The Financial Action Task Force (FATF) concluded its fifth Plenary under the presidency of T. Raja Kumar of Singapore on 23 February 2024, marking a significant milestone in the global fight against money laundering, terrorism financing, and proliferation financing.
Held at the FATF headquarters in Paris, the event saw extensive participation from over 200 jurisdictions and observers from various international organizations. Over three days, delegates engaged in critical discussions, resulting in pivotal outcomes, including the introduction of new risk-based guidance for beneficial ownership transparency, proposed revisions to international standards on wire transfers, and strategic updates to combat the misuse of virtual assets.
Additionally, the Plenary announced the appointment of a new FATF President for the 2024-2026 term and issued a statement regarding the Russian Federation, underscoring the FATF's ongoing commitment to enhancing global financial security.
Compliance with the FATF Standards
Jurisdictions Under Increased Monitoring
The FATF has identified jurisdictions that are actively working to address strategic deficiencies in their regimes. This year, Kenya and Namibia have been added to the list AML&CFT of jurisdictions under increased monitoring. This designation indicates these countries' commitment to implementing action plans to swiftly resolve identified deficiencies within agreed timeframes.
Progress and Removal from the Monitoring List
In a notable achievement, Barbados, Gibraltar, Uganda, and the United Arab Emirates have been removed from the FATF's list of jurisdictions under increased monitoring. This decision acknowledges their significant progress in rectifying the strategic AML/CFT deficiencies identified during their mutual evaluations. The successful implementation of their respective action plans, validated through on-site visits, has led to this positive outcome. These countries will continue to work with their FATF-Style Regional Bodies to strengthen their AML/CFT/CPF regimes further.
Jurisdictions Subject to a Call for Action
The FATF also addresses jurisdictions with serious strategic deficiencies that threaten the integrity of the international financial system. These jurisdictions are subject to a call for action to mitigate risks and address their shortcomings. As of the February 2024 Plenary, no new countries or jurisdictions have been added to this list, indicating a period of stability in the global landscape of financial security.
Strategic Initiatives and Priorities
The FATF General Plenary in February 2024 has laid out a comprehensive roadmap for its strategic initiatives and priorities for the 2024-2026 period. These initiatives are aimed at bolstering the global fight against money laundering and terrorist financing and ensuring the integrity of the international financial system.
Increasing Beneficial Ownership Transparency Globally
A significant update has been made to the FATF's Risk-Based Guidance following the February 2023 revisions to Recommendation 25 on Beneficial Ownership and Transparency of Legal Arrangements. This updated guidance aims to assist stakeholders in assessing and mitigating risks associated with trusts and similar legal arrangements. The guidance, which is a result of extensive engagement with the private sector and public consultations, is part of the FATF's broader initiative to enhance global transparency of beneficial ownership. This effort is crucial in identifying and combating the misuse of legal structures for money laundering, tax evasion, and other illicit activities.
Leveraging Digital Transformation: Virtual Assets
Acknowledging the rapid evolution of virtual assets, the FATF has emphasized the need for countries to fully implement its revised Recommendation 15. The lack of global implementation poses significant risks, as the borderless nature of virtual asset activities can be exploited by criminals and terrorists. A roadmap has been agreed upon to strengthen the implementation of FATF Standards on virtual assets and virtual asset service providers (VASPs), including a stocktake of current implementation levels and publishing an overview of regulatory and supervisory steps taken by jurisdictions with significant virtual asset activities.
Payment Transparency
In response to the rapid development of cross-border payment systems, the FATF is proposing amendments to Recommendation 16. These revisions aim to enhance the speed, cost-efficiency, transparency, and inclusivity of cross-border payments while maintaining AML/CFT compliance. The proposed changes, which are set for public consultation, reflect the FATF's commitment to keeping its recommendations technology-neutral and responsive to industry developments.
Protecting Non-Profit Organisations from Abuse for Terrorist Financing
Following amendments to Recommendation 8 in October 2023, the FATF has focused on protecting non-profit organizations (NPOs) from potential terrorist financing abuse. The updated best practices and changes to the assessment methodology for mutual evaluations clarify the obligations to apply risk-based measures to NPOs most vulnerable to abuse. This initiative underscores the FATF's dedication to safeguarding legitimate NPO activities while preventing terrorist financing.
These strategic initiatives and priorities underscore the FATF's proactive approach to addressing emerging threats and vulnerabilities in the global financial system. Through collaboration, innovation, and a commitment to transparency and inclusivity, the FATF continues to lead the charge in creating a safer and more secure global financial environment.
Setting the Strategic Priorities for 2024-2026
In anticipation of the challenges ahead, the FATF delegates have identified specific focus areas to enhance the global financial system's resilience against abuse by criminals, the corrupt, and terrorists. These strategic priorities are set to be presented to FATF Ministers at the upcoming FATF Ministerial meeting in April, marking a critical step in the FATF's ongoing efforts to foster sustainable and inclusive economic development.
FATF Presidency 2024-2026: A New Leadership Era
FATF has announced a significant leadership change, appointing Ms. Elisa de Anda Madrazo of Mexico as its President for the 2024-2026 term. This decision, made during the latest FATF Plenary, comes after a detailed consultation process with all member delegations.
Ms. de Anda Madrazo, who previously served as the FATF Vice President until June 2023, brings a wealth of experience and insight to her new role. Her tenure is set to begin on 1 July 2024, succeeding Mr. T. Raja Kumar's presidency. With a strong background in combating financial crimes, Ms. de Anda Madrazo is expected to lead the FATF in its ongoing efforts to strengthen global financial integrity and combat money laundering and terrorist financing.
