Transcript Key FATF Standards related to Non

EuroMed Justice Programme Seminar 4:
Financial Operations of Money Laundering
Amman, 17-20 July 2006
Countering Money Laundering
and Terrorist Financing :
The International Standards
Rachelle BOYLE
Administrator
FATF Secretariat
Presentation overview
1.The FATF.
2.The 40+9 Recommendations.
3.The role of key institutions.
4.Criminal justice issues.
The FATF
The FATF
 Established by the G-7 Summit in Paris in July 1989 to
examine measures to combat money laundering.
 Originally comprised the G-7 member States, the
European Commission and 8 other countries.
 An inter-governmental body whose purpose is to establish
international standards and promote national and
international policies to combat money laundering (ML)
and terrorist financing (TF).
Membership of the FATF
 The 33 members of the FATF and the members of the
FATF-style regional bodies (FSRBs) have all directly
committed to implement the FATF standards.

The Gulf Cooperation Council is a member of the FATF.

The European Commission is a member of the FATF.
Membership of the FATF:
The FSRBs
 Together the 9 FSRBs comprise more than 150
jurisdictions.
 The Middle Eastern and North African FATF (MENAFATF) is
an FSRB comprising Algeria, Bahrain, Egypt, Jordan,
Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia,
Syria, Tunisia, United Arab Emirates and Yemen.
 Traditionally the FSRBs have been Observers. Now they
may gain associate membership. 3 FSRBs are Associate
Members of the FATF.
The role of the
Financial Action Task Force (FATF)
40+9 Recommendations (the FATF standards)

Establish international standards to combat money
laundering and terrorist financing.
Mutual evaluation system

Assess compliance with the FATF standards.
Typologies work

Study methods and techniques of money laundering
(ML) and terrorist financing (TF).
The 40+9
Recommendations
The 40+9 Recommendations:
A background
1990
The FATF 40 Recommendations are published.
1996
Revised to reflect evolving money laundering
typologies.
2001
Expanded in October 2001 with 8 Special
Recommendations on Terrorist Financing.
2003
The FATF conducted a thorough review of the
Forty Recommendations.
2004
Added a 9th Special Recommendation.
… the 40+9 Recommendations
40+9 Recommendations:
The FATF Standards
Objectives of FATF Standards


Provide a comprehensive set of measures to enable all
countries to implement effective anti-money
laundering (AML) / counter-terrorist financing (CFT)
systems that will protect the world-wide financial system
from misuse by organised crime and terrorist financiers.
Foster good governance and longer term economic
development.
40+9 Recommendations:
The FATF Standards
The importance of these objectives



For countries: Good governance, crime reduction, financial
market stability, investor confidence, revenue collection,
economic growth.
For the private sector: Financial institution soundness
and integrity, public confidence, market distortions /
competition.
For the international community: Impacts on organised crime and
terrorist networks, promotes stability of international financial
markets.
The 40+9 Recommendations:
Overview of the standards
The 40 Recommendations
 Legal systems: criminalisation of money laundering,
international cooperation.
 Comprehensive set of preventative measures to be taken
by financial institutions and non-financial businesses and
professions (customer due diligence, record keeping).
 Institutional framework and other measures (reporting of
suspicious transactions, compliance, regulation and
supervision, sanctions).
 International cooperation: mutual legal assistance,
extradition, information sharing.
The 40+9 Recommendations:
Overview of the standards (continued)
The 9 Special Recommendations on Terrorist Financing
 Ratify United Nations instruments.
 Criminalise terrorist financing.
 Freeze and confiscate assets.
 Report suspicious transactions.
 International cooperation.
 Protect against abuse of alternative remittance systems and
abuse of non-profit organisations.
 Ensure originator information on wire transfers
 Detect cash couriers.
The roles of key
institutions
The 40+9 Recommendations:
Coordinated action by key institutions
Key institutions
 Law enforcement / prosecutorial authorities.
 Financial institutions and other businesses / professions.
 Financial intelligence unit (FIU).
 Financial sector supervisors / regulators.
The importance of coordination
 Effective AML/CFT systems require coordinated action by
the government agencies as well as with the private sector.
 International cooperation is key to effectively counter
transnational money laundering and terrorist financing.
The 40+9 Recommendations:
The role of law enforcement and
prosecutors
Obligations in the 40+9 Recommendations

Criminalise ML/TF.

