The Financial Action Task Force (FATF) concluded a Plenary meeting in Berlin today, and issued its revised Forty Recommendations to combat money laundering. This was the Task Force’s final Plenary meeting under the Presidency of Germany.
In a release from Berlin today, FATF President Jochen Sanio said, *”In updating its Forty Recommendations against money laundering, the FATF has accomplished one of the most important tasks it has undertaken since its inception in 1989.”*
The main task of the “international cooperation” agency has been to uncover money laundering techniques, to develop recommendations for effective counter measures, and to harmonise anti-money laundering policies at the international level by means of minimum standards. Specifically, during 2002-2003, its main priority has been to complete the revision of the Forty Recommendations, the international anti-money laundering standard.
According to the FATF, this revision makes significant changes which, when combined with the Eight Special Recommendations, “create a comprehensive, consistent and substantially strengthened international framework for combating money laundering and terrorist financing.”
Major changes adopted include:
·specifying a list of crimes that must underpin the money laundering offence;
·the expansion of the customer due diligence process for financial institutions;
·enhanced measures for higher risk customers and transactions, including correspondent banking and politically exposed persons;
·the extension of anti-money laundering measures to designated non-financial businesses and professions (casinos; real estate agents; dealers of precious metals/stones; accountants; lawyers, notaries and independent legal professions; trust and company service providers);
·the inclusion of key institutional measures, notably regarding international co-operation;
·the improvement of transparency requirements through adequate and timely information on the beneficial ownership of legal persons such as companies, or arrangements such as trusts;
·the extension of many anti-money laundering requirements to cover terrorist financing; and
·the prohibition of shell banks.
FATF members have pledged to immediately start work on the implementation of the new standard set by the revised Recommendations, and the FATF has encouraged other countries and jurisdictions to do likewise. Its 2003-2004 Work Programme will include initiatives to assess members’ compliance with this standard, through a process of self-assessment, followed by a further round of mutual evaluations, potentially starting before the end of 2004.
Included in the Report presented at the Berlin Plenary was an update on the FATF’s activities to counter terrorist financing.
Since October 2002, the Task Force has developed “further interpretation and guidance” on its Eight Special Recommendations, to assist countries to implement effective measures to combat the financing of terrorism. This includes SR VI – Informal Money Transfer Systems; SR VII – Wire Transfer Requirements; and SR VIII – Non –Profit Organisations.
Additionally, The FATF has collaborated with the United Nations and other international organisations to encourage all countries to implement the Special Recommendations. In this connection, the Recommendations have been endorsed by many non-FATF members and international organisations and bodies, and some 130 jurisdictions are participating in the FATF self-assessment exercise.
The FATF says this global cooperation will allow it to assist the IMF, World Bank, UN and other donors, including the recently-created Counter Terrorism Action Group, to prioritise their offers of technical assistance with respect to implementing the Eight Special Recommendations on Terrorist Financing.
Also included in the Report were indications that the FATF looks to continued collaboration with International Financial Institutions (IFIs) to reinforce global standards. The IMF and World Bank formally added the Forty + Eight Special Recommendations to the list of standards for which Reports on the Observance of Standards and Codes (ROSCs) are prepared. According to the FATF, this was in recognition of these Recommendations as the international standards for combating money laundering and terrorist financing.
The three agencies, i.e. the FATF, the IMF, the World Bank, have agreed a common methodology to assess compliance with the FATF Recommendations. This methodology has now been used both for FATF mutual evaluations and IMF/World Bank assessments. To assist the Fund and Bank in their work, experts from FATF members or FATF-style regional bodies have been made available for IMF/World Bank-led assessments.
Today as well, the Federal Department of Finance in Switzerland issued a release indicating that country’s full support for the revised Recommendations.
Switzerland has participated actively in the work involved in revising the 40 Recommendations, and according to the FDF release, several of the new regulations were inspired by Swiss legislation. Most notably, cited were regulations concerning client and beneficial owner identification or due diligence obligations with regard to politically exposed persons. Reportedly, Switzerland’s Federal Council *”welcomes the outcome as a good compromise which, on the whole, is positive for Switzerland.*
The Bahamas has been a participant in this exercise as well, with representatives from the Central Bank representing the Caribbean Financial Action Task Force (CFATF) on the Working Group appointed by the FATF to review the Recommendations.
With the new legislative and regulatory architecture introduced in 2000, The Bahamas upgraded its anti-money laundering regime and its general regulatory and supervisory infrastructure. The compendium of legislation introduced:
·Ensured that all financial institutions as defined by the legislation adhere to a standard of due diligence that is consistent with international standards and enable the proper identification of customers
·Ensured that persons offering financial services were brought within the legislative framework, including intermediaries where they offer facilities to their clients.
·Modernised the regulatory and supervisory framework of The Bahamas to meet international standards as set out by organisations such as the Basle Committee and IOSCO.
The Bahamas always has and always will support the international community’s abhorrence of abuse of the system through criminal money-laudering, and The Bahamas will continue to cooperate fully with global measures to ensure a sound international financial system.
Any offshore financial centre which hopes to be successful in the long term must cooperate with other jurisdictions and have stringent regulations in place to enhance and protect the reputation of the centre. The Bahamas Government has gone on record with its intention of attaining and maintaining *”the very highest levels of conduct as a clean jurisdiction, complying with the highest standards to prevent the abuse of its financial system by money launderers and criminal elements”.*
As a sovereign country with a pro-business government, strong regulatory oversight and sensitivity to the requirements of a global market, The Bahamas provides a unique environment for the conduct of international business.