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Homeland Security

Washington File

20 June 2003

Financial Body Revises Anti-Money Laundering Recommendations

(Will comprise a strengthened international standard, OECD says) (1380)
The Financial Action Task Force (FATF) has significantly revised its
core recommendations to create a "comprehensive, consistent and
strengthened" international framework for combating money laundering
and terrorist financing, says the Organization for Economic
Cooperation and Development (OECD).
The recommendations include more monitoring of high risk bank
customers and transactions, extending anti-money laundering measures
to non-financial businesses and professions such as casinos, real
estate agents, dealers of precious stones and metals, accountants,
lawyers, notaries and trust company providers, and improving
transparency requirements, according to a June 20 OECD press release.
The FATF's "40 Recommendations" comprise an international anti-money
laundering standard, the release noted.
The FATF is an OECD-based inter-governmental body that sets standards
and develops policies to combat terrorist financing and money
laundering. It is comprised of 33 members -- 31 countries, including
the United States, the European Union and the Gulf Cooperation Council
-- and more than 20 observers.
The FATF has admitted South Africa and Russia as members and removed
St. Vincent and the Grenadines from its list of non-cooperative
countries, the release said. The organization also listed Egypt,
Guatemala, the Philippines and Ukraine as making progress in their
anti-money laundering systems, it said.
The World Bank and International Monetary Fund (IMF) have added the
FATF recommendations to their list of accepted standards, the release
said.
The FATF's original recommendations were developed in 1990 to combat
the misuse of financial systems by persons laundering drug money. In
1996 the recommendations were revised to reflect evolving money
laundering methods.
More information about the FATF, its recommendations and list of
non-cooperative countries is available at: http://www.fatf-gafi.org.
Following is the text of the OECD press release:
(begin text)
New Anti-Money Laundering Standards Released
Berlin, 20 June 2003
Revision of the Forty Recommendations
The Financial Action Task Force (FATF) issued its revised Forty
Recommendations to combat money laundering at the conclusion of the
final Plenary meeting under the Presidency of Germany. Commenting on
the Recommendations, 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 priority of the FATF during 2002-2003 (see annual report) has
been to complete the revision of the Forty Recommendations, the
international anti-money laundering standard. The 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.
The major changes that have been 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.
The revised Recommendations set a new standard, which FATF members
will immediately start working to implement. The FATF encourages other
countries and jurisdictions to do likewise. The FATF will also be
moving promptly to assess members' compliance with this standard as
part of its programme of work for FATF-XV (2003-2004). This will occur
through a process of self-assessment, which is then to be followed by
a further round of mutual evaluations which could start before the end
of 2004.
New members of FATF
The FATF also announced that South Africa and the Russian Federation
have been admitted as full members of the FATF following a positive
outcome to the first mutual evaluations -- which assessed their
systems for combating money laundering and terrorist financing. The
addition of South Africa and the Russian Federation to its membership
strengthens the FATF's representation worldwide.
Non-cooperative countries and territories
The FATF removed St. Vincent and the Grenadines from the list of
Non-Cooperative Countries and Territories (NCCTs). In line with past
practice, the FATF will continue to monitor closely the implementation
of the anti-money laundering system in this jurisdiction.
The current list of NCCTs is as follows: Cook Islands, Egypt,
Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines and
Ukraine. Accordingly, the FATF calls on its members to update their
advisories requesting that their financial institutions give special
attention to businesses and transactions with persons, including
companies and financial institutions, in listed countries or
territories, to take into account the changes in the list.
The FATF welcomed further progress made by some of the jurisdictions
on the list. Egypt, Guatemala, and the Philippines will be invited to
submit implementation plans to enable the FATF to evaluate the actual
implementation of their legislative changes. The FATF welcomes the
continued progress of Ukraine to improve its anti-money laundering
system and encourages the Ukrainian authorities to pursue their
efforts. If Ukraine maintains its current pace of reform it may be
asked to submit an implementation plan in the near future. The FATF
welcomes Nauru's recent legislative efforts to eliminate offshore
shell banks and encourages Nauru to take additional steps to ensure
that shell banks cease to operate and cease banking activity. At its
next Plenary meeting on 1 to 3 October 2003, the FATF will review
again the situation of each NCCT.
Terrorist Financing
The FATF has also actively pursued its activities to counter terrorist
financing. In order to assist countries to implement effective
measures to combat the financing of terrorism, further interpretation
and guidance have been developed since October 2002 on the Eight
Special Recommendations, including with respect to informal money
transfer systems (SR VI), wire transfer requirements (SR VII) and
non-profit organisations (SR VIII).
There has also been a collaborative effort between the FATF, the
United Nations and other international organisations, to encourage all
countries to implement the Special Recommendations. The
Recommendations have now been endorsed by many non-FATF members and
international organisations and bodies, and 130 jurisdictions are
participating in the FATF self-assessment exercise. This will enable
FATF 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.
Collaboration between FATF and the IFIs
Finally, FATF-XIV saw a continuation of the collaborative efforts
between FATF and the International Financial Institutions to reinforce
global standards. Having earlier recognised the Forty and the Eight
Special Recommendations as the international standards for combating
money laundering and terrorist financing, the IMF and World Bank
formally added them to the list of standards for which Reports on the
Observance of Standards and Codes (ROSCs) are prepared. In October
2002, the IMF, the World Bank and the FATF 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.
Further information about the FATF, the revision of the Forty
Recommendations, its efforts to combat terrorist financing, the annual
report and the present list of non-cooperative countries and
territories can be found at http://www.fatf-gafi.org.
The FATF is an independent international body whose Secretariat is
housed at the OECD. The thirty-one 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; the Russian Federation;
Singapore; South Africa; 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
(end text)
(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)



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