GAFISUD contributions to the global AML/CFT network and programmes and priorities of the FATF during the Norwegian presidency

ADDRESS BY MR. BJØRN S. AAMO, PRESIDENT OF THE FATF

26TH PLENARY MEETING OF THE GRUPO DE ACCIÓN FINANCIERA DE SUDAMÉRICA (GAFISUD)

Buenos Aires, Argentina, 13 December 2012

INTRODUCTION

President of GAFISUD [Ms. Tamara AGNIC],

Executive Secretary of GAFISUD [Mr. Esteban FULLIN],

Distinguished delegates and colleagues,

Thank you very much for the invitation to attend your 26th Plenary Meeting of GAFISUD.  It gives me great pleasure to be here in Buenos Aires and address you today. 

It is important for FATF Presidents to see first-hand the work that you and other regional bodies are doing in the fight against money laundering and terrorist financing. Even if not all previous FATF presidents have visited GAFISUD; this region has showed is strong role in the FATF-network, inter alia by producing two of the last five FATF Presidents [Brazil and Mexico].

As you know, combating money laundering and terrorist financing, and now the financing of proliferation, is an international task that requires strong efforts by all countries and coordination of these efforts through the global network of the FATF and FATF-style regional bodies (FSRBs).  GAFISUD’s role in this area has been essential.  I would like to speak for a few minutes about the programs and priorities of the FATF during the Norwegian presidency, and the contributions of GAFISUD in the global AML/CFT network overall.

THE FATF STANDARDS AND THE NEXT ROUND OF MUTUAL EVALUATIONS

In February of this year, the FATF finalised, adopted, and published the revised FATF Recommendations.  I want to thank GAFISUD for its contributions during this process, and for endorsing the new 40 Recommendations at your last plenary meeting in Santiago de Chile in July. 

Implementing the revised Recommendations effectively will be a challenge for all countries.  The changes will likely require countries to amend legislation and regulations along with the practical organisation of their AML/CFT systems.  The FATF will therefore need to work with GAFISUD and other FSRBs to continue enhancing understanding of the Recommendations and training on the revised standards over the coming year and beyond.  I am pleased to hear that GAFISUD already held training on the new standards in May, and this seminar was well attended and successful.  And in July, GAFISUD began a comprehensive self-assessment exercise on the new standards.  This exercise is unique amongst the FATF and FSRBs and is no doubt strengthening GAFISUD members’ understanding and implementing of the new Recommendations and preparations for the next round of mutual evaluations.

As you know, the mutual evaluation process is critical to the success of the FATF Recommendations and the global network, as it identifies shortcomings, demonstrates practical application of the FATF requirements, and encourages countries to strengthen their AML/CFT regimes.  The FATF will begin its next round of assessments in the 4th quarter of 2013, and I understand that GAFISUD will begin at the same time.

The next round of evaluations will place a much stronger emphasis on effective implementation of the revised FATF Standards. The new approach to assess effectiveness, based on objectives, will be integrated in the Methodology.  We are currently working to finish this new methodology, as well as to develop guidance on issues where further advice on implementation may be useful. The FATF also hopes to work with GAFISUD and other FSRBs to even further align assessment and follow-up procedures. We encourage GAFISUD to continue contributing actively to this work.

ENGAGEMENT WITH THE PRIVATE SECTOR AND CIVIL SOCIETY

Implementation of the revised FATF standards will continue to require dialogue and consultation with the private sector and representatives of civil society.  Private institutions have a vital role to play in the fight against money laundering and terrorist financing.  It will therefore be important to maintain and improve the mechanisms through which we formulate new guidance and carry out research on money laundering and terrorist financing typologies.  The FATF plans during this Presidency to convene another consultative forum meeting to discuss further work relating to the implementation of the new FATF Recommendations.  There may also be other forms of dialogue. Our dialogue with non-governmental organisations will naturally also include how Recommendation 8 on non-profit organisations should be followed up in practice.

FINANCIAL INCLUSION

The key role of the risk-based approach is the most important feature of the revised Recommendations.  The risk-based approach will allow a more efficient allocation of resources to combating money laundering and terrorist financing, both by governments and financial institutions. It should focus resources and attention on the highest-risk sectors and activities, resulting in more effective implementation overall.

The risk-based approach should also enable governments to enhance their efforts on financial inclusion, which is an important issue for many countries.  While some countries may have yet to apply financial inclusion measures for fear that this would make their country less compliant with the FATF Recommendations, a well implemented risk-based approach is a good basis for successfully applying financial inclusion measures in compliance with the revised FATF Recommendations. Financial inclusion will bring people into the more formal financial system; measures that reduce the use of cash are usually good measures from an AML perspective. In the FATF we are working on revised guidance on financial inclusion, as well as on new guidance on new payment methods. I encourage all GAFISUD members to take part in the drafting of these documents at the FATF.

