Paris, 22 October 2010.
Under the Mexican Presidency, the FATF Plenary met in Paris on 20-22 October 2010 and has taken important new steps to protect the international financial system from abuse by:
- Producing two public documents as part of its ongoing work to identify jurisdictions that may pose a risk to the international financial system.
- FATF public statement
- Improving global AML/CFT compliance: on-going process
- Providing an update on AML/CFT Improvements in Qatar and Azerbaijan
- Adopting the mutual evaluation report of Argentina
- Publishing Follow-Up Reports to the mutual evaluation reports of the Kingdom of Denmark, Spain and Sweden.
- Publishing detailed examinations of money laundering through the use of New Payment Methods and Trust & Company Service Providers
- Providing an update on the Preparation for the FATF’s fourth round of mutual evaluations
- Approving the public consultation on changes to the FATF Standards
- Approving a guidance paper on voluntary tax compliance programmes
- Publishing a reference guide and information note on the use of the FATF Recommendations to support the fight against corruption.
Providing an update on AML/CFT Improvements in Qatar and Azerbaijan
The FATF welcomes Qatar’s significant progress in improving its AML/CFT regime and notes that Qatar has met its commitments in its Action Plan regarding the strategic AML/CFT deficiencies that the FATF had identified in February 2010. Qatar is therefore no longer subject to FATF’s monitoring process under its ongoing global AML/CFT compliance process. Qatar will work with MENAFATF as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report, in particular compliance with Special Recommendation III (adequate procedures to identify and freeze terrorist assets).
The FATF welcomes Azerbaijan’s significant progress in improving its AML/CFT regime and notes that Azerbaijan has met its commitments in its Action Plan regarding the strategic AML/CFT deficiencies that the FATF had identified in February 2010. Azerbaijan is therefore no longer subject to FATF’s monitoring process under its ongoing global AML/CFT compliance process. Azerbaijan will work with MONEYVAL as it continues to address the full range of AML/CFT issues identified in its Mutual Evaluation Report, particularly compliance with SRIII (adequate procedures to identify and freeze terrorist assets).
Mutual Evaluation of Argentina
The FATF adopted the mutual evaluation report on the anti-money laundering and combating the financing of terrorism (AML/CFT) system of Argentina. The FATF expressed its disappointment and serious concern regarding Argentina’s failure to implement an adequate and effective AML/CFT system and will engage closely with Argentina to ensure that it quickly rectifies the identified deficiencies.
A summary of the comprehensive assessment will soon be on the FATF website and the full report will be released in the coming weeks.
The FATF has approved and published the Follow-Up reports of the Kingdom of Denmark, Spain and Sweden. These countries were originally placed in the regular follow-up process as a result of partially compliant (PC) ratings in certain of the Core Recommendations in their mutual evaluation reports. The mutual evaluation report of Sweden was adopted in February 2006, the mutual evaluation reports of the Kingdom of Denmark and Spain were adopted in October 2006.
These countries have since taken sufficient action and have therefore been taken off the regular follow-up process. Henceforth, they will report back to the Plenary on any further improvements to their AML/CFT system on a biennial basis.
Money laundering through the use of New Payment Methods
|Money Laundering Using New Payment Methods - COVER||
This report is builds on the 2006 Typologies report on New Payment Methods (NPMs). Since 2006, there has been a significant rise in the number of transactions and the volume of funds moving through NPMs. Consequently, the number of discovered cases where such payment systems were misused for ML/TF purposes has also increased.
This report compares the "potential risks" described in the 2006 report to the "actual risks" based on new case studies and typologies. The report also describes a number of indicators of suspicious activity. These red flag indicators will help NPM service providers and other financial institutions to detect ML/TF activities. The report describes the challenges presented in developing appropriate legislation and regulations for NPMs and the different approaches taken by national legislators and regulators.
The New Payment Methods report is the result of analysis of questionnaire responses and publications about NPMs as well as input by relevant private sector representatives such as NPM service providers, including the Internet payment sector, the mobile payment sector and prepaid card technology providers.
The risk of money laundering through Trust & Company Service Providers
|Money Laundering Using Trust and Company Service Providers - COVER||
Trust and Company Service Providers (TCSPs) provide an important link between financial institutions and many of their customers. TCSPs have often been used, wittingly or unwittingly, in the conduct of money laundering activities.
This comprehensive typologies report evaluates the effectiveness of the practical applications of the FATF 40+9 Recommendations as they relate to TCSPs. It also considers the role of TCSPs in the detection, prevention and prosecution of money laundering and terrorist financing. Finally, it evaluates the potential need for additional international requirements or sector-specific international standards for TCSPs.
Preparation for the FATF’s fourth round of evaluations
The FATF is considering a number of issues, including the Risk Based Approach, Customer Due Diligence and Reliance on Third Parties, in preparation for the 4th Round of evaluations. It reviewed the progress which has been made in considering these issues and it has prepared a first set of proposals for changes to the FATF Standards that will be subject to public consultation.
Public consultation on changes to the FATF Standards
The FATF remains committed to a process of consultation and engagement with the private sector in relation to the work of the FATF. The FATF Plenary has approved a public consultation document which seeks views on an initial set of proposals to amend the FATF Recommendations. The deadline for comments is 7 January 2011.
Guidance on voluntary tax compliance programmes
Voluntary tax compliance programmes (VTCs), aimed at raising tax revenue; increasing tax honesty and compliance; and/or facilitating asset repatriation, could potentially have a negative impact on the effectiveness of AML/CFT, if they exempt AML/CFT measures from being applied. For example, some programmes exempt financial institutions from the requirements to conduct full customer due diligence on taxpayers and to verify that the assets come from a legitimate source.
The FATF has agreed four basic principles which underscore the importance of ensuring that jurisdictions address and mitigate the ML/FT risks of VTC programmes, and are able to effectively investigate and prosecute their abuse.
This paper sets out international best practices, based on these four principles, which will assist jurisdictions in the implementation of VTC programmes that do not impede the effective implementation of AML/CFT measures.
- International Best Practices: Managing the Anti-Money Laundering and Counter-Terrorist Financing Policy Implications of Voluntary Tax Compliance Programmes
Reference guide and information note on the use of the FATF Recommendations to support the fight against corruption.
The G20 leaders have asked the FATF to help detect the proceeds of corruption and deter corruption offences by strengthening the FATF Recommendations, taking corruption issues into account in the process. The FATF recognises the link between corruption and money laundering. Effectively implemented AML/CFT measures create an environment in which it is more difficult for corruption to thrive and go undetected. The FATF has therefore developed an information note to raise public awareness on how the use of the FATF Recommendations can help combat corruption.
Luis Urrutia Corral
22 October 2010