particular at issues such as international co-operation, transparency, and how to enhance global compliance in the shorter and longer term.
In August, I sent a report to the G20 Ministers of Finance and Central Bank Governors for their meeting early September; we were able to report real progress and perspective for the coming months, but we will also continue to study other effects that the crisis may have on AML/CFT efforts. Of course I did send the report to all non G20 delegations in the FATF as well.
Last weekend the G20 welcomed in Pittsburg the progress made by the FATF in its fight against ML and FT. Heads of State specifically called upon the FATF to issue a public list of high risk jurisdictions by February 2010.
Our first session today will discuss this whole issue in more depth, with introductions from the perspective of the industry, the regulators and the FATF.
Proliferation Financing
Under item II of the agenda we will look at proliferation financing. Last year FATF Ministers reaffirmed that part of the FATF’s mandate is to respond to new and emerging threats, including threats such as financing the proliferation of weapons of mass destruction. Although this is a relatively new area of interest, the FATF has already published the Proliferation Financing Report which identifies and analyses the existing threats linked to proliferation financing. It has also issued three guidance papers to assist jurisdictions and financial institutions in their implementation of relevant United Nations Security Council Resolutions.
Work in progress is that the FATF has constituted a Project Team that is developing policy options for consideration relating to the implementation of United Nations Security Council Resolution 1540. The Project team consists of representatives from the United Nations 1540 Committee and export control authorities, with input from the private sector. I expect that the Project Team will deliver its report with some policy options to the FATF early next year.
Preparation of the 4th Round of evaluations
We will turn to the global mutual evaluation process under item III. Currently, we are heading towards the end of the 3rd round of evaluations of FATF members. 25 of the FATF’s 32 members have been assessed, and FATF Style Regional Bodies have also conducted many mutual evaluations of their members, using the common AML/CFT Methodology. Altogether, since 2004, 118 jurisdictions have been evaluated. I should recognize the constructive role here of the World Bank and the IMF. The peer review process aims to ensure a full and transparent analysis of national AML/CFT regimes that is valuable not only for the international community and the countries concerned , but undoubtedly also for the private sector. The various processes in place provide a powerful incentive for the assessed countries to continue strengthening their regimes.
The FATF is about to reconsider some parts of the Recommendations in preparation for its fourth round of evaluations. This review will be a focused and balanced exercise, aiming at maintaining the necessary stability in the standards while addressing new or emerging threats, or obvious deficiencies or loopholes in the standards. The review will give emphasis to the impact and effectiveness of AML/CFT systems.
The FATF is committed to conducting this exercise in an open and transparent manner. That is why the FATF is keen to involve the private sector and in particular the members of the Consultative Forum.
We are just at beginning of the exercise and no precise processes and timelines for private sector consultation have as yet been decided, but we look forward to receiving the benefit of your contributions.
How best to organize that interaction can also be discussed under agenda item IV later today.
Conclusion
Let me conclude by saying that the financial sector is a key partner for the FATF. We are fully committed to having a close dialogue with you on many elements of FATF’s work. The FATF may be the standard setter, you are the lead actors in the daily fight against money laundering and terrorist financing. Your practical knowledge and experience is therefore essential for us.
The Consultative Forum is a valuable mechanism, and I am sure that in the future it could be used even more effectively to help us work together towards our common objectives. It’s a privilege to chair this meeting and I look forward to a successful outcome.
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