Documents

Outcomes of the FATF Plenary, Oslo, 19-21 June 2013

Oslo, Norway, 21 June 2013 - Under the Norwegian Presidency, the third FATF Plenary meeting of FATF-XXIV was held on 19-21 June 2013.

The meeting was opened by Mr. Sigbjørn Johnsen, Minister of Finance of Norway. 

 

From left to right, Minister of Finance of Norway, Sigbjørn Johnsen; H.M. Queen Máxima of the Netherlands and FATF President Bjørn Aamo (Photo: Tor Martin Bærum/Ministry of Finance)

Her Majesty Queen Máxima of the Netherlands, United Nations Secretary-General's Special Advocate for Inclusive Finance for Development, delivered a keynote address on Strengthening Financial Integrity through Financial Inclusion on the second day of the FATF Plenary meeting. Her address underlined that financial inclusion,effective and proportionate anti-money laundering and combating the financing of terrorism (AML/CFT) regimes are mutually reinforcing objectives. The President of the FATF, Bjørn Aamo, said in his comment that Financial Inclusion will remain an important task for the FATF in coming years, both in policy development and in other areas of work.

FATF Decisions

The FATF took important new steps to protect the international financial system from abuse by:

This was the last Plenary meeting under the Norwegian Presidency of Mr. Bjørn Aamo. During his Presidency, four countries were removed from the regular follow-up process as a result of the positive action they had taken to strengthen their AML/CFT measures :

  • October 2012: Hong Kong, China 
  • June 2013: Finland, India and Ireland 

During the same period, eight countries that had been identified as having strategic AML/CFT deficiencies, were taken off the public statement of jurisdictions for which an FATF call for action applies:

  • October 2012: Trinidad and Tobago
  • February 2013: Ghana and Venezuela
  • June 2013: Bolivia, Brunei Darussalam, the Philippines, Sri Lanka and Thailand

Follow-reports to the mutual evaluations of Finland, India and Ireland

The FATF has approved and published the follow-up reports for Finland, India and Ireland.  These countries were placed in the regular follow-up process as a result of partially compliant and non compliant ratings for certain core and key Recommendations in their mutual evaluation reports of October 2007, June 2010 and February 2006, respectively. Each country has since taken sufficient action to address these deficiencies and have therefore been taken off the regular follow-up process.

     

Mutual Evaluation of Finland: 9th Follow-up report

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Mutual Evaluation of India: 8th Follow-up report & Progress Report on Action Plan

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Mutual Evaluation of Finland: 11th Follow-up report

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A Risk-Based Approach to Prepaid Cards, Mobile Payments and Internet-based Payment Services

 

New and innovative payment products and services are being developed and used at an ever-increasing pace.  These new payment products and services have the potential of being used for money laundering or terrorist financing.  Their vulnerabilities, associated risk factors and risk mitigants were described in earlier typologies reports by the FATF.  The FATF has now developed guidance for countries and the private sector on how to apply a risk-based approach to implementing AML/CFT measures.  This guidance examines how these payment products and services work, and how to regulate and supervise this activity. The FATF consulted with the private sector in the development of this guidance paper and appreciated the feedback received. The guidance recognises the role played by these products in financial inclusion and it should be considered, together with the FATF guidance on financial inclusion. In relation to Internet-based payment systems, the guidance provides advice in relation to the issuance of electronic money. While some alternative currencies, such as decentralised digital currencies, may fall outside the scope of this guidance, the guidance remains relevant where such currencies are exchanged or redeemed. The FATF will continue to consider the risks posed by such currencies and possible mitigating measures, and it encourages countries to monitor developments in the market.

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The Implementation of Financial Provisions of United Nations Council Resolutions (UNSCRs) to Counter the Proliferation of Weapons of Mass Destruction 

 

FATF Recommendation 7 requires countries to implement targeted financial sanctions to comply with the United Nations Security Council Resolutions (UNSCRs) relating to the prevention, suppression and disruption of proliferation of weapons of mass destructions (WMD) and its financing.  The revised guidance consolidates and updates the previous three FATF guidance papers: (i) The Implementation of Financial Provisions of UNSCRs to Counter the Proliferation of WMD (June 2007); (ii) The Implementation of Activity-Based Financial Prohibitions of UNSCR 1737 (October 2007); and (iii) The Implementation of Financial Provisions of UNSCR 1803 (October 2008).  The new guidance assists countries in implementing not only targeted financial sanctions, but also other measures, such as activity-based financial prohibitions and vigilance measures. 

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Politically Exposed Persons (Recommendations 12 and 22)

 

politically exposed person (PEP) is an individual who is or has been entrusted with a prominent function.  Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery.  Because of the risks associated with PEPs, the FATF Recommendations require the application of additional AML/CFT measures to business relationships with PEPs. These requirements are preventive (not criminal) in nature, and should not be interpreted as meaning that all PEPs are involved in criminal activity. This guidance, based on experiences of countries, international organisations, private sector and non-governmental organisations, will assist in the effective implementation of Recommendations 12 and 22. 

