Vienna, 24 April 2018 – The Financial Action Task Force (FATF) held its annual Private Sector Consultative Forum (PSCF) on 23-24 April 2018 in Vienna, Austria, hosted by the United Nations Office on Drugs and Crime (UNODC).
The meeting was chaired by the Vice President of the FATF, Ms. Jennifer Fowler (the U.S.). Over 250 representatives from the financial sector and other businesses and professions subject to AML/CFT obligations, civil society, and FATF members and observers participated in this year’s Private Sector Consultative Forum.
The Forum is an opportunity for the FATF and its members to engage directly with the private sector on anti-money laundering and counter terrorist financing (AML/CFT) issues. It provides a regular platform for the FATF to learn more about the private sector’s views and concerns of AML/CFT-related issues. Over the two days of the Forum, participants held constructive discussions over the following issues:
Addressing de-risking is a key FATF priority. In light of continuing concerns about the impact of de-risking, particularly in the context of the remittance and Non-Profit Organization (NPO) sectors, participants took stock of the latest market developments and ongoing initiatives to address de-risking. Participants also discussed the remaining challenges and the potential next steps, including through coordinated action at the global level, and by national policy makers, supervisors, financial institutions and industry bodies. The importance of constructive dialogue and engagement among various stakeholders, as well as capacity building was also highlighted in this regard. Participants also shared ideas on ways in which FATF can increase the traction and transmission of its guidance across the global network.
Fintech & Regtech: Digital Identification and Crypto Assets
As part of the FATFs ongoing Fintech/Regtech work, participants met to discuss the private sector’s experience of using digital IDs to identify and verify their customers as part of the on-boarding process. Similarly, public and private sector representatives also met to discuss the regulatory landscape for crypto assets, and the extent to which the current FATF standards and guidance adequately address the recent developments in this area.
For a more detailed summary of these discussions, see Outcomes on Fintech/Regtech from the 2018 PSCF.
Risk Based Approach for Securities Sector
A risk-based approach (RBA) is central to the effective implementation of the 2012 FATF Standards. Participants from government and the securities sector met to discuss the ongoing work to develop risk based approach guidance for the securities sector. In particular, participants discussed the ML/TF risks which are unique to the securities sector as well as the role of intermediation and reliance. Participants also discussed the types of relationships covered by Recommendation 13 in the securities sector, and the potential risk factors/indicators and measures to mitigate those risks.
Risk Based Approach for the Life Insurance Sector
Separately, participants from government and the insurance sector met to exchange views on the ongoing FATF work to develop Risk Based Approach Guidance for the Life Insurance sector (update of the 2009 Guidance). Participants discussed the scope and focus of the Guidance, the nature and level of ML/TF risks associated with different types of life insurance products and their risk mitigating factors, as well as situations where simplified due diligence or enhanced due diligence could be applied.
Engagement with Financial Institutions (FI), Designated Non-Financial Businesses and Professions (DNFBP) and Non-Profit Organizations
Participants from governments and FIs, DNFBPs and NPOs shared their experiences in participating in ML/TF risk assessments and FATF mutual evaluations, with a particular focus on Recommendations 1 and 8, and Immediate Outcomes 1, 4 and 10.
With respect to the ML/TF risk assessments, participants stressed the need for ongoing dialogue between public and private sector representatives, noting that the private sector is well placed to provide valuable input on the ML/TF risks within their relevant sectors. Similarly, participants highlighted the importance of distinguishing between actual ML/TF risks, and perceived risks. Participants also noted that assessment of risks in the NPO sector can be particularly challenging to undertake for a variety of reasons, including the diverse nature of the sector and the fact that many countries do not have a central point of contact through which to engage the sector.
Concerning the mutual evaluation process more generally, participants noted the need to initiate engagement with the private sector as early as possible. Industry bodies and associations can play a key role in disseminating material to the relevant sectors and helping to raise awareness within the private sector about the process. Private sector participants welcomed the use of templates and other preparatory tools in this regard.
Private sector representatives also noted the value of having additional engagement after the on-site visit and throughout the FATF follow-up process.