FATF President's Speech at the APG Annual Meeting July 2012

by FATF President Bjørn S. Aamo at

the Asia Pacific Group (APG) on Money Laundering 15th Annual Meeting

Brisbane, Australia

17 July 2012

Good morning Co-Chairs, Executive Secretary, distinguished delegates and colleagues.

I am very pleased to be here today to address the 15th APG Annual Meeting, and I wish to sincerely thank you for the invitation.

This is the first FATF Associate Member Plenary meeting that I attend since the start of the Norwegian Presidency on the 1^st of July. I would like to take this opportunity to highlight the important role APG plays in the global AML/CFT network as one of the senior FATF associate members and one of the consistently well-performing ones.

The coming year will present significant challenges for our work as partners in the FATF-family. Many countries and financial institutions have economic difficulties.  Terrorist threats are present in several parts of the world.  Fighting money laundering and financing of terrorism are important tasks in promoting financial integrity and building trust between countries and market participants. Trust and confidence are necessary to restore growth and prosperity in all parts of the world.

The new Mandate, which was approved by FATF ministers on 20 April,  improves the basis for building a stronger global network of the FSRBs and the FATF. The mandate clearly recognizes the role of the FSRB’s as associate members of he FATF.  It also describes the close cooperation with the International Financial Institutions, The IMF and World Bank, as well as with the United Nations.

FATF Standards and the fourth round of mutual evaluations

The first priority of the coming year will be to promote and facilitate an effective implementation of the Revised Recommendations. As you all know, after over two years of negotiation, the FATF completed the review of its Standards and adopted and published the Revised FATF Standards on the 16^th of February. The fundamental elements of the FATF Standards are maintained and many of the changes are technical and editorial in nature.

The Risk-Based Approach is the most important of the changes to the FATF Standards. The purpose of the Risk-Based Approach is to allow a more efficient 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 resources and attention on the highest risk sectors and activities.

In the new standards tax crimes are included among the predicate offences for Anti Money Laundering measures. This will provide a better foundation for international cooperation against tax crimes and tax evasion. More efficient tax collection is a necessary part of international efforts to strengthen public finances, which in particular is required in many European nations.

The mutual evaluation process is what gives the FATF Recommendations teeth. Therefore, all countries in the global network will be assessed for compliance with the revised Recommendations, and the next round of assessments by both the FATF and the APG is scheduled to start in the 4th quarter of 2013. As in the past, it will involve several joint FATF/APG assessments and the Secretariats of both the FATF and the APG are working in close coordination in that regard.

This new round of mutual evaluations will place a much stronger emphasis on the assessment of effective implementation of the revised FATF Standards, and not only technical compliance. The new approach to assess effectiveness, based on objectives, will be integrated in the Methodology. Apart from developing the new Methodology, the FATF is also working on guidance, on issues where further (non-binding) advice on implementation would be useful. We encourage the APG to continue its active involvement in this on-going work.

Looking forward to the next round of mutual evaluations, however, must not withdraw the attention from the current follow-up procedures The APG’s strengthened follow-up procedures should continue to be an important driver for jurisdictions to address the deficiencies in their AML/CFT regime and enhance the overall level of compliance with the Standards in the Asia/Pacific region.

Global AML/CFT Network

Not all FSRBs within the global AML/CFT network are currently operating at the same level. For this reason, we have been looking for ways to identify and address potential weaknesses in individual FSRBs with a view to ensuring the strength of the global AML/CFT network as a whole.

The FATF has been considering ways to further reinforce the global AML/CFT network. In October last year, we agreed on a new set of high level principles and objectives. It is important to stress that the newly agreed objectives apply to all bodies – both the FATF and the FSRBs – and thus form a clearer and more balanced foundation for the global AML/CFT network. As mentioned, this is now also underpinned by the New FATF mandate.

Based on these Principles, I was very encouraged by the meetings of the newly created Global Network Coordination Group and of the FSRB Presidents’ meeting in Rome in June. Under the able co-chairs Pieter Smit of South Africa and Dawne Spicer of the CFATF-secretariat, the GNCG had a highly useful exchange of views on experience on staffing and practical work of the FSRBs. Information was given on the formation of a new FSRB in French-speaking central Africa, GABAC . Other questions on performance were also discussed. 

Respect for the autonomy of each of the bodies combined with the common global goals, is the foundation for this work. The result of the meeting of GNCG was reported to the annual meeting of FSBR-president which thus had more “meat on the bone” for its more general discussion on principal and strategic issues and the further cooperation between FSBRs and the FATF.

I look forward to the APG’s continued active presence in these bodies, as it is only through the participation of the stronger parts of the global AML/CFT network that we will be able to help all to play their respective part.

International Co-operation and Review Group (ICRG)

As you are aware, an important function of the FATF is to identify and address, through its ICRG process, the risks related to jurisdictions that insufficiently apply the FATF Recommendations. The ICRG process is world-wide in scope and can thus focus on jurisdictions in any region when they meet certain criteria. Even FATF members have been or are currently subject to the ICRG process.

It is important to note that the ICRG process is not intended to replace follow-up or membership procedures carried out by FSRBs; rather it is intended to ensure a level playing field in dealing with jurisdictional risks on a world-wide basis.

Conclusion

I once again thank you for the opportunity to be here today and address the APG Annual Meeting, and I wish to congratulate APG on its effective functioning and valuable performance and contribution. I rely on APG’s continued support and participation in the FATF efforts to consolidate and enhance the AML/CFT global network. Thank you all for your kind attention.