The role of the Asia/Pacific Group on Money Laundering in the global AML/CFT network

Keynote address by FATF President Vladimir Nechaev

during the opening ceremony of the 16th Annual Meeting of the Asia Pacific Group on Money Laundering (APG)

hosted by the People’s Bank of China

Shanghai, 16 July 2013

Distinguished Co-Chairs, delegates and colleagues,

It is a great pleasure for me to be here with you in Shanghai for the 16th APG Annual Meeting. At the outset, I would like to thank APG for giving me the opportunity to be here, and to thank our Chinese hosts for their generous hospitality.

Prior to becoming the FATF President on the 1st of July, I was the Chairman of the MONEYVAL Committee of the Council of Europe from December 2009 to May 2013, and so I am very much aware of the importance of the relationship between the FATF and the FSRBs. Having a strong global AML/CFT network is of utmost importance to our work, particularly since money laundering, terrorist financing, and the financing of proliferation are transnational activities. APG plays a very important role in that network and you have done excellent work for over 15 years to foster implementation of the FATF standards here in the Asia/Pacific region.

Implementation is assessed through the mutual evaluation process and this process gives the FATF Recommendations teeth. All countries in the global network will be assessed for compliance with the revised Recommendations. Earlier this year, the FATF adopted the Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems. I acknowledge and welcome the fact that, like other FSRBs, the APG actively contributed to the process of drafting the Methodology.

While previous assessments have focused more on technical compliance with FATF Standards, which was essential if an Anti-Money Laundering / Counter Terrorist Financing (AML/CFT) regime is to have a solid foundation, now we move to focus much more on effectiveness – does the system work?

Effectiveness will make assessments more challenging because judgments will need to be made on how various components of the AML/CFT regime interact, and if things are not working, then why not. Assessments will also now focus more explicitly on the areas of higher risk. The reports will provide a basis upon which countries can address the issues that are most critical for them.

It is also important that we use the time between rounds of evaluation to reinforce national AML/CFT systems, and to ensure our national authorities have a good level of awareness and understanding – not only of the FATF Recommendations but of the practicalities of implementing an effective AML/CFT system. I am pleased to see APG’s extensive training programme with workshops on the revised FATF Standards, including workshops specifically dealing with money laundering and terrorist financing national risk assessment components, and workshops on the new assessment Methodology.

Significant resources also continue to be devoted to the coordination of technical assistance to APG members, and the APG’s processes for identifying and addressing members’ needs are highly thought of and working well to support members’ efforts.

Your technical assistance programme produces indeed excellent results not only in relation to your mutual evaluation process and its follow-up but also in the context of the FATF’s ICRG process. Brunei Darussalam, the Philippines, Sri Lanka and Thailand were removed from ICRG monitoring during the recent FATF meetings in June and I would like to congratulate these countries and the APG Secretariat for the results achieved. Another concrete example of how successful the APG is in assisting members under ICRG review is Vietnam. I learned that an APG Team visited Vietnam in April to brief the National Assembly members and senior officials on the need to pass a comprehensive CFT law and as a result, the necessary legislation was enacted and Vietnam avoided a counter-measures warning by the FATF in June. The APG through its Secretariat is actively involved in the ICRG’s Asia/Pacific Regional Review Group what assists the review group in better understanding the specific challenges the 11 APG members currently under ICRG review are facing. I also take this opportunity to express my gratitude to those APG delegates that are members of this Regional Review Group and would like to invite others to contribute to this group so that APG members under ICRG review can benefit from their expertise.

I would now like to say a few words on financial inclusion. I know that this is a topic of interest to many countries in this region as well as to APG as an organisation. This topic was also a high priority on the agenda of the recent FATF Plenary and we were honoured by the presence of H.M. Queen Máxima of the Netherlands who attended the meeting in her capacity of UN Secretary-General’s Special Advocate for Inclusive Finance for Development. In her keynote address to the Plenary, Her Majesty highlighted the mutually reinforcing goals of financial inclusion and AML/CFT measures. She specifically commended APG members, including India and Pakistan for enlarging access to the formal financial system. Queen Máxima also participated in a working lunch to exchange views and experiences regarding financial inclusion with some of the FATF members as well as FSRB Chairs and Secretariats, including Co-Chair Zhengming Liu and Executive Secretary Gordon Hook from the APG.

The revised FATF Recommendations introduce a risk-based approach which allows governments and financial institutions to more efficiently allocate their resources to combat money laundering and terrorist financing. It should also enable governments to enhance their efforts on financial inclusion. There should be no doubt that a well-implemented risk-based approach is a good basis for successfully applying financial inclusion measures in compliance with the revised FATF Recommendations. 

In February, the FATF adopted revised guidance on financial inclusion, which was developed in close cooperation with APG and the World Bank, and this guidance is scheduled for adoption by APG members this week. Moreover, at the FATF meetings in Oslo, the FATF issued new guidance on payment products and services that are often used to facilitate financial inclusion.

Finally, based on the FATF’s new 8-year mandate adopted last year and the upcoming 4th round of mutual evaluations, the FATF decided to refine its internal working methods and structure. In June, the FATF adopted a strategy to better prioritise and co-ordinate its workload and ensure that any unnecessary duplication can be avoided. The FATF will continue to manage its workload through five working groups. Three new working groups were created to better streamline the workload following the revision of the FATF Standards: the Policy Development Group (PDG); the Evaluations and Compliance Group (ECG) and the Risks, Trends and Methods Group (RTMG). The PDG will take responsibility for all policy-related issues while the Evaluations and Compliance Group will be responsible for monitoring and ensuring consistency of the mutual evaluation and follow-up process. The former Working Group on Terrorist Financing and Money Laundering (WGTM) and Working Group on Evaluations and Implementation will cease to exist. The Risks, Trends and Methods Group will focus on conducting research on typologies and trends and will thus replace the Working Group on Typologies. The ICRG and GNCG will continue operating as before. The implementation of these new internal structures and working practices has just started and we will keep you updated on future developments.

Closing remarks

Since its establishment in February 1997, the APG has grown from 13 to 41 members. The APG’s membership now encompasses all of the major jurisdictions in the region, and includes a wide range of jurisdictions, from the largest economies in the world to a number of micro-states. But whatever their size and nature, all APG members are committed to implementation of the international AML/CFT standards and, with the APG as the focal point, working together to achieve effective implementation.

The APG continues to play an active role in the global AML/CFT network, and to work closely with other FSRBs. I note, for example, that the APG will be holding a joint typologies workshop with the Eurasian Group in September in Mongolia, and that the APG is working with MENAFATF to coordinate a paper on technical assistance and coordination for consideration by the Global Network Coordination Group. I look forward to continued dialogue between APG and the FATF on ways that can further strengthen the relationship between FATF and its associate members.

I thank you again for giving me the opportunity to address you today. I wish you all well in your future work.

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