CFATF's progress in improving performance

An Address by Mr. Giancarlo Del Bufalo
President of the FATF

 CFATF Ministerial Meeting
25 November 2011
Porlamar, Isla Margarita, Venezuela


Introduction

His Excellency the Minister of Interior & Justice of the Venezuelan Republic, Mr. Tarke El Aissami,

Honourable Attorney General and CFATF Chairman Mr. Samuel Bulgin,

Honourable President of the Officio National Antidrogas Mr. Nestor Luis Reverol,

Honourable Incoming Chair, Mr. Manuel Gonzalez

Honourable Ministers, CFATF Secretariat and Executive Director and distinguished delegates, dear colleagues,

It is my honour to be able to attend this 18th CFATF Ministerial meeting here in Isla Margarita. I wish to thank our Venezuelan hosts for their wonderful welcome and kind hospitality. Being allowed to meet up in a beautiful place such as Isla Margarita is a truly special gift to all delegates.

CFATF Developments

Just a year ago, my predecessor Luis Urrutia was invited to speak at your Ministerial meeting in the Cayman Islands. At the time, CFATF was facing severe problems threatening its very existence. Some of the problems were outlined by President Urrutia in his speech (see related documents).

As the FATF Vice President at that time, I closely followed the developments in CFATF and I believe President Urrutia’s speech may have sounded very hard to some of you. However, repeating my predecessor’s words, by attending all FSRB meetings the FATF attains a good insight in the performance of each FSRB, and CFATF was indeed lagging behind at the time.

Today, I have come to congratulate CFATF with the work it has undertaken to improve its own performance. I know you held a special Ministerial Meeting in Miami in August this year at which you discussed important matters. I was also able to witness further discussions on reforming the organisation during the Plenary meeting this week, and I hope to witness your approval of the reforms to be proposed today. These are all good steps in the right direction.

Although much has been done so far, this will not be the end of the reform process and I encourage CFATF to continue its effective work, since effective implementation of the reforms is as important as the formal changes that will hopefully be approved today and at future meetings. The FATF will continue to monitor the developments in CFATF through its reports to the FATF Plenary until both CFATF and FATF can be confident that all matters of concern have been duly resolved. During this process, CFATF can count on the support of the FATF.

One of the concerns to be addressed is CFATF's financial situation, which proves not healthy in the long term. I realise the current membership contributions represent a large financial offer for some of the small and less economically developed jurisdictions. However, CFATF's effective functioning and long-term success depend on the availability of sufficient funds. Hence I call on Ministers to materialise their political commitment to this organisation by following the current example of Trinidad and Tobago and making extra funds available to CFATF.

Review of the FATF Recommendations

As to the FATF Standards, the FATF has no choice but to ensure they remain a comprehensive and up-to-date framework for combating money laundering and terrorist financing. The review of the FATF Standards this past year has made significant progress through the work and input by the relevant expert and working groups, and several associate members, including CFATF. Relevant policy goals have been discussed, including: the addition of tax crime to the list of predicate offences for money laundering; new initiatives such as combating corruption more effectively and addressing proliferation financing; and financial inclusion issues. At this stage, the FATF has almost completed its technical work on the new standards, and will continue some of the discussions on legal persons’ transparency. It is one of the priorities of my Presidency to enable the FATF to finalise its work on the updated Recommendations in February 2012.

Thereafter, the FATF will need to revise its current evaluation procedures and related supporting documents to allow for effective and consistent assessments.

It is my aim to ensure that under my Presidency the re-design of the evaluation process and the re-drafting of the relevant supporting material (such as the Assessment Methodology) will also include enhanced focus on effectiveness, in close co-operation with FSRBs. I urge you as well to take advantage of this opportunity. Despite your constraints in following all aspects of the ongoing review process, I also encourage you to remain informed of the outcome of these discussions and to have your national experts begin assessing the consequences that changes to FATF Standards and assessment procedures will have for your jurisdictions.

ICRG

It is the FATF’s mandate to address risks. The ICRG is one of the tools to such end – in this case, to address the risks related to jurisdictions that insufficiently apply FATF Recommendations.

The ICRG process concerns several countries in several regions, not only in the Caribbean and Central American region, and what we have seen is that the ICRG can be a blessing. Although the ICRG comes in the form of a negative list, the process forces jurisdictions to empower themselves to significantly improve their respective AML/CFT systems, and brings experts from targeted countries into direct contact with FATF and FSRB experts – which is a very valuable opportunity.

I have taken note with great interest of the CFATF-ICRG process, which I sincerely support. I feel that addressing risks is in the interest of both FATF and CFATF countries, and we need your regional expertise to identify and address such risks.

I also support the CFATF-ICRG mandate to assist countries to ensure that they address their shortcomings before the FATF regional review group reviews the situation. Those jurisdictions that have insufficiently implemented the FATF Recommendations should embrace this opportunity, or will otherwise end up on the public lists or even face a call for counter measures. The FATF will not hesitate to do so for jurisdictions that do not address all identified gaps in their AML/CFT systems, irrespective of whether these particular countries are FATF or FSRBs members.

Global FATF/FSRB Network

The FATF is currently discussing ways to further reinforce the global AML/CFT network. After three rounds of discussions on the topic, we have agreed on a new set of high level principles and objectives for FATF and FSRBs, replacing the previous criteria for FSRBs and obligations for associate members. I should stress that the new objectives apply to all bodies – not just FSRBs – and I feel this is a step forward in our partnership.

The next phase will be to design a peer review process for FATF and FSRBs. High level principles and objectives exist for a good reason but need to be effectively implemented by all. We do not want to prescribe in detail how the objectives need to be attained, as we believe the first aim of the peer review process should be to create a platform for exchange of best practices.

Therefore, prior to peer assessments, we should aim for self-reflection as a first step of the process.

Through CFATF updates to FATF I have witnessed the valuable work performed by your Working Group on Reflection and Improvement, and by the related Financial Advisory Group. I deem it a perfect example that other FSRBs should follow, and it is my aim to have this approach discussed in February.

Moreover, as stated, some FSRBs do not perform as well as FATF and other FSRBs would expect. Their situation is not as urgent as at CFATF last year (notably regarding its finances), yet it is inevitable that the FATF and other FSRBs will need to assess the performance of these FSRBs and request them to address their shortcomings, just like CFATF is addressing its own issues. I count on CFATF’s input, sharing of experience and support in this process.

Conclusion

Honourable Chairman, Ministers and delegates, it has been an honour for me to speak to you, and a pleasure to do so on Isla Margarita, La Perla de la Caribe.

Today, I have been able to congratulate you on the progress you have accomplished, and I hope this reform process can be concluded before the end of my Presidency in June 2012. However, I should note that most of the work still lies ahead of CFATF, and it is important that we continue to see on-going progress. As long as CFATF is progressing, you can count on the full support of the FATF, its members and Secretariat.

Mr. Bulgin, I guess the past year was not an easy one for you, having to chair four Plenary and Ministerial meetings (instead of the regular two) and address numerous issues with FATF that no prior CFATF Chair had had to face, or had been willing to face… I therefore wish to congratulate you on your effective leadership, as you have successfully steered CFATF away from crisis and laid the foundations for a stronger and better organisation. I sincerely thank you for your valuable work.

Mr. Manuel Gonzalez, as incoming Chairman, I wish to congratulate you on your election. I am confident you will successfully continue Chairman Bulgin’s work, and I look forward to your update of the CFATF progress at the FATF Plenary meeting next February.

Thank you.

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