Implementation of the FATF Recommendations by ESAAMLG Countries

Publication details




Implementation of the FATF Recommendations by ESAAMLG Countries

Maputo, 31 August 2012ESAAMLG Council of Ministers 31 August 2012

The Right Honourable Prime Minister,

Mr. Chairman of the ESAAMLG Council of Ministers,

Honourable Ministers,

Distinguished delegates and colleagues,

It is my great pleasure to be with you today in Mozambique, at the occasion of the 12th Council of Ministers of ESAAMLG members. This is my 1st visit to Africa since the start of the Norwegian Presidency of FATF. I would like to thank you all for this invitation, and congratulate our Mozambican hosts for their great hospitality.

Personally, being in Mozambique for the first time, brings back memories of meeting Eduardo Mondlane, the founder and leader of FRELIMO, some 45 years ago. As a young student I was active in solidarity work to support FRELIMO in its fight to liberate Mozambique from the Portuguese colonial rule.  It was a great event when he spoke to hundreds of youth activists in Oslo in autumn 1967. Sadly, as you know, he was killed by Portuguese agents less than two years after. To me, it is great to see that Mozambique has become very much what was Eduardo Mondlane’s dream.

I would like to take this opportunity to congratulate you on your commitment to cooperate at regional level and encourage you to expand even further the membership of this group.

I had the pleasure to follow the discussions of the Task force over the last 3 days, and noted the frank and sometimes lively debates, in a good and friendly mood.

All our countries face a challenging global environment, which calls for coordinated - and somehow stringent - policy and regulatory responses. 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 to promote 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. In this context, the coming year will present challenges for our work as partners of 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

First of all, and as you all know, after two years of negotiations, the FATF completed the review of its Recommendations to counter money laundering and the financing of terrorism. In February 2012, FATF adopted and published a revised set of Recommendations. I very much welcome the endorsement of the new standards by all ESAAMLG member countries. The first priority of the coming year will therefore be to promote and facilitate an effective implementation of these revised Recommendations.

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.

The revised standards have also been clarified on transparency - of legal entities in particular-, and strengthened to better address the laundering of proceeds of corruption. Tax crimes have been introduced as a predicate offence, and this will facilitate the cooperation between national authorities responsible for investigating and prosecuting tax crimes. This move should be highly welcome by Ministers of Finance. It will help them collect the money needed to support their public policies initiatives and actions.

The Risk-Based approach is another important change. 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.

The implementation of the Risk-Based approach will be of specific importance for ESAAMLG member countries, which have to meet the dual objective of fighting illicit finance and achieving financial inclusion.

Implementation of the standards by ESAAMLG countries

The mutual evaluation process is what gives the FATF Recommendations teeth. 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, and not only technical compliance. FATF is currently working on the methodology to assess both technical and legal compliance and effectiveness. It will also develop guidance on issues where further non binding advice for implementation would be useful, for example on Politically Exposed Persons. I strongly encourage and welcome ESAAMLG member countries, and the ESAAMLG Secretariat, to actively contribute to this ongoing work, so that the revised framework takes as much account as possible of the regional specificities.

Looking forward to the next round of evaluations must not withdraw the attention from the current follow-up procedures. ESAAMLG has now completed its 1st Round of evaluations, and I have to congratulate you on the continuous improvement of the quality of reports. They have nevertheless revealed an overall low level of compliance of countries throughout the region, which indeed face severe capacity constraints.

Mutual evaluation reports should therefore be viewed as starting points for further AML/CFT actions, aimed at improving national systems. Remedial actions to address the deficiencies identified by the mutual evaluation reports have to be put in place, in a timely and efficient manner, to reach our ultimate, common objective to reduce the harms caused by criminals and preventing the financial system from being abused. I would like to invite you to take this into consideration when you examine the ten progress reports of evaluated ESAAMLG members [Botswana, Comoros, Namibia, Uganda, Zimbabwe, Malawi, Mauritius, Seychelles, Zambia, Tanzania], and the two post-evaluation implementation plans [Kenya, Lesotho].

We should also keep in mind that mutual evaluation reports are a useful tool to identify needs for technical assistance. In this respect, I am pleased to see that ESAAMLG partners have enhanced their cooperation, to ensure better information sharing and coordination in the support brought to ESAAMLG countries.

Finally on this point, I want to underline the crucial importance of the ICRG process –the International Cooperation and Review Group process-, which is the instrument that FATF uses in its oversight of the risks related to jurisdictions that insufficiently apply the Recommendations. Last June, FATF gave a formal warning to one of the ESAAMLG countries that failure to take significant actions by October 2012 will lead to a FATF call for application of countermeasures against this country. Both this country and the ESAAMLG region would greatly benefit from actions taken to improve the situation. I am convinced that the FATF peer approach has to play a central role in this kind of situation, and overcome the challenges.

Global AML/CFT Network

The second key development which I wanted to mention to you is the new FATF mandate for 2012/2020, which was approved by FATF Ministers during the IMF meeting this spring. One of the important aspects of the new mandate is that it improves the basis for building a stronger global network of the FATF-Style Regional bodies - known as FSRBs-, and the FATF. It clearly recognizes 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.

In this perspective, 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 agreed on a set of high level principles and objectives to organize the interaction between the FATF and the FSRBs, and to set up a process to facilitate the exchange information and learn from each others.

Following the adoption of those Principles, I was very encouraged by the first meeting of the Global Network Coordination Group –the GNCG-, which brings together representatives of all FSRBs, and of FATF members. I am pleased to underline that this group is co-chaired by a representative of South Africa, and look forward to the ESAAMLG’s continued active presence in this body, and invite you to take part in its activities. I believe that there will be mutual benefits, in particular to ensure clear understanding of the FATF Recommendations and consistent application of FATF/FSRB processes. It could also be helpful to improve Secretariats’ working practices and circulation of information within the network, based on transparency and reciprocity.

Let me put back my Norwegian hat for a few seconds. In this capacity, I am pleased to inform you that the Norwegian Authorities will actively consider supporting the work of the ESAAMLG. Financing technical expertise to increase the capacities of the secretariat may be the most relevant option, for a possible three years period, starting in 2013. ESAAMLG countries are key partners for Norway, and this support will be an additional way for my country to strengthen the region.


The FATF and the Norwegian Presidency look forward to working with ESAAMLG in furthering our common objectives. I once again thank you for the opportunity to be here today. I wish you a fruitful meeting and thank you for your kind attention.