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Joint FATF/MONEYVAL Experts Meeting on Typologies
Keynote Address by the FATF President
Antonio Gustavo Rodrigues
24 November 2008
Your Serene Highness;
Ministers;
Mr Vasil Kirov, MONEYVAL President;
Andrew Strijker and Philippe de Koster, co-chairs;
distinguished guests;
ladies and gentlemen.
My friends, it is a great pleasure for me to be here in the beautiful Principality of Monaco and to speak to you today.
Firstly, I would like to thank each and every one of you for coming to the 2008 FATF and MONEYVAL Joint Typologies Meeting. Many of you have travelled great distances to work hard over the next three days. And, no doubt working instead of seeing such a beautiful location will be even harder.
I would also like to thank the Monegasque authorities, particularly SICCFIN, for organising this meeting of experts. Hosting such an event is a clear message of your commitment to the global fight against money laundering and terrorist financing. Additionally, as a Brazilian, I also have to thank you for assistance recently provided in a very important case in my country. The Monegasque Minister of Justice just visited Brazil to facilitate important international co-operation to progress this case.
With the regulatory revolution we faced worldwide in the past 20 years, the international trade and financial flows have multiplied by more than 10 times. In the same way as the more competitive businessmen, criminals have taken advantage of this.
Most governments have however continued working based on the same traditional principles and procedures, specifically with regard to law enforcement.
The FATF has assumed a fundamental role in this context – guiding countries, through its standards, along a path towards a truly international and co-ordinated response.
Money laundering, terrorist financing and other financial crimes should be a matter of serious concern to all governments and all of them should react in a co-ordinated and co-operative way. Boundaries should not provide safe havens for criminals.
For the FATF to carry out its work in a meaningful way however, we need to identify and understand the financial flows related to money laundering and terrorist financing. We have to know the enemy.
This work of identifying, describing and, wherever possible, quantifying those flows – what we call typologies – is critical to underpin the design of adequate standards. It is also a fundamental tool for financial intelligence and law enforcement at the national level.
The collective knowledge and expertise gathered in this room represents a powerful weapon in the anti-money laundering and counter-terrorist financing effort. But, it is not an end in itself. Your expertise helps build the foundation for the whole effort that is occurring at national and international levels.
Why Work Together on Typologies?
The exact size of the money laundering problem is unknown, although some estimate that it can represent up to 4.5 percent of the global GDP. That means it is likely to be in the order of hundreds of billions of dollars annually. (And they say crime doesn’t pay!)
Financial crime may appear to be discreet and non-violent, but appearances can be deceptive. Let’s not forget the human side. People have their lives destroyed by corruption, drugs, kidnapping, sexual exploitation and many other crimes that may not be a problem in a given country, but certainly affect us all. Money laundering and terrorist financing are a direct threat to democracy, human rights and the rule of law. They undermine the freedom and the safety of people across the world by facilitating such criminal activity and terrorist attacks.
There are also potentially serious economic consequences for a country when such activity appears to be tolerated – including by lack of action. This can lead to a serious risk to the safety and soundness of the banking sector, increased volatility of international capital flows and exchange rates, and reduced levels of foreign direct investment.
The most valuable asset of a financial institution is it reputation. Unchecked, money laundering eats away at the integrity of a nation's financial institutions, and a good reputation can therefore be quickly lost. An international financial centre perceived to be open to dirty money will eventually lose the trust – and the investments. Countries that turn a blind eye to the sources of foreign investment as a short-term strategy can later find it difficult to attract essential foreign direct investment.
Working Together on Typologies
For just about 20 years now, experts from FATF and other countries have met annually to discuss and examine the trends and techniques relating to money laundering and terrorist financing. An important part of this work has been the contribution made by FATF-style regional bodies (FSRBs) – our sister organisations – such as MONEYVAL. This co-operation started out modestly with a few of the regional groups attending FATF typologies meetings as observers. Over the last five to six years however, our typologies effort has evolved, FATF and FSRB member countries now participate directly in joint typologies research.
The FATF has published nearly 20 typologies reports over the past few years, and almost all of them have had contributions from members of regional groups or were informed by typologies research carried out by them. The research projects that are to be the subject of your workshops this week are additional examples of the extent of this co operation.
The task before us this week is to make substantial progress on four important projects:
• Money laundering and terrorist financing risks in the securities industry.
• Money laundering through money service businesses.
• Money laundering through sporting clubs.
• The Global Threat Assessment.
Conclusion
Money laundering and terrorist financing techniques evolve quickly. Therefore, what we are looking at are not static phenomena – launderers and terrorist financiers change their techniques in response to a number of factors including new legislation; law enforcement intervention; technological developments; and new financial products. New techniques, methods and trends of money laundering and terrorist financing are being identified every day. That is why we need to remain vigilant.
Money laundering and the financing of terrorism are not only local problems. Even the best of insights will be of limited use if they are restricted to what is happening in one’s own backyard. That is why I believe that the FATF typologies initiative, including this meeting and the related research projects, are truly dependent on the combined effort of experts not only from the FATF but also from MONEYVAL, from other FSRBs and from our respective observer organisations. Money laundering and terrorist financing have domestic and regional features and trends, but ultimately, they are truly global phenomena and must be approached from a global perspective.
You have interesting work ahead of you this week. I wish you well.
Thank you
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