The first plenary session of the Financial Action Task Force (FATF), the global money laundering and terrorism financing watchdog, under the chairmanship of T. Raja Kumar, took place in Paris on 20-21 October 2022.
It was noted that Russia continues to violate the basic principles of the FATF and additional restrictions were imposed. Jurisdictions should be wary of the risk of violations of measures taken against Russia. Myanmar was added to the blacklist. Also, some countries were added to the grey list: Mozambique, Tanzania, and the Democratic Republic of the Congo.
Russia Excluded from the FATF
The FATF renewed its deepest sympathy for the devastation caused by Russia's ongoing occupation of Ukraine, announcing additional restrictions on the country's remaining role.
Russia continues to violate the basic principles of the FATF, and as a result of these ongoing actions, the country is prohibited from participating as a member of the FATF in current and future FATF Project teams and FATF-Style Regional Bodies meetings. These measures expanded the actions that stripped Russia of all leadership roles.
The FATF said it would continue to monitor the situation and assess at its plenary meetings whether there were grounds for these restrictions to be lifted or changed.
Myanmar was Blacklisted
Myanmar had committed to addressing its strategic shortcomings in 2020, but the action plan ended in September 2021 without significant progress. The FATF called on Myanmar to complete its action plan in June 2022. As a result, Myanmar has been added to the blacklist due to ongoing shortcomings and the fact that action plans have still not been addressed a year after the deadline.
The FATF's current blacklist: includes Myanmar, Iran, and North Korea.
Gray List Updates
With the latest update, there are now 23 jurisdictions in the grey list.
Mozambique, the Democratic Republic of the Congo (DRC), and Tanzania will be subject to further monitoring due to deficiencies in anti-money laundering and counter-financing of terrorism (AML/CFT) regulations. Nicaragua and Pakistan have been removed from the grey list due to their progress.
- Mozambique
After the Mutual Assessment Report (MER) in April 2021, the FATF noted that Mozambique was added to the grey list. While the country made progress on some recommended actions, it was not enough, according to FATF. Mozambique has made a high-level political commitment to address AML/CFT regime deficiencies.
- Democratic Republic of the Congo
Since adopting the MER in October 2020, the country has made progress in some of the actions recommended by the MER, but due to insufficient progress, the decision was made to add it to the grey list. The FATF said that the country should implement its action plan by 2025 and address the identified gaps fully.
- Tanzania
Since adopting the MER in April 2021, Tanzania has made progress in some of the recommended actions to improve the system, including developing the legal framework for TF and TFS and disseminating the FIU strategic analysis. However, Tanzania has been placed on the grey list due to the fact that deficiencies have been found yet.
- Nicaragua
The FATF noted the country's progress in the AML/CFT regimes. He announced that Nicaragua is no longer subject to further monitoring as it has made improvements in strategic deficiencies in the designated areas since February 2020. On the other hand, Nicaragua has been warned of possible misapplication of the FATF Standards, which has resulted in the suppression of its nonprofit sector. Nicaragua has been encouraged to ensure that its oversight of nonprofits is risk-based and compliant with FATF Standards.
- Pakistan
Pakistan, which has been on the grey list many times since 2008, is no longer subject to increased monitoring due to the significant progress it has made in improving the AML/CFT regime. The country will continue to work with APG to improve the AML/CFT regime.
Other jurisdictions on the grey list are Albania, Barbados, Burkina Faso, Cambodia, Cayman Islands, Gibraltar, Haiti, Jamaica, Jordan, Mali, Morocco, Panama, Philippines, Senegal, South Sudan, Syria, Turkey, Uganda, United Arab Emirates, Yemen.
Strategic Initiatives
Developing Beneficial Ownership Transparency
In March 2022, the FATF adopted the 24th Amendment, which requires countries to prevent the misuse of institutional structures or entities for money laundering or terrorist financing and ensure that they are adequate, accurate, and up-to-date. He had strengthened his advice and his Comment Note. To guide countries and the private sector in implementing these new requirements, FATF members agreed to publish draft guidance on Recommendation 24.
In addition, the FATF agreed to submit to the public the proposed amendments to Recommendation 25, which aims to improve beneficial ownership transparency.
The proposed revisions aim to ensure a balanced and consistent approach, and the final guidelines and amendments are expected to be completed by February 2023.
Improving Asset Recovery
FATF works to improve asset recovery outcomes and thus eliminate the financial incentives that drive criminal activity. It reiterated its focus on accelerating the successful recovery of funds that have fallen victim to illegal financial flows. Delegates supported key conclusions agreed upon at the FATF-INTERPOL Roundtable Engagement (FIRE) keynote meeting in September 2022.
Assertive action is required, as confiscations account for less than 1% of the total proceeds of crime. For this reason, participants agreed on the importance of higher FATF standards and faster, smoother collaboration.
Delegates stressed that the FATF should continue to work closely with INTERPOL, Egmont Group, UNODC, the World Bank, and other partners. They agreed that the FATF should continue to take the lead in developing international cooperation and enabling further recovery of global assets.
Global Anti-Corruption
The FATF has agreed to undertake three projects to enhance its global anti-corruption efforts.
- The FATF will assess the risks of illicit finance created by the misuse of "citizenship by investment" and “residency by investment" schemes, known as "golden passports."
- The FATF will develop assessments of efforts to implement the United Nations Convention Against Corruption.
- Finally, the FATF will assess members' FATF compliance concerning non-financial professionals and gatekeepers whose professional expertise can lead to corruption.
Illicit Profits from Fentanyl and Related Synthetic Opioid Supply Chains
The FATF has worked to assist law enforcement and other authorities in conducting more effective financial investigations into the growing illicit trade in fentanyl and other synthetic opioids. In this context, it announced that it would publish the report in mid-November, including risk indicators to help detect and disrupt financial flows.
While overdose of fentanyl is causing deaths in North America, the tramadol epidemic is significantly affecting some parts of Africa. At the same time, Asian countries report that the number of cases is increasing.
The FATF noted that investigations and measures to launder proceeds from synthetic opioid trafficking remain low, despite most countries identifying drug trafficking as a major precursor offense for money laundering.
For these reasons, the report will include risk indicators to identify suspicious activity and recommendations on identifying and disrupting financial flows related to this illicit trade.
For more information about the Outcomes FATF Plenary, October 2022, you can visit the FATF website. The next FATF General Assembly will be held in Paris in February 2023.
