Recent developments in the fight against money laundering and terrorist financing, and MENAFATF's vital contribution to these efforts

FATF Vice-President's speech to the 16th MENAFATF Plenary 
Marrakech, 27 November 2012


Your Excellency Minister of State Abdellah BAHA,

Your Excellency Wali of Marrakech Mohamed FAOUZI,

Your Excellency President of MENAFATF Dr. AbdulRahman Al Kalaf,

Distinguished delegates and colleagues;

It is a great pleasure for me to be here with you in Marrakech for the 16th Plenary meeting of MENAFATF. In the beginning I would like to thank MENAFATF for giving me the opportunity to be here, and to thank our Moroccan hosts for their generous hospitality.

The FATF President, Bjorn Aamo, was not able to come to this meeting of the MENAFATF, so as vice-President I am here in his place. I am pleased to be able to begin meeting with FATF-style regional bodies before the start of my Presidency of FATF next July. As you may know I am also the Chairman of Moneyval, as well as FATF vice-President, and so I am very aware of the important relationship between the FATF and the FATF-style regional bodies. I hope to hear during this week’s meetings how we can further strengthen cooperation within our global network of anti-money laundering bodies.
A global approach to the problems of money laundering and terrorist financing is essential – all our countries face a challenging environment, and an always-evolving threat from crime and terrorism, which calls for coordinated policy and regulatory responses. Many countries and financial institutions have economic difficulties, which makes it more difficult to apply strong AML/CFT systems. And persistent terrorist threats are present in several parts of the world.

Fighting money laundering and financing of terrorism are important to promote financial integrity and build trust between countries and market participants. Trust and confidence are necessary to restore growth and prosperity in all parts of the world. In this context, the coming year will present challenges for our work as partners in the FATF family.
At the same time, I believe that the recent FATF developments provide us with powerful tools to successfully overcome these difficulties, and achieve our common objectives. 

Revised FATF Recommendations

In February this year the FATF adopted and published a revised set of Recommendations. Since then these have been endorsed by most FATF members and FSRBs. I very much look forward to MENAFATF’s endorsement of the new standards now that they have been translated into Arabic.

The fundamental elements of the FATF Recommendations have been maintained. However, they have been expanded to deal with new threats such as the financing of proliferation of weapons of mass destruction; and to give more scope to follow a risk-based approach.

The purpose of the Risk-Based approach is to allow a more effective allocation of resources to combating money laundering and terrorist financing, both by governments and financial institutions. It should mean more effective implementation overall, by focusing attention on the highest risk sectors and activities, and more efficient use of limited resources. But it also means new requirements for countries to understand and assess the risks.

Other important changes have been to strengthen implementation of the most difficult requirements – for example to ensure transparency about the beneficial ownership of legal persons and legal arrangements – and to give a stronger basis for international cooperation. Tax crimes have also been added to the required predicate offences for money laundering, and this will facilitate the cooperation between national authorities responsible for investigating and prosecuting tax crimes.

The first priority for the FATF in the coming year will therefore be to promote and facilitate an effective implementation of these revised Recommendations.
MENAFATF is making an important contribution to this work, looking at the question of whether Waqf should be included in the scope of the FATF Recommendations, and if they are included, on what basis they should be assessed. This is a question on which MENAFATF’s conclusions will be the basis for how the FATF and other FSRBs conduct assessments worldwide. MENAFATF members also have unique and current experience in tracing and repatriating the proceeds of corruption, and it will be interesting to see what can be learned from those efforts.

Mutual Evaluations

The mutual evaluation process is what gives the FATF Recommendations their teeth, and what makes the FATF standards more widely followed than many other international standards. Starting in about twelve months time, all countries will be assessed for compliance with the revised Recommendations. This new round of mutual evaluations will place a stronger emphasis on the assessment of effective implementation of the requirements, and not only of technical compliance.

Assessing effectiveness will mean that Mutual Evaluations consider whether the AML/CFT measures are actually working in practice, and whether they are having the right effect of reducing the amount, and the risks, of money laundering.

The FATF is currently working on the methodology to assess both technical and legal compliance and effectiveness, which will be discussed in two weeks time. We will also develop guidance on issues where further advice would be useful, for example on Politically Exposed Persons. MENAFATF has taken an active role in this work and I'm sure it will continue to do so.

One of the important questions which will need to be resolved in the year ahead is the procedures which the FATF will use for Mutual Evaluations. The core elements of the Mutual Evaluation Procedure will be the same for the FATF and all the Regional Bodies – with flexibility to take account of the working practices and priorities of each regional body. So it is essential that MENAFATF takes an active part in the development of those procedures.

But of course the current round of assessments has not finished. MENAFATF will consider two important Evaluations this week. I want to congratulate MENAFATF and in particular the assessors on the evaluations of Iraq and Sudan on your commitment to complete this round of assessments, and to ensure every country is assessed properly, despite very difficult circumstances. I hope these evaluations will make an important contribution to improving the AML/CFT situation in those countries.

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 anti money-laundering system. I am pleased to see MENAFATF’s extensive training programme, with seminars for supervisors, and for prosecutors and judges; and with workshops on the revised FATF Standards and on the non-profit organisation sector. MENAFATF has a strong and comprehensive training programme which I hope will continue.

Strengthening the Global AML/CFT Network

Alongside the revised FATF Recommendations and an updated methodology and assessment process, we are also building a stronger global network of the FATF-Style regional bodies. The revised Mandate of the FATF – which was adopted by ministers this Spring – clearly recognises the role of the FSRBs as associate members of the FATF. The new mandate also describes the close cooperation with the International Financial Institutions, the IMF and World Bank, as well as with the United Nations.

To support this mandate, we have been looking for ways to foster the activities of individual FSRBs with a view to ensuring the strength of the global AML/CFT network as a whole. We have agreed on a set of high level principles and objectives to organise the interaction between the FATF and the FSRBs, and we have set up a process to facilitate the exchange of information and to help us learn from each other, through the new Global Network Coordination Group, comprising representatives of all FSRBs and of FATF members.

Closing Remarks

Your work in MENAFATF makes a vital contribution to our global efforts – both through your participation in the work of the FATF, and through your essential work within member countries on mutual evaluation reports and follow-up; and on training and technical assistance.

I look forward to increased dialogue between MENAFATF and the FATF on ways that can further strengthen the relationship between FATF and its associate members.
I thank you for giving me the opportunity to address you today. I wish you all well for the remainder of this Plenary meeting and in your future work.

Vladimir Nechaev
FATF Vice-President

27 November 2012

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