Here I would also highlight the work of GAFISUD, through its working group specifically to deal with these issues –the Working Group on Risk Analysis and Financial Inclusion [WGAR in Spanish]. I understand that this group has been very active recently, including a productive meeting recently in Costa Rica, and I look forward to hearing its results during this Plenary meeting. 

INTERNATIONAL CO-OPERATION REVIEW GROUP (ICRG)

The International Cooperation Review Group (ICRG) process of the FATF has as its main goal to identify jurisdictions with strategic AML/CFT deficiencies and encourage them to implement sufficient reforms, in order to increase global AML/CFT compliance, cooperation, and transparency.  I know this has affected a number of countries in this region and has been burdensome.  I am happy to hear that all the countries involved in the process are not only cooperating very actively in the process but also taking significant steps to improve their AML/CFT systems.  I encourage your continued cooperation and I look forward to countries being removed from the process in step with the progress they make. 

FURTHER DEVELOPMENT OF THE GLOBAL NETWORK

The FATF has also been enhancing its efforts to further reinforce the global AML/CFT network. Our ministers provided us in April this year with a mandate for an eight year period from 2012 to 2020 which strengthened the role of the FSRBs as their right to take part in all FATF activities was made clear. In October last year, we agreed on a new set of high level principles and objectives, which apply to the FATF and the FSRBs – and form a clearer and balanced foundation for the global AML/CFT network, including the structures, roles and responsibilities of each of our organisations.

We then created the Global Network Coordination Group (GNCG), a new FATF working group.  The purpose of the GNCG is to serve as a forum for raising, and when necessary resolving, issues of interest to the FSRBs and the FATF.  In addition, the group will also serve as a mechanism for sharing good practices and ideas relevant to such bodies.   As a demonstration of our commitment to involve FSRBs in this process, for the first time, we have a working group co-chair who comes from an FSRB. 

The new group has now met in June and October of this year, and the meetings have been constructive.  GAFISUD is one of the more developed and experienced regional bodies, so I hope that I can count on your active support to ensure that this initiative succeeds.

On the topic of institutional issues, here I will take a moment to congratulate Mr. Esteban Fullin on his position as the new Executive Secretary for GAFISUD. I wish you every success in the years to come.  

It is admirable that GAFISUD has achieved so much with such a small Secretariat [now only 2 administrators + technical and support staff].  I will mention that one of the key aspects for effective functioning of an FSRB is to have an adequately resourced Secretariat.  While I don’t want to get too involved in GAFISUD’s internal affairs, I would ask the membership here to consider, despite the challenging economic times, the additional support that the Secretariat will need in order to stay successful through its current projects and the challenging upcoming round of mutual evaluations.

I would also like to highlight a few other areas where GAFISUD is enhancing its own network and contributions to the global AML/CFT network, under the Presidency of Chile during the last year. 

  • GAFISUD’s Assets Recovery Network- RRAG:   It is important to recognise the commitment and efforts of your member countries on the development of GAFISUD’s Assets Recovery Network (Red de contactos para la recuperación de activos de GAFSISUD) to enhance information exchange and asset recovery.  This network, which includes all GAFISUD members, is also exchanging information with other networks (in particular CARIN--Camden Asset Recovery Inter-Agency Network, a similar network of European States). Public prosecutors and policemen are informally exchanging vital information on the tracing of assets towards confiscation in ML and TF investigations. 
  • TYPOLOGIES:  Identifying new trends and threats, so that we can confront these threats, remains crucial to the global AML/CFT network.   GAFISUD continued its excellent work on typologies through 2012.  In Ecuador in May, GAFISUD developed with Egmont Group a new collection and compilation of regional GAFISUD typologies.  Countries presented new typologies, especially in regard to new payment methods and the non-banking financial system. 
  • EXPANDING THE GLOBAL AML/CFT NETWORK:  It goes without saying that the FATF strongly encourages all countries to participate directly in global FATF network, through membership in either the FATF or an FATF style regional body, or for a few countries: Both.  GAFISUD has therefore enhanced the network over the years by expanding its membership, and will consider further expanding its membership during this plenary.  I look forward to a successful outcome on this.

CONCLUSION

These remain challenging economic and financial times in many countries.  But together, our commitments to further enhance our regimes through effective implementation of the FATF Recommendations and continuing our strong partnership, will enable us to confront the on-going AML/CFT risks.  At the same time, this will contribute to the confidence in our financial systems that is required if economic growth and prosperity shall be restored throughout the world.

Madame President, dear colleagues, thank you again for the honor to address you during your plenary meeting.  I congratulate GAFISUD, and the Presidency under Chile for another successful year of GAFISUD and its achievements to further strengthen the global AML/CFT network. 

I am very much looking forward to participating in your Plenary meeting, and I wish you all success this week.

Bjørn S. AAMO
FATF President

13 December 2012

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