31 October 2001
Text: FATF Cracks Down on Terrorist Financing
(Group issues new international standards) (1670)
The Financial Action Task Force (FATF), an international group devoted
to fighting money laundering, has expanded its mission to combating
terrorist financing networks.
The group held an emergency session October 29-30 and adopted eight
recommendations designed to deny terrorists and their supporters
access to the international banking system.
"Today the FATF has issued new international standards to combat
terrorist financing, which we call on all countries in the world to
adopt and implement," FATF President Clarie Lo said in an October 31
news release.
FATF members include 29 governments plus the European Commission (EC)
and the Gulf Cooperation Council (GCC). Under the new recommendations,
they have committed themselves to:
-- Take steps to ratify and implement relevant United Nations
instruments.
-- Criminalize the financing of terrorism and terrorist organizations.
-- Freeze and confiscate terrorist assets.
-- Report suspicious transactions linked to terrorism.
-- Provide assistance to other countries' terrorist financing
investigations.
-- Impose anti-money laundering requirements on alternative remittance
systems.
-- Strengthen customer identification measures for wire transfers.
-- Ensure that entities, in particular non-profit organisations,
cannot be misused to finance terrorism.
An action plan approved during the special session calls for FATF
members to conduct an assessment of their compliance plans by December
31, 2001, and to be in full compliance with all recommendations by
June 2002. According to the action plan, "counter-measures" may be
imposed against members that fail to comply.
Following is the text of the FATF news release and the annex listing
the eight special recommendations:
(begin text)
Financial Action Task Force on Money Laundering
Groupe d'action financière sur le blanchiment de capitaux
Washington, 31 October 2001
FATF Cracks Down On Terrorist Financing
At an extraordinary Plenary (1) on the Financing of Terrorism held in
Washington, D.C. on 29 and 30 October 2001, the Financial Action Task
Force (FATF) expanded its mission beyond money laundering. It will now
also focus its energy and expertise on the world-wide effort to combat
terrorist financing. "Today the FATF has issued new international
standards to combat terrorist financing, which we call on all
countries in the world to adopt and implement," said FATF President
Clarie Lo. "Implementation of these Special Recommendations will deny
terrorists and their supporters access to the international financial
system."
During the extraordinary Plenary, the FATF agreed to a set of Special
Recommendations on Terrorist Financing (2) which commit members to:
-- Take immediate steps to ratify and implement the relevant United
Nations instruments.
-- Criminalise the financing of terrorism, terrorist acts and
terrorist organisations.
-- Freeze and confiscate terrorist assets.
-- Report suspicious transactions linked to terrorism.
-- Provide the widest possible range of assistance to other countries'
law enforcement and regulatory authorities for terrorist financing
investigations.
-- Impose anti-money laundering requirements on alternative remittance
systems.
-- Strengthen customer identification measures in international and
domestic wire transfers.
-- Ensure that entities, in particular non-profit organisations,
cannot be misused to finance terrorism.
In order to secure the swift and effective implementation of these new
standards, FATF agreed to the following comprehensive Plan of Action:
By 31 December 2001, self-assessment by all FATF members against the
Special Recommendations. This will include a commitment to come into
compliance with the Special Recommendations by June 2002 and action
plans addressing the implementation of Recommendations not already in
place. All countries around the world will be invited to participate
on the same terms as FATF members.
In June 2002, the initiation of a process to identify jurisdictions
that lack appropriate measures to combat terrorist financing and
discussion of next steps, including the possibility of
counter-measures, for jurisdictions that do not counter terrorist
financing. Regular publication by its members of the amount of
suspected terrorist assets frozen, in accordance with the appropriate
United Nations Security Council Resolutions.
The provision by FATF members of technical assistance to non-members,
as necessary, to assist them in complying with the Special
Recommendations. In taking forward its Plan of Action against
terrorist financing, the FATF will intensify its co-operation with the
FATF-style regional bodies and international organisations and bodies,
such as the United Nations, the Egmont Group of Financial Intelligence
Units, the G-20, and International Financial Institutions, that
support and contribute to the international effort against money
laundering and terrorist financing. FATF also agreed to take into
account the Special Recommendations as it revises the FATF 40
Recommendations on Money Laundering and to intensify its work with
respect to corporate vehicles, correspondent banking, identification
of beneficial owners of accounts, and regulation of non-bank financial
institutions.
The FATF is an independent international body whose Secretariat is
housed at the OECD [Organization for Economic Cooperation and
Development]. The twenty nine member countries and governments of the
FATF are: Argentina; Australia; Austria; Belgium; Brazil; Canada;
Denmark; Finland; France; Germany; Greece; Hong Kong, China; Iceland;
Ireland; Italy; Japan; Luxembourg; Mexico; the Kingdom of the
Netherlands; New Zealand; Norway; Portugal; Singapore; Spain; Sweden;
Switzerland; Turkey; United Kingdom and the United States. Two
international organisations are also members of the FATF: the European
Commission and the Gulf Co-operation Council.
