FATF President's Speech to the EAG Plenary

Ashgabat, Turkmenistan

14 November 2013

The Honourable Minister of Finance of Turkmenistan, Mr. Chairman, Friends and Colleagues,

It is a great pleasure for me to be here at the EAG, speaking to you as the FATF President, and having the chance to meet again with so many close colleagues and friends. For me, the EAG is very special because I was involved from the beginning at the birth of this organisation.

Over 10 years ago, as a member of the Russian delegation to FATF, I was one of those who worked on the initiative to establish an FSRB in this region. Back then, there was no FATF-style regional body in this part of the world, and that left many countries excluded from the global AML/CFT network.

I remember the October 2003 FATF Plenary, when Mr. Zubkov, who was head of the Russian delegation at the time, first announced the initiative to create an FSRB in this region. And, for the next year, we worked tirelessly to bring that initiative to fruition. So, it was a great moment when the EAG was finally established at the founding conference in Moscow on 6 October 2004.

As a new FSRB, the EAG membership was comprised of six original founding states. Since then, I have been pleased to watch the EAG grow to a fully-fledged international organisation of 9 member states, 14 observer states and 18 international organizations. And, I well remember when the EAG achieved full FATF Associate Member status back in 2010, as that was an important step in forging a stronger relationship between the two bodies.

Having a strong and robust global AML/CFT network is more important now than ever before, as countries work to implement the revised FATF Recommendations which were adopted in 2012. The revised Recommendations require countries to identify, assess and understand their money laundering and terrorist financing risks, and take action to mitigate those risks effectively. The revised Standards on transparency, beneficial ownership, politically exposed persons, and international cooperation have been significantly strengthened. And, there are new measures to counter the financing of the proliferation of weapons of mass destruction.

Implementation of these new requirements will be challenging for many countries, but the real test will come with the next round of mutual evaluations which is already underway in FATF. In the past, the evaluations focused on technical compliance – Is the correct legal framework in place? Now, we are also focusing on effectiveness – Is the system working in practice, and generating results?

This focus on effectiveness will make the mutual evaluation process 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. The new process also focuses more explicitly on higher risk areas, and the reports will provide a basis upon which countries can address the issues that are most critical for them.

I recall that, as a newly created organization, one of the first initiatives EAG implemented was to organize the provision of technical assistance to EAG member states in establishing national AML/CFT systems. Going forward, it will be important for EAG to continue that initiative as members work to implement the revised FATF Recommendations and prepare for their next mutual evaluations. I trust that you are all up to the task.

Indeed, EAG members continue to demonstrate their commitment to improving their implementation of AML/CFT measures. For example, at the FATF Plenary which was held in Paris last month, the Plenary removed the Russian Federation from the FATF mutual evaluation follow-up process, as it had made sufficient progress to address the deficiencies identified in its mutual evaluation report. This means that all three EAG members who are also FATF members have now been removed from FATF follow-up. Additionally, the FATF noted that Kyrgyzstan and Tajikistan are making progress towards improving their AML/CFT regimes. I strongly encourage them to continue with this work so that they can exit the FATF’s ICRG process soon. 

The EAG also participated in the Experts Meeting on Corruption which the FATF held jointly with the G20 Anti-Corruption Working Group in Paris on 12 October 2013. Discussions at that meeting contributed to the development of the new FATF Best Practices Paper on the Use of the FATF Recommendations to Combat Corruption which was published by the FATF a few short weeks ago. This paper is an important piece of work, giving guidance and best practices to policy makers and practitioners on how to use AML/CFT measures to combat corruption.

I will leave it to the FATF Secretariat to update you on the current FATF initiatives. But, before I conclude, I would like to thank you for giving me the opportunity to address you today. And, I invite all of you to join me at the joint FATF/EAG Plenary which will be held in Moscow from in June next year. This will be a milestone event because, although there have been joint FATF/EAG events in the past, this will be the first ever joint FATF/EAG Plenary meeting. So, I think it is quite symbolic that this first joint Plenary will be held in Moscow which was the birthplace of EAG.

Thank you for your attention.