Key FATF Standards related to Non
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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