The Financial Action Task Force (FATF) recently held its Plenary between 22-24 February 2023, bringing together representatives from its member jurisdictions and observer countries and organisations. As a global body setting standards for combating money laundering and terrorism financing, the FATF’s main role in the Plenary was to review the progress of ongoing work, develop new standards, and discuss emerging threats and trends related to AML/CTF.
Suspension of Membership of Russian Federation
One of the major outcomes of the FATF Plenary was the suspension of the membership of the Russian Federation. The FATF concluded that the Russian Federation’s continuous aggression against Ukraine was against the FATF’s principles of promoting security, safety, and integrity of the global financial system.
Compliance with the FATF Standards – Indonesia and Qatar
Regarding compliance with the FATF standards, the Plenary reviewed the AML/CTF policies of Indonesia and Qatar. The Plenary found that Indonesia has a strong legal, regulatory, and institutional framework resulting in robust technical compliance in several areas.
Qatar, on the other hand, has made significant improvement in its compliance with the FATF standards. The country has taken positive steps to develop a better understanding of ML/TF risks, has improved in confiscating criminal assets, supervising the financial and non-financial sectors, and implementing targeted financial sanctions for the financing of terrorism.
Jurisdictions Under Increased Monitoring
The FATF also placed South Africa and Nigeria under increased monitoring as these jurisdictions have strategic AML deficiencies. However, both countries are under a plan with the FATF and committed to resolving those deficiencies as soon as possible. Cambodia and Morocco have improved their AML/CTF regimes as required by their individual action plans and are now removed from the list of jurisdictions subject to increased monitoring.
Upcoming Reports on Financial Crimes and Regulations
Advancing Beneficial Ownership Transparency
The FATF has recently developed a guidance document to help countries implement the revised Recommendation 24, which aims to mitigate money laundering and terrorism financing risks associated with foreign companies. The report also includes enhancements to Recommendation 25 on beneficial ownership of legal arrangements to prevent the misuse of shell companies for illicit purposes.
Tackling Ransomware Attacks
With the rise of ransomware attacks and their increasing sophistication, the FATF has conducted research on the techniques used by attackers and their laundering methods. An upcoming report will highlight a set of risk indicators to help public and private sectors detect suspicious activities associated with ransomware attacks, especially those involving crypto assets.
Preventing Money Laundering in Art and Antiquities Markets
Criminals often exploit the Art and Antiquities market to launder proceeds from drug trafficking, corruption, and other crimes while financing terrorism groups. The FATF is set to release a report featuring a list of risk indicators to help the public and private sector identify suspicious activities related to art and antiquities.
Regulating Virtual Asset Service Providers
The FATF during the last few years has strengthened its requirements on Virtual Asset Service Providers (VASPs), including the “travel rule,” which many countries have failed to implement. An upcoming report in the first half of 2024 will outline the measures taken by FATF members and FSRB countries with significant virtual asset activity to regulate and supervise VASPs.
FATF Vice Presidency (2023-2025)
Mr. Jeremy Weil from Canada has been selected as the next FATF Vice President and will be responsible for leading the organisation’s efforts to combat money laundering and terrorism financing globally.
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