Speech at the GAFILAT Plenary

Publication details




Speech by Santiago Otamendi
FATF President
Buenos Aires, 27 July 2017

Ladies and gentleman heads of delegation, good morning!

On behalf of the Minister of Justice and Human Rights of the Nation, Dr. German Garavano, and in my capacity as Secretary of Justice, I would like to thank the distinguished representatives from the countries that are part of GAFLAT for their presence in Buenos Aires city to participate in this Plenary.

Now, as President of the FATF since this month of July, I would like to specially thank the President of GAFILAT, ambassador Curia, and through him to all those who are here, the invitation to participate in this Plenary. I would like to thank you very much for your cordiality and I would also like to congratulate the Executive Secretariat, headed by Secretary Marconi Melo for the organization!

It is a pleasure and an honor for me that my first institutional activity as President of the Financial Action Task Force be in this Plenary with sister countries of Latin America.

Last June 23th, I had the opportunity to present the Objectives of my presidency for the consideration of the FATF Plenary and I have received an excellent feedback from all delegations.

Likewise, the priorities over terrorist financing of the Argentine Presidency received an express and strong support from the G20 Leaders in the Hamburg Declaration.

Indeed, prevention and fighting against terrorist financing shall remain high on the FATF Agenda since they are a global concern.

Nevertheless, FATF must continue strengthening its primary responsibility that is assessing and promoting effective implementation of the anti-money laundering and terrorist financing standards, and the priority of the 4th round of mutual evaluations will continue focusing on effectiveness.

In joint collaboration with the Regional Groups, we have achieved solid global standards for protecting the financial system and depriving criminals or terrorists of their funds. The FATF Global Network nowadays consists of 9 regional bodies, gathering together 198 jurisdictions that have committed themselves at their highest level to implement these standards and to be evaluated by their peers, using FATF’s methodology.

We are all now focusing on assessing how effectively countries are facing these threats. Passing laws is no longer enough, we need to have the capacity to enforce them. By effectively enforcing the laws, at the end of the day these measures protect our economies, ensure their transparency, predictability and increase their competitiveness, attracting direct foreign investment.

This is a demanding task that requires commitment. It requires that countries’ operative experts devote time to become assessors, so that all countries thoroughly examine the evaluations, and that Secretariats have adequate resources and operate as efficiently as possible.

This has been an arduous task for the FATF and Regional Groups and I would like to recognize the contribution to the Global Network made by GAFILAT. Within the framework of the 4th Round of Evaluations, Costa Rica and Cuba were part of the first countries assessed by GAFILAT in 2015, and their re-ratings have been discussed this week as well as Nicaragua’s mutual evaluation. We are already starting a new phase of the 4th Round, in which follow-up reports will begin to be discussed by Regional Groups. This could pose new challenges for ensuring quality and coherence on all the Global Network.

Enhancing quality and uniformity of mutual evaluations is an ongoing process that demands constant effort. In this respect, I particularly value GAFILAT’s initiative for conducting a quality and consistency revision of all of its mutual evaluations since the beginning of the 4th. Round.

I would also like to encourage GAFILAT’s members to ensure that procedures for Mutual Evaluations have an adequate follow-up, since strict compliance with procedures and terms have a direct and substantial impact on the quality of the evaluations.

In this regard, I welcome another important item on the Plenary’s agenda that is the study conducted by GAFILAT on the Quality and Consistency of its Mutual Evaluations since the beginning of the 4th. Round of Evaluations. This is an interesting exercise to improve the consistency of Mutual Evaluations and such initiative must be welcomed.

Having said this about the shared concern about the global threat of terrorism and the need that, together with other Regional Groups, we keep fulfilling these primary functions of Standardization and Assessment among Peers, cornerstone of the Global System for Preventing and Combating Money Laundering and Terrorist Financing, I would like to mention that the Argentine Presidency has succeeded in prioritizing, through its objectives, on the FATF agenda other concerns and regional challenges:

First, I would like to refer to Financial Inclusion:

In order to achieve strong, sustainable and inclusive economic growth, promote greater inclusion and reduce inequalities, the FATF must continue focusing upon financial inclusion, in accord with the Standards and the G20 High-Level Principles for Digital Financial Inclusion.