(1) Attended by representatives of the 31 FATF members and 18
FATF-style regional bodies and observer organisations. Regional bodies
and observer organisations included the Asia/Pacific Group on Money
Laundering, the Caribbean Financial Action Task Force, the Eastern and
Southern Africa Anti-Money Laundering Group, the Select Committee of
Experts on the Evaluation of Anti-Money Laundering Measures of the
Council of Europe, the Asian Development Bank, the Commonwealth
Secretariat, the European Central Bank, Europol, the Inter-American
Development Bank, the International Monetary Fund, the International
Organisation of Securities Commissions, Interpol, the Offshore Group
of Banking Supervisors, OAS/CICAD [Organization of American States],
the United Nations Office on Drug Control and Crime Prevention, the
World Bank, and the World Customs Organisation.
(2) See the text of the Special Recommendations in Annex 1
By February 2002, the development of additional guidance for financial
institutions on the techniques and mechanisms used in the financing of
terrorism.
ANNEX FATF
Special Recommendations on Terrorist Financing
Recognising the vital importance of taking action to combat the
financing of terrorism, the FATF has agreed these Recommendations,
which, when combined with the FATF Forty Recommendations on money
laundering, set out the basic framework to detect, prevent and
suppress the financing of terrorism and terrorist acts.
I. Ratification and implementation of UN instruments
Each country should take immediate steps to ratify and to implement
fully the 1999 United Nations International Convention for the
Suppression of the Financing of Terrorism.
Countries should also immediately implement the United Nations
resolutions relating to the prevention and suppression of the
financing of terrorist acts, particularly United Nations Security
Council Resolution 1373.
II. Criminalising the financing of terrorism and associated money
laundering
Each country should criminalise the financing of terrorism, terrorist
acts and terrorist organisations. Countries should ensure that such
offences are designated as money laundering predicate offences.
III. Freezing and confiscating terrorist assets
Each country should implement measures to freeze without delay funds
or other assets of terrorists, those who finance terrorism and
terrorist organisations in accordance with the United Nations
resolutions relating to the prevention and suppression of the
financing of terrorist acts.
Each country should also adopt and implement measures, including
legislative ones, which would enable the competent authorities to
seize and confiscate property that is the proceeds of, or used in, or
intended or allocated for use in, the financing of terrorism,
terrorist acts or terrorist organisations.
IV. Reporting suspicious transactions related to terrorism
If financial institutions, or other businesses or entities subject to
anti-money laundering obligations, suspect or have reasonable grounds
to suspect that funds are linked or related to, or are to be used for
terrorism, terrorist acts or by terrorist organisations, they should
be required to report promptly their suspicions to the competent
authorities.
V. International Co-operation
Each country should afford another country, on the basis of a treaty,
arrangement or other mechanism for mutual legal assistance or
information exchange, the greatest possible measure of assistance in
connection with criminal, civil enforcement, and administrative
investigations, inquiries and proceedings relating to the financing of
terrorism, terrorist acts and terrorist organisations.
Countries should also take all possible measures to ensure that they
do not provide safe havens for individuals charged with the financing
of terrorism, terrorist acts or terrorist organisations, and should
have procedures in place to extradite, where possible, such
individuals.
VI. Alternative Remittance
Each country should take measures to ensure that persons or legal
entities, including agents, that provide a service for the
transmission of money or value, including transmission through an
informal money or value transfer system or network, should be licensed
or registered and subject to all the FATF Recommendations that apply
to banks and non-bank financial institutions. Each country should
ensure that persons or legal entities that carry out this service
illegally are subject to administrative, civil or criminal sanctions.
VII. Wire transfers
Countries should take measures to require financial institutions,
including money remitters, to include accurate and meaningful
originator information (name, address and account number) on funds
transfers and related messages that are sent, and the information
should remain with the transfer or related message through the payment
chain.
Countries should take measures to ensure that financial institutions,
including money remitters, conduct enhanced scrutiny of and monitor
for suspicious activity funds transfers which do not contain complete
originator information (name, address and account number).
VIII. Non-profit organisations
Countries should review the adequacy of laws and regulations that
relate to entities that can be abused for the financing of terrorism.
Non-profit organisations are particularly vulnerable, and countries
should ensure that they cannot be misused:
(i) by terrorist organisations posing as legitimate entities;
(ii) to exploit legitimate entities as conduits for terrorist
financing, including for the purpose of escaping asset freezing
measures; and
(iii) to conceal or obscure the clandestine diversion of funds
intended for legitimate purposes to terrorist organisations.
(end text)
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