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Best Practices Paper on Targeted Financial Sanctions Related to Terrorism and Terrorist Financing (Recommendation 6)

 

FATF Recommendation 6 requires countries to implement the targeted financial sanctions regimes to comply with the UNSCRs relating to the prevention and suppression of terrorism and terrorist financing, such as UNSCR 1267(1999) and its successor resolutions, and UNSCR 1373(2001).  The updated best practices paper reflects the latest relevant UNSCRs in response to challenges faced by countries in the implementation of the Recommendation 6.  They provide best practices countries could consider in its implementation of targeted financial sanctions to prevent and suppress terrorist financing in accordance with the relevant UNSCRs. 

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International Best Practices: Combating the Abuse of Non-Profit Organisations

 

Charitable fundraising has been used to provide cover for the financing of terrorism.  FATF Recommendation 8 requires that the laws and regulations that govern non-profit organisations be reviewed so that these organisations cannot be abused for the financing of terrorism.  However, these regulations should not disrupt or discourage legitimate charitable activities.  The FATF has established best practices, aimed at preventing misuse of non-profit organisations for the financing of terrorism while, at the same time, respecting legitimate actions of non-profit organisations (NPOs). This is a limited update of the FATF Best Practices Paper on non-profit organisations, to bring it into line with the new FATF Recommendations which were adopted in February 2012, and to highlight that measures to protect NPOs from misuse should not disrupt or discourage legitimate charitable activities. Going forward, the FATF will be undertaking typologies work on this issue, after which the FATF will reconsider this paper with a view to determining whether further updates are needed. FATF will continue its dialogue with the NPOs. 

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Money Laundering and Terrorist Financing Related to Counterfeiting of Currency

Producing counterfeit currency has always been a high profit crime and one that exists ever since money was introduced as a means of exchange.  The circulation of counterfeit currency can seriously destabilise a country’s currency and as such represents a serious threat to national economies.  The FATF has conducted a study of the money laundering methods used  for putting the proceeds of the illicit trade in counterfeit currency into the regular financial system.  The study also focuses on how counterfeit currency is used for the purpose of terrorist financing and other crimes. The report identifies relevant AML/CFT measures and red flag indicators for detecting counterfeit currency, in particular as it relates to money laundering and terrorist financing.  Report published shortly.

Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals

 

Research into money laundering methods and trends has confirmed that criminals seek the advice or services of legal professionals to help in laundering criminal assets.  Using legal professionals, wittingly or unwittingly, for financial transactions, creates an additional step in the chain of transactions to launder the funds, further frustrating law enforcement in their investigations.  Legal professionals also provide a veneer of respectability that money launderers believe will limit the number of questions asked.  Supported by case studies, this study examines the vulnerabilities of the legal profession for witting/unwitting involvement in money laundering and terrorist financing and identifies ‘red flag indicators’ which will help raise awareness with the legal professionals.

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AML/CFT Improvements in Bolivia, Brunei Darussalam, the Philippines, Sri Lanka and Thailand

The FATF congratulates Bolivia, Brunei Darussalam, the Philippines, Sri Lanka and Thailand for the significant progress made in addressing the strategic AML/CFT deficiencies identified in their action plans agreed with the FATF. These countries will no longer be subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. These countries will work with their respective FATF-Style Regional Bodies as they continue to address the full range of AML/CFT issues identified in their Mutual Evaluation Reports.

Reviewing the voluntary tax compliance programmes in Argentina and Turkey.

The FATF heard reports on the VTC programmes of Argentina and Turkey.  On Argentina, the FATF received from the country preliminary information on the planned programme which would take effect in July.  The FATF expects the country to apply all AML/CFT measures to the programme.  The FATF will further study the programme once all relevant information becomes available.  The FATF, while continuing to monitor the implementation of these programmes, urges all countries to apply all AML/CFT measures to their VTC programmes in accordance with the FATF’s four principles on the VTC.[2]  The two countries committed to ensuring that their VTC programmes are consistent with the FATF Recommendations and principles on the VTC.  The FATF will study other VTC programmes that take effect following this meeting.

See also: Best Practices: Managing the anti-money laundering and counter-terrorist financing policy implications of voluntary tax compliance programmes

   

[1] The following countries have previously been removed from follow-up or are not in follow-up: Belgium; China; Denmark; France; Greece; Hong Kong, China; Italy; Norway; Portugal; Singapore; Spain; Sweden; Switzerland and the United Kingdom.

[2] The FATF’s four principles on the VTC: (i) the effective application of AML/CFT measures during the implementation of VTC programmes; (ii) the prohibitions on exempting VTC programmes from AML/CFT requirements in the FATF Recommendations; (iii) domestic co-ordination and co-operation between relevant competent authorities; and (iv) international co-operation, i.e. mutual legal assistance.  See the FATF’s best practices paper, International Best Practices: Managing the Anti-Money Laundering and Counter-Terrorist Financing Policy Implications of Voluntary Tax Compliance (VTC) Programmes (available at: www.fatf-gafi.org).