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Countering Money Laundering and Terrorist Financing : The International Standards

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Title: Key FATF Standards related to Non-Banking Conduits for Terrorist Financing Author: Vincent SCHMOLL Last modified by: boyle_r Created Date – PowerPoint PPT presentation

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Title: Countering Money Laundering and Terrorist Financing : The International Standards


1
Countering Money Launderingand Terrorist
Financing The International Standards
EuroMed Justice Programme Seminar 4 Financial
Operations of Money Laundering Amman, 17-20
July 2006
Rachelle BOYLE AdministratorFATF Secretariat
2
Presentation overview
  1. The FATF.
  2. The 409 Recommendations.
  3. The role of key institutions.
  4. Criminal justice issues.

3
  • The FATF

4
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).

5
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.

6
Membership of the FATFThe 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.

7
The role of theFinancial Action Task Force (FATF)
  • 409 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).

8
  • The 409 Recommendations

9
The 409 RecommendationsA 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 409 Recommendations

10
409 RecommendationsThe 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.

11
409 RecommendationsThe 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.

12
The 409 RecommendationsOverview 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.

13
The 409 RecommendationsOverview 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.

14
  • The roles of key institutions

15
The 409 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.

16
The 409 Recommendations The role of law
enforcement and prosecutors
  • Obligations in the 409 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.

17
The 409 Recommendations The role of the
private sector
  • Obligations in the 409 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.

18
The 409 Recommendations The role of the
Financial Intelligence Unit
  • Obligations in the 409 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.

19
The 409 Recommendations The role of
supervisors and regulators
  • Obligations in the 409 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.

20
  • Criminal justice issues

21
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).

22
Criminal justice issuesCriminalise 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.

23
Criminal justice issuesFreeze 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.

24
Criminal justice issuesInternational 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.

25
Criminal justice issuesInstitutional 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.

26
For further information
  • FATF website www.fatf-gafi.org
  • Ms. Rachelle BOYLE
  • Administrator
  • FATF Secretariat
  • rachelle.boyle_at_fatf-gafi.org
  • Thank you
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