Freeze, seize and confiscate.

International cooperation (mutual legal assistance and
extradition).
The importance of fulfilling these obligations



Authorises investigation / prosecution of ML/TF offences.
Weakens criminal / terrorist organisations by taking their
profits and assets.
Prevents criminals from escaping by crossing borders.
The 40+9 Recommendations:
The role of the private sector
Obligations in the 40+9 Recommendations
 Customer due diligence.
 Record keeping.
 Suspicious transaction reporting.
 Internal controls.
The importance of fulfilling these obligations
 Ensures that useful information is available to law
enforcement / prosecutorial authorities.
 Increases transparency in the financial sector.
 Deters criminals.
The 40+9 Recommendations:
The role of the Financial Intelligence Unit
Obligations in the 40+9 Recommendations
 Establish an FIU … a national centre for receiving,
analysing and disseminating disclosures of suspicious
transactions other relevant information concerning ML/TF.
The importance of this obligation
 Centralises information received from private sector
entities.
 Focal point for financial intelligence.
 Facilitates international cooperation.
 Produces value-added analysis for investigation/
prosecution.
 Provides guidance to the private sector.
The 40+9 Recommendations:
The role of supervisors and regulators
Obligations in the 40+9 Recommendations
 Ensure that financial institutions are complying with the
AML/CFT obligations.
 Ensure that proportionate and dissuasive sanctions are
available for those financial institutions that are not
complying with their AML/CFT obligations.
The importance of fulfilling these obligations
 Facilitates detection of criminals who have infiltrated or
gained control over financial institutions.
 Identifies areas where more guidance is needed.
Criminal justice
issues
Criminal justice issues
 Criminalise money laundering and terrorist financing.
 Freeze and confiscate criminal and terrorist assets.
 International cooperation.
 Government institutional framework (FIU, regulation and
supervision).
Criminal justice issues:
Criminalise money laundering and
terrorist financing
Criminalise ML & TF (Recommendations 1& 2, Special Recommendation II)

At minimum, must cover 20 categories of offences and,
where applicable, minimum threshold. Must also cover
equivalent foreign offences.

Need effective, proportionate and dissuasive sanctions.

Must be sanctions for companies.

TF – must cover providing and collecting funds for
terrorists, terrorist organisations and terrorist acts.
Criminal justice issues:
Freeze and confiscate criminal and
terrorist assets
Confiscation and freezing (Recommendation 3, SR III)

Complex but vital.

Need to go below the criminal standard of proof.

Meet the obligations set in both UNSCR 1267 & 1373.

Important to have capacity to act immediately to freeze.
Criminal justice issues:
International cooperation
International Co-operation
(Recommendations 36, 27, 38, 39 & 40, SR V)
 Sign, ratify, implement 3 International Conventions.
 Mutual legal assistance.
 Freeze & confiscate proceeds.
 Extradition - money laundering.
 Other forms of cooperation between competent authorities
- FIUs, law enforcement, supervisors.
 Cooperation on TF.
Criminal justice issues:
Institutional framework
Authorities powers and other issues
(Recommendations 26, 27, 28, 29, 30, 31, 32, 33 & 34. SR VIII)
 Powers - FIUs, law enforcement, supervisors.
 Adequate structuring & resources.
 Domestic cooperation / coordination.
 Comprehensive statistics.
 Companies / trusts – beneficial owners.
 NPOs, ARS.
For further information
FATF website: www.fatf-gafi.org
Ms. Rachelle BOYLE
Administrator
FATF Secretariat
[email protected]
Thank you