The Financial Action Task Force (FATF) held its fourth Plenary meeting under the Presidency of T. Raja Kumar of Singapore from October 25th to 27th, 2023, at the FATF headquarters in Paris. Delegates from more than 200 jurisdictions and international organization observers participated in discussions focused on critical issues related to money laundering, terrorism financing, and proliferation financing.
Enhancing Countermeasures Against Financial Crime
The FATF's core mission is to strengthen countermeasures against money laundering, terrorism financing, and proliferation financing. In this Plenary, several significant developments and initiatives were discussed:
- Crowdfunding for Terrorism Financing: The FATF will release a report on how terrorist groups misuse crowdfunding to fund their activities, aiming to increase global awareness and cooperation to prevent this.
- Revisions to FATF Recommendations: FATF is revising Recommendation 8 to ensure balanced and risk-based measures for Non-Profit Organizations (NPOs) while preventing terrorism financing, recognizing the importance of NPOs in humanitarian work.
- Criminalization of Terrorism Financing: FATF is assessing how countries are implementing Recommendation 5 to criminalize terrorism financing, emphasizing alignment with international standards and equipping law enforcement agencies effectively.
- Global Asset Recovery: FATF amendments to its Recommendations enhance tools for recovering the proceeds of crime, a critical aspect of combating money laundering and financial crime.
- Asset Recovery Networks (ARINs): The Plenary discussed the role of ARINs in improving international asset recovery efforts, focusing on enhancing collaboration between FATF and ARINs.
- Illicit Financial Flows: The General Assembly addressed Illicit Financial Flows from Cyber-Enabled Fraud and the Misuse of Citizenship and Residency by Investment Programmes, highlighting evolving challenges in the fight against financial crime.
Membership Expansion and Assessments
In October 2023, Indonesia joined as the 40th member of the FATF, emphasizing its commitment to FATF standards and fighting financial crime. The Plenary also discussed the joint FATF-GAFILAT evaluation of Brazil, focusing on enhancing cooperation, prosecuting money laundering, and improving AML/CFT/CPF regimes.
The FATF maintains the suspension of Russia's membership and warns all jurisdictions to stay vigilant against risks from circumventing measures aimed at safeguarding the global financial system.
CBI/RBI programs attract criminals seeking to evade justice and launder money. The FATF recognizes the money laundering risks. The report suggests measures for policymakers, including multi-layered due diligence and clear role definitions to counter these risks.
These reports, scheduled to be published in November, will offer valuable insights into addressing the evolving challenges posed by cyber-enabled fraud and the misuse of investment programs.
High-Risk and Monitored Jurisdictions
The FATF updates its lists of high-risk and monitored jurisdictions to reflect progress and areas of concern:
- Jurisdictions under Increased Monitoring: Bulgaria's addition to the list highlights the country's proactive approach to addressing identified strategic AML/CFT deficiencies within agreed timelines.
- Jurisdictions No Longer under Increased Monitoring: Albania, the Cayman Islands, Jordan, and Panama were removed from the increased monitoring list due to significant progress in rectifying strategic deficiencies identified during mutual evaluations. Successful on-site visits played a crucial role in this decision.
- Jurisdictions Subject to a Call for Action: No new countries or jurisdictions were added to this list.
Under the Singapore Presidency, the FATF emphasized the importance of asset recovery as a core component of the global strategy to tackle money laundering and terrorism financing. Several key initiatives were discussed:
- Enhancing Domestic Legal Frameworks: The FATF, in partnership with INTERPOL, brought together policymakers and operational experts in the FATF-INTERPOL Roundtable Engagements (FIRE). These deliberations highlighted the need for stronger domestic legal frameworks for asset recovery.
- Enhancing International Cooperation: Successful asset recovery often requires international cooperation. The FATF's efforts to strengthen operational structures and promote cooperation aim to streamline the recovery of criminal assets across borders.
- Non-Conviction-Based Confiscation: The revised FATF Recommendations now require countries to establish non-conviction-based confiscation regimes in their legal systems. This powerful tool enables relevant national authorities to secure criminal assets more swiftly, increasing the chances of successful confiscation and potential recovery for victims.
- Suspension of Transactions: The revised Standards provide countries with the power to suspend transactions related to money laundering, terrorist financing, and serious crime. This authority allows national authorities to prevent further movement of funds associated with illicit activities.
- Cultural Shift: The revised Standards aim to bring about a cultural shift, ensuring that asset recovery becomes a core component of an effective crime prevention and mitigation strategy. However, effective implementation of these requirements at the national level is key to their success.
The outcomes of the FATF's October 2023 General Assembly reflect a global commitment to combating money laundering, terrorism financing, and proliferation financing. These initiatives and updates exemplify ongoing efforts to safeguard the international financial system and adapt to emerging threats. The FATF plays a pivotal role in providing countries with the necessary tools and guidance to effectively combat financial crime and promote transparency in the global financial landscape. The release of these reports in November will provide further insights into the FATF's comprehensive endeavors to address these challenges comprehensively. The work of the FATF remains essential in protecting the integrity of the global financial system and ensuring that it is not abused for illegal or harmful purposes.