The second General Assembly of the Financial Action Task Force (FATF), led by Singapore President T. Raja Kumar concluded its discussions at the FATF headquarters in Paris. Representatives from more than 200 jurisdictions in the Global Network participated in the Plenary, which addressed a wide range of issues related to the global financial system.
South Africa and Nigeria are the new jurisdictions under increased monitoring.
No new country/region has been added to the list of jurisdictions subject to a call for action.
Cambodia and Morocco are no longer under increased monitoring.
During the Plenary, FATF delegations agreed on the order of countries to be evaluated during the first year of the upcoming mutual evaluation cycle that will begin in 2024. The 5th round of mutual evaluations is set to last six years, with around seven countries being assessed each year. The Methodology and Procedures for this round were approved in March 2022 but are not yet in effect and are subject to change until the start of the new round. Additionally, the FATF discussed the FSRBs' readiness for the next round of mutual evaluations.
Jeremy Weil, from Canada, has been selected as the next FATF Vice President. He will take over from Elisa de Anda Madrazo from Mexico on 1 July 2023 and hold the position for two years. Weil is currently the Head of the Canadian delegation to the FATF.
Membership in the Russian Federation Suspended
The Plenary's discussions also touched on the ongoing conflict between the Russian Federation and Ukraine. One year after the Russian Federation's military invasion of Ukraine, which the FATF considers illegal, unprovoked, and unjustified, the FATF has reiterated its condolences to the people of Ukraine for the losses they have suffered.
Furthermore, the Plenary noted that the Russian Federation's continuing and intensifying aggression against Ukraine is fundamentally contrary to the FATF's core principles of promoting security, safety, and the integrity of the global financial system, as well as fostering international cooperation and mutual respect among FATF members. As a result, the FATF Plenary has decided to suspend the membership of the Russian Federation.
In addition, the FATF has issued several statements since March 2022, urging all jurisdictions to remain vigilant against any potential attempts to circumvent measures that have been taken against the Russian Federation. These measures aim to safeguard the international financial system against any illicit activities that may be linked to the ongoing conflict in Ukraine.
In summary, the FATF remains committed to upholding its standards and promoting the integrity of the global financial system. The suspension of the Russian Federation's membership serves as a clear message that the FATF will not tolerate any activities that are contrary to its principles and objectives, especially those that may jeopardize the security and stability of the international financial system.
During its recent meeting, the FATF reviewed and accepted the mutual evaluation report of Indonesia, which has been an observer of the FATF since June 2018.
The FATF evaluated Indonesia's request for membership and found that the country has a strong legal framework and good results in fighting terrorist financing. However, Indonesia needs to focus more on pursuing larger-scale money launderers and enhancing asset confiscation. The FATF has called on Indonesian authorities to improve risk-based supervision of non-financial businesses and professions and impose effective sanctions for non-compliance. Indonesia will continue its work to fulfill the FATF’s membership requirements.
During the Plenary, the FATF reviewed Qatar's assessment and acknowledged the country's efforts in improving its AML/CFT regime in recent years, resulting in strong technical compliance with FATF Standards. The country has also taken positive steps in developing a better understanding of money laundering and terrorist financing risks, implementing targeted financial sanctions, and supervising both financial and non-financial sectors. However, Qatar needs to make significant improvements in certain areas, such as its law enforcement response to money laundering and terrorism financing, the use of financial intelligence, and the availability and access to beneficial ownership information. Additionally, the country needs to strengthen the implementation of targeted financial sanctions for proliferation financing.
The FATF will publish the assessment reports of both Indonesia and Qatar by May after completing a quality and consistency review.
Enhancing the transparency of beneficial ownership and preventing illicit activities and assets from being concealed behind opaque corporate structures has been a priority for the FATF. This includes targeting criminals, the corrupt, and those evading sanctions who may seek to hide their illegal activities and assets behind anonymous shell companies, legal arrangements, and other businesses.
Beneficial Ownership of Legal Persons
FATF agreed to tougher global beneficial ownership standards and revised Recommendation 24 to require access to accurate information on true company owners. FATF has now finalized guidance to help countries implement the revised requirements and mitigate associated risks. The guidance will be published in March 2023.
Beneficial Ownership of Legal Arrangements
FATF has agreed to make changes to Recommendation 25 on legal arrangements to align its requirements with those for Recommendation 24 on legal persons. The changes aim to ensure a consistent set of FATF standards on beneficial ownership. The FATF sought input from stakeholders, including through a White Paper consultation and public consultation. The FATF will develop a guidance document to help countries implement the revised requirements of Recommendation 25.
Disrupting the Financial Flows From Ransomware
Ransomware attacks have increased in scale and number in recent years, targeting individuals, businesses, and government agencies worldwide. Criminals are using the latest technologies to carry out these attacks and evade detection while laundering large amounts of money, often using virtual assets. The FATF has analyzed these methods, and identified jurisdictions with weak AML/CFT controls as a concern. To combat this, authorities must leverage existing international cooperation mechanisms and collaborate with cyber-security and data protection agencies to quickly collect information, trace transactions, and recover virtual assets. The FATF will publish a report in March 2023 that includes risk indicators to identify suspicious ransomware-related activities.
Money Laundering and Terrorist Financing in the Art and Antiquities Markets
FATF has completed a report on the link between money laundering and art and antiquities, highlighting the use of third-party intermediaries to launder the proceeds from crimes such as drug trafficking and corruption. The report also examines how terrorist groups can finance their operations through cultural objects. Insufficient awareness and understanding of these risks in many jurisdictions can result in a lack of investigative resources and cross-border difficulties. The report includes a list of risk indicators for identifying suspicious activities, as well as good practices such as the establishment of specialized units and cooperation with experts to identify, trace, investigate, and repatriate cultural objects. The report will be published on 27 February 2023.
For more information about the Outcomes FATF Plenary, February 2022, you can visit the FATF website.