FATF Compliance Standards

- formed by group of seven nations
- coordinated effort against international money laundering
- guidance for governmental bodies around the globe
- provoked changes in laws and in governmental operations

- 36 members, 34 jurisdictions
- jurisdiction should be strategically important
- size of (GDP), banking sector,
- impact on global financial system, degree of openness of the financial sector and interaction with international markets
- regional prominence and level of commitment in aml/ cft efforts

- level of adherence to financial sector standards
- participation in other relevant international organizations
- level of AML/ cft risks faced and efforts to combat those risks

- if jurisdiction were to become a member - geographical balance should be enhanced

- country should provide a written commitment at the political level
- endorse and support the FATF 40 recommendations and the FATF AML/ CFT methodology
- agree to implement all FATF recommendations in reasonable time frame

- agree to undergo mutual evaluation during membership process
- Assessing compliance w/ FATF criteria
- agree to periodic mutual evaluations following admission as full member
- agree to participate actively in FATF and to meet all the other commitments of FATF membership

- country should be full and active member of a relevant FATF-style regional body

- overall mutual evaluation needs to be regarded as satisfactory and in particular the level of compliance w/ the recommendations dealing w/ ML

- Overall level of compliance satisfactory
- some flexibility may be allowed w/ respect to CDD due to complexity and multifaceted requirements
- assessed country - must demonstrate sig progress toward full compliance w/ components of this recommendation

- country should obtain ratings of fully or largely compliant for all FATF recommendations
- demonstrate substantial progress toward full implementation,
- come into compliance w/ in a reasonable time frame and a detailed action plan

- country should obtain ratings of fully or largely compliant for all FATF recommendations
- demonstrate substantial progress toward full implementation,
- come into compliance w/ in a reasonable time frame and a detailed action plan

- spread AML message worldwide
- establishment of global AML and anti- terrorist financing network based on expansion of membership

- development of regional AML bodies in various parts of the world and cooperation w/ international organizations

- monitor implementation of FATF recommendations ( monitored in 2 pronged apprh)

- annual self assessment - fill out detailed standard questionnaire on status of their compliance w/ recommendations - data compiled and analyzed
- access extend of compliance and Implementation of recommendations

- more detailed mutual evaluation procedure

- member country examined by FATF on basis of on-site visit conducted by a team of experts: legal, financial, law enforcement fields
- report accessing extent evaluated country has moved forward in implementation of effective AML system and areas still needing work

- to help accessors determine if countries are in compliance with FATF recommendations in place at the time of assessment

- reflects principles of the FATF recommendations

- no power to impose fines or penalties on member nations

-nations failing to comply w/ recommendations adopted peer pressure policy

1. Progress report at meetings
2. Letter from FATF president/ visit from high level mission
3. Issue statement calling attention to transactions/ banks in non complying country
4. Final measure - suspend membership

- gather info on ML trends to ensure recommendation stay current

- extended organizations charter by 8 years

1. Standard setting
2. Ensuring effective compliance w/ standards
3. Identifying ML and terrorist financing threats

Core of FATFs work, respond to new and emerging threats

- worlds blueprint for effective national/ international AML and CTF related controls
- recognized by IMF and world bank
Covers:
- identification of risks and development of appropriate policies; criminal justice system and law enforcement; financial system and it's regulation; transparency of legal persons and arrangements; and international cooperation

- countries have different legal and financial systems - can't have identical measures for AML
- minimum standards of action for countries to implement according to their particular circumstance

- first step involves assessing risk in combating ML and TF

- global blueprint for cracking down on the illicit movement of funds

- strengthen measure to combat money laundering and terrorist financing and further established enhanced measure countries can better combat ML and TF

- expanded coverage - includes terrorist financing
- widened categories of business that should be covered by national laws
- real estate agents, accountants, lawyers

- specified compliance procedures on issues:
- customer identification, due diligence, EDD measure for high risk transaction/ customers

- adopted clearer definition of ML predicate offenses
- encouraged prohibition of shell banks
- typically in tax/ secrecy havens

- improved transparency of legal persons/ arrangements
- stronger safeguards, notably in international cooperation

1. - accessing risk and applying a risk based approach
2. - targeted financial sections related to proliferation of WMDs

3. - more attention on domestic PEPs and those entrusted w/ a prominent function by an international organization

- require identification and assessment of risks of new products - prior to launch of product

- financial groups required to implement a group wide AML/CFT program and have procedures for sharing information w/ in group

- include tax crimes w/ in scope of ML offense categories

- identify, access, and understand ML/ TF risks
- take appropriate measures to mitigate identified risks

- allows countries to target limited resources - increase efficiency of preventative measures

- specify crimes - called designated categories of offenses
- trying to conceal them through financial subterfuge would constitute criminal ML

- countries- put in place provisions to allow the confiscation of the proceeds of crime - prevent criminals access to funds

- criminalize terrorist financing
- impose sanctions regimes
- freeze assets of persons involvement in terrorism or proliferation of WMDs
- establish sufficient controls to mitigate misuse of non-profits to provide support to terrorists

- knowledge required for the offense of ML
- May be inferred from objective factual circumstances - willful blindness

- criminal, civil, administrative liability - apply to legal persons also

- establish business relations
- occasional transaction/ wire transfers above the specified threshold
- suspicion of ML or TF
- doubt regarding veracity or adequacy of previously obtained CID