Results of the FATF Plenary

Results of the FATF Plenary - June 2022

#FATF #plenary #AML #KYC #KYB #risk-based #guidance

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July 1, 2022
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4 Minutes

In combination with anti-money laundering (AML) regulations, non-compliance can result in substantial fines. In 2021, regulators around the world fined people for AML violations which totalled to €4.7 billion. The organisation responsible for preventing money laundering and the financing of terrorism is called the Financial Action Task Force (FATF) and it additionally aids in recovering the proceeds of such crimes.

The FATF's mandate calls for cooperation with various states. The objective is to implement AML/CTF policies. This AML/CFT framework will be implemented by more than 200 nations and jurisdictions. It's crucial to stay current with the FATF Standards to avoid penalties.

Update Regarding Russian Federation

Update Regarding Russian FederationThe Russian Federation's participation in the FATF has been restricted by the FATF. This is because of the continual invasion of Ukraine. Read the complete statement here.

Compliance with the FATF Standards

Examining a nation's adherence to AML/CFT regulations is one of the FATF's responsibilities. Assessments are comprehensive reports written by participants from other nations. The highlights from the most recent reviews are listed here.

The Assessment of Germany

It was discovered by the Plenary that over the last five years there has been improvement in Germany’s AML/CTF framework. The evaluation discovered a better grasp of the risk of money laundering and terrorism financing. Additionally, it found an improvement in state and federal cooperation.

However specific areas still require improvement. For instance, inadequate supervision continues to exist for the private sector. Information on beneficial ownership (BO) should also be made more readily available. It was also suggested by the Plenary that appropriate authorities use financial intelligence data more effectively. It was furthermore suggested that authorities give money laundering cases top priority.

The Assessment of the Netherlands

In recent years, the Netherlands' AML/CFT system saw significant improvements. Their system is integrated at the operational and policy levels enabling their recent success. The creation and application of financial intelligence is another strong point.

The review highlighted the priority of seizing criminal proceeds. Additionally, the government's emphasis on NPOs in avoiding terrorist financing was acknowledged in the report.

However, there are still certain shortcomings in the regulation of Virtual Asset Service Providers (VASPs). Access to current beneficial owner data should also be improved.

Risk-based supervision has also been noted as an area that needs development. The research recommended expanding the pool of resources available to stop illegal acts. In September, both country assessments will be released.

Gibraltar Placed Under Increased Monitoring

Gibraltar is now noted as being under closer observation. The countries on this list work with the FATF to address the weaknesses it has found. Countries should take corrective measures in a predetermined amount of time.

It also indicates that there will be more inspections of the nation. The "grey list" is another name for this list.

Malta No Longer Under Increased Monitoring

The Plenary commended Malta for its improvements in addressing AML/CTF flaws. It has been taken off the list of jurisdictions that will now receive more scrutiny as a result. To improve its AML/CTF structure, it will still collaborate with MONEYVAL.

Upcoming Reports

Several reports were recently approved in the FATF Plenary. The ones to watch out for in the upcoming months are listed below.

Balancing Information Sharing and Data Protection

For financial institutions to analyse and find questionable transactions, information gathering is essential. However, the gathering and processing of personal information must adhere to data protection laws. This next FATF study demonstrates how some participating governments were successful in both. The objective is to comply with data protection and privacy policies while yet having access to sufficient information to communicate. In July, the report will be released.

Guidance on Risk-Based Measures for the Real Estate Sector

Criminals frequently use real estate purchases as a means of laundering their illegal funds. Because of this, the FATF finalised advice to assist this commercial sector in reducing risks. Understanding the risks of money laundering and terrorist financing is the main objective. The paper also emphasises the use of risk-based strategies to reduce risks. In July, this report will be released.

Implementing the FATF Standards on Virtual Assets/VASPs

Compared to conventional financial institutions, VASPs have less regulation. Criminals find them appealing because of this. The FATF wants all jurisdictions to implement its Travel Rule in order to reduce risks.

According to this regulation, VASPs must collect identifying data for each transfer of virtual assets. Information about the beneficiary and the originator must be included. Market trends and present dangers are also mentioned in the research. By the end of June, it will be accessible.

Improving Transparency of Beneficial Ownership

Criminals frequently conceal ultimate beneficial ownership (UBO) information via elaborate shareholding structures. These specifics are essential for locating questionable transactions and unreported money. The following steps are taken by the FATF to increase transparency.

Guidance on Implementing the FATF Standard for Legal Persons

The FATF established new guidelines for beneficial ownership to reduce risks. All entities should have access to this data through an official registration.

The implementation guidelines will aid nations in implementing the new laws. In October, the guidance will be finished.

Amendments to the FATF Standard for Trusts and Other Legal Arrangements

Recommendation 25, which has an impact on trusts and other legal arrangements, is being reviewed by the FATF. The objective is to increase beneficial ownership's transparency.

The proposed definition of beneficial owners and risk assessment are both included in the white paper. The public has until 1 August (18:00 CEST) to submit their views when the paper is published.

Implementation of the Strategic Vision for the Global Network

The Mar 2022 strategic vision is being put into practise by the FATF in an effort to improve the Global Network. 206 jurisdictions committed to enhance their AML/CTF regimes in order to achieve this. The FATF continues to assist regional organisations in timely completion of their ongoing mutual reviews. The following round of evaluations is scheduled to start in 2025.

Looking to the Future Under Singapore Presidency

Improving access to data on beneficial ownership was one major priority. The advice also concentrated on industries with known AML loopholes, like real estate and VASPs. This Plenary was the last under the German presidency.

T. Raja Kumar, the incoming president of Singapore, outlined his Presidency's aims. Cross-border financial crimes and the recovery of assets are two of the key areas of concentration. Additionally, cybercrimes will receive special attention.

The FATF also wants to strengthen public-private collaborations. This is a crucial step in the fight against the financing of terrorists and money laundering. A crucial tool for preventing these crimes is MemberCheck. We make sure that the compliance procedure is as simple and painless as possible with the help of our products. We also provide a range of services and solutions to meet various demands. Request a product demo by getting in touch with us right now.

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