Today, theFinancial Action Task Force (FATF) concluded its sixth and final plenary under the presidency of T. Raja Kumar of Singapore. This significant event brought together delegates from over 200 jurisdictions and observers from various international organizations for three days of intensive discussions in Singapore. The primary focus was on critical issues such as money laundering, terrorism financing, and proliferation financing. The outcomes of this Plenary are pivotal for the global financial system, and here’s a detailed look at what transpired.
Key Highlights from the Plenary
- Jamaica and Türkiye were removed from the FATF's increased monitoring list.
- The FATF reiterated its concerns regarding the Democratic People’s Republic of Korea (DPRK).
- A significant milestone was achieved with the revision of criteria for prioritizing countries under the International Cooperation Review Group (ICRG) process.
- The Plenary agreed on how countries will be assessed for compliance with the recently revised FATF Standards.
- The joint FATF/APG/EAG assessment of India and the joint FATF-MENAFATF assessment of Kuwait were discussed and adopted.
Compliance and Methodology Revisions
Revised Criteria for the ICRG Review Process
The FATF approved revised criteria for prioritizing countries for its International Cooperation Review Group (ICRG) review process. This updated approach will be more risk-based and considerate of the capacity challenges faced by the least developed countries. This change is expected to make the ICRG process more effective and equitable, ensuring that countries are assessed fairly based on their specific circumstances.
Assessment of Compliance with Revised FATF Standards
Members also agreed on the methodology for assessing countries' compliance with the recently revised FATF Standards on asset recovery and related international cooperation. Countries will need to demonstrate prioritization of asset recovery, identification and tracing of criminal property, enforcement of confiscation orders, and provision of timely international cooperation.
Adoption of Mutual Evaluation Reports
The Plenary also discussed and adopted the joint FATF/APG/EAG assessment of India and the joint FATF-MENAFATF assessment of Kuwait. These reports evaluate the effectiveness of these countries' measures to combat money laundering, terrorist financing, and proliferation financing. The findings from these assessments will be instrumental in guiding future efforts to strengthen AML/CFT regimes in these countries.
High-Risk and Monitored Jurisdictions
Jurisdictions Under Increased Monitoring
Monaco and Venezuela were added to the list of jurisdictions under increased monitoring. These countries are actively working with the FATF to address strategic deficiencies in their AML/CFT regimes.
Jurisdictions No Longer Under Increased Monitoring
Conversely, Jamaica and Türkiye were congratulated for their significant progress in addressing the strategic AML/CFT deficiencies previously identified during their mutual evaluations. They have completed their Action Plans to resolve the identified strategic deficiencies within agreed timeframes and will no longer be subject to the FATF’s increased monitoring process. However, they will continue to work with the FATF and the relevant FATF-Style Regional Body to further strengthen their AML/CFT/CPF regimes.
Continued Concerns Over DPRK
However, the FATF also reiterated its ongoing concerns regarding the Democratic People’s Republic of Korea (DPRK). The country has consistently failed to address significant deficiencies in its AML/CFT regime, posing serious threats due to its illicit activities related to the proliferation of weapons of mass destruction. The FATF's stance on DPRK underscores the importance of global vigilance and cooperation in combating financial crimes.
Strategic Initiatives
The FATF has been proactive in addressing emerging challenges and refining its strategies to combat financial crimes more effectively. Here are some of the key strategic initiatives discussed during the Plenary:
Review of Gatekeeper Measures
The FATF completed a comprehensive review of measures to prevent gatekeepers—such as accountants, lawyers, real estate agents, and trust and company service providers—from being exploited for money laundering and terrorist financing. These professionals often serve as intermediaries in financial transactions, and when not properly regulated, they can become conduits for illicit activities. The findings of this review, which will be published in July 2024, aim to enhance the regulatory framework and ensure that gatekeepers are equipped to identify and mitigate risks.
Virtual Assets and VASPs
The FATF agreed to publish the fifth annual update on the progress made by jurisdictions in implementing the FATF Standards on virtual assets and virtual asset service providers (VA/VASPs). Despite some advancements, the majority of jurisdictions remain only partially or not compliant with these standards, leaving virtual assets and VASPs vulnerable to misuse. The FATF calls on all jurisdictions to act swiftly and fully implement the FATF’s requirements on VAs and VASPs. This update will be available in July 2024 and will provide a clearer picture of global compliance levels and areas needing improvement.
Payment Transparency
In response to the evolving landscape of cross-border payment systems and changes to industry standards, particularly ISO20022, the FATF is revising its Standards. The goal is to make cross-border payments faster, cheaper, more transparent, and more inclusive while ensuring AML/CFT compliance. The Plenary discussed the outcomes of an extensive public consultation on draft amendments to the standards, which closed on May 3, 2024. Given the complexity and potential impact of these requirements, further dialogue with relevant bodies and experts in both the public and private sectors will take place before finalizing the amendments.
Global Network Cooperation
The FATF President met with the Chairs of FATF-Style Regional Bodies (FSRBs) to discuss progress in implementing the 2022 Strategic Vision for the Global Network. They agreed on three Global Network priorities for the coming year:
- Increasing FSRBs’ voice and participation in FATF work
- Preparing for the new round of mutual evaluations
- Strengthening AML/CFT expertise at the regional level
These priorities aim to enhance the cohesion and effectiveness of the Global Network, ensuring that regional bodies are well-integrated into the FATF’s broader efforts to combat financial crimes.
Future Directions
Incoming Mexican Presidency’s Priorities
Looking ahead, the incoming President, Elisa de Anda Madrazo, outlined the priorities for the Mexican Presidency from July 2024 to June 2026. These priorities include:
- Advancing financial inclusion
- Ensuring a successful start to the new round of assessments
- Strengthening the cohesion of the Global Network
- Supporting the effective implementation of revised FATF Standards
- Continuing efforts to combat terrorist and proliferation financing
These strategic initiatives are expected to drive significant progress in the global fight against financial crimes.
Women in FATF and the Global Network Initiative
The Singapore Presidency also made significant strides with the Women in FATF and the Global Network initiative. This initiative includes a multi-cultural pilot mentoring program and the launch of an e-book titled “Breaking Barriers: Inspiring the Next Generation of Women Leaders,” which features stories from distinguished leaders within the FATF and Global Network. His initiative aims to inspire and empower the next generation of women leaders in the fight against financial crime.
In conclusion, the outcomes of the FATF Plenary under the Singapore Presidency mark significant progress in the global fight against financial crimes. The strategic initiatives and revised standards set the stage for a more robust and inclusive global financial system, ensuring that countries are better equipped to combat money laundering, terrorism financing, and proliferation financing. As we look forward to the Mexican Presidency, the focus on financial inclusion, effective implementation of standards, and global cooperation will be crucial in driving further progress.