Clearly, banks global de-risking and de-marketing may lead to financial exclusion and an increase in the risks of money laundering and terrorist financing faced by societies, indirectly encouraging the use of cash and informal or non-regulated channels.

Therefore, the FATF shall continue working with the Financial Stability Board and other agencies to monitor and address the risks of a decline in correspondent banking relationships and the worrying practices of terminating or restricting commercial relationships with certain categories of customers, such as Non-Profit Organizations, currency exchange and money remittance providers, among others.

Banking and financial services in a globalized context are well understood by the countries of the region as a public responsibility from a “social inclusion” point of view and therefore we are on the alert for what I call “regulatory inflations” do not encourage risk aversion on the one hand and do not discourage access to this essential public service on the other.

As regards financial but also social inclusion, we must acknowledge the key role of Non-Profit Organizations in providing a range of vital services in our communities, particularly, to needy people, which are often vulnerable communities in high-risk regions.

The FATF, under the Argentine presidency, shall continue preventing improper use of Non-Profit Organizations to finance terrorism, but at the same time it will promote a proper implementation of Recommendation 8, so as to ensure that regulations are applied using a sensible real-risk-based approach in order to not interrupt or inhibit legitimate non-profit activities that so much contribute, closely together with States, to assistance and social inclusion.

The second regional challenge is Enhancing Transparency and Integrity of Financial Flows, a topic in which GAFILAT is particularly interested in.

In our fight against corruption, tax evasion and financial crime in general, we must keep focusing on enhancing transparency of legal persons and other corporate structures, by making updated and accurate information on beneficial owners readily available, as well as on improving national and international cooperation for information exchange purposes.

In addition, the Argentine Presidency shall renew and put a new emphasis on the various forms of money laundering through international trade, which have caused growing concern about illegal financial flows, and particularly affects developing economies.

In this regard, I must stress that GAFILAT Plenary is analyzing an update to its Report on Money Laundering Regional Threats, which will be a great input for FATF in this field.

Finally, I would like to introduce a specific initiative we have developed jointly with GAFILAT’s Argentine Presidency. It is an initiative designed to reach out to the Judicial Community so as to bring it closer at an institutional and operative level, through hosting FATF Forums with judges and prosecutors.

The Judiciary and the Attorney General’s Office are essential in order to build stable and efficient institutions; responsibility, integrity, transparency and the rule of law: all of them are the pillars of an effective anti-money laundering and counter terrorist financing system.

Even though the private sector and FIUs are fundamental to prevent money laundering and terrorist financing, and the information they have support criminal investigations, the action of the Judiciary ensures a successful suppression of such activity. Criminal investigations and sentences are the strongest messages our systems can sent out in terms of effectiveness.

Judges and prosecutors are an important source of information, evidence and intelligence, and this initiative will highlight the complex structures used for money laundering activities and will focus on the growing link between organized crime and terrorism.

This Presidency acknowledges that the legitimacy of global efforts arises not only from effective prevention but also from convictions, financial sanctions, freezing measures, confiscation and assets recovery for the benefit of States and victims.

With this end in view, it is important that both FATF and GAFILAT should aim for a more prominent role of the Judiciary and the Attorney General’s Office, for instance by being part of delegations and attending Working Groups’ meetings.

Lastly, I must admit I am very proud that my first participation as President of the Plenary meeting of FATF’s representatives will be held in the context of a Joint Plenary Meeting with GAFILAT, which will be held in this city at the beginning of November. Argentina has the great responsibility for heading both bodies, and in this respect, I would like to emphasize the joint work carried out with GAFILAT’s President, to make this Joint Plenary possible.

This is confirmation, and be sure about it, that some of the main hopes of the FATF Argentine Presidency is to count on the work and voices of all of you to be able to detect the main threats and challenges our region is confronting in this field, but also to maximize the potential, the resources devoted, the investigations and good practices adopted by Latin America to contribute to the fight against these two big threats to global stability and security, which are organized crime and terrorism.

Lastly, in my capacity as Secretary of Justice of the host country, I hope you enjoy your stay in Argentina.

As President and representative of the Financial Action Task Force, I am confident about your commitment, and I encourage you to keep working together, I hope you have fruitful discussions and we can all meet again during the next Joint Plenary meeting.

Thank you very much!