Opening remarks by FATF President Paul Vlaanderen at the 12th APG Annual Meeting
Brisbane, Australia, 7 July 2009
Minister O’Connor, Commissioner Keelty, Director Ong, ladies and gentlemen,
It is one week ago now that I took over the Presidency of the FATF. This meeting marks the first occasion that I have the honour of visiting a FSRB in this new capacity.
I start this new assignment while the world is in one of the worst economic and financial crisis in recent history. Although we are all still struggling with the why and the how questions, it is already clear that the enormous growth in the size and complexity of the financial sector over the past decades has contributed to it.
In that same period FATF has evolved substantially as well, putting it in a well prepared position to play its part in fighting undesirable consequences of the crisis. In fact the G20 and the OECD are looking at the FATF model in their search for instruments how to handle the crisis in areas such as regulation and tax. Now in its 20th year of existence, FATF has a very strong structure, both in terms of mandate and geographical coverage:
1.FATF’s mandate has grown in two decades to cover not only drugs related financial streams, but as a consequence of 9/11 also terrorist financing and, more recently, also proliferation financing. That is an extensive mandate!
2.FATF is the only standard setter in its field of expertise in the world; but on top of that it also globally monitors compliance with the standards. And, unique in intergovernmental cooperation, it maintains the standards through public action, including if need be countermeasures. Transparency and accountability are the key driving principles. Jurisdictions that are affected may not be pleased, but history has already shown its effectiveness.
3.FATF has grown enormously in its geographical coverage. From a few members in the early years to a substantial membership of 32 + 2 jurisdictions \ organisations and, and that is the secret of FATF, the 8 FSRB’s. That means that more than 180 jurisdictions are working to achieve the shared objectives against money laundering and terrorist financing. And with the prospect of a 9th FSRB, we can really speak of a FATF family!
FSRBs
I am convinced that the commitment of FSRBs to the FATF standards is crucial for the long term viability of FATF’s mandate. Therefore, it seems impossible to envisage an FATF as effective as it is today without FSRBs.
Here in Australia I would like to underline the close relationship between the FATF and the APG. That relationship is close because of interlinked membership: at this moment 8 FATF jurisdictions – including China - are member of both the FATF and the APG, while Korea and India have applied for full FATF membership. The Mutual Evaluation Report of Korea has been discussed extensively in the last FATF plenary in Lyon, and I am sure that the work with the contactgroup and Korea will lead to a positive discussion in October.
Workwise, the FATF-APG relations are equally close and still growing. Over the past year we have together conducted the mutual evaluations of New Zealand, Japan and Korea, and we also finalised the typologies project on money laundering through the casinos and gaming sector, on which the APG took the lead.
This proves the vital role you have - as APG members - in contributing to FATF work. And I am also looking forward to your contributions on FATF strategic directions, like the planned fourth round of mutual evaluations. I will get back to this issue.
In view of these extensive membership and work related FATF-APG links, I would encourage you to continue attending and contributing to FATF plenaries and working groups.
For the coming year there are a few topics related to FATF-FSRB cooperation that I would like to explore further:
1.I will consider organising a FATF – FSRBs Presidents meeting if that would be appropriate, preferably in the context of a FATF plenary meeting. It is my understanding that APG is in favour of such an initiative. In addition to this, the FATF Secretariat is ready to continue holding regular FATF – FSRBs Secretariat meetings.
2.Another point which could also lead to a closer cooperation with the FSRBs would be the establishment of a closer working relationship for the chairs of working groups in FATF and the FSRBs. A model for this could be the existing cooperation between FATF and APG typology co-chairs.
3.In addition to this, the FATF has developed guidance on the implementation of the FATF standards in low capacity countries (LCC) and jurisdictions, which is now being used by the FSRBs. I would like to encourage all FSRBs, including the APG, to provide feedback to the Working Group on Evaluations and Implementation (WGEI) on the implementation of that LCC guidance. This would contribute to an improvement of the LCC guidance.
At the June FATF meeting in Lyon I presented my priorities for the coming year. FSRB relations is clearly one of them: now I’ll take a couple of minutes to highlight three more issues:
1.The FATF initiative related to the global financial crisis.
2.The work FATF is doing on International Co-operation.
3.Preparations for a new round of mutual evaluations.
The FATF initiative related to the global financial crisis
As you know, the global financial and economic crisis has affected most of the countries in the world, undermining financial markets, with direct consequences on societies and the world’s economy at large. The current financial and economic crisis could present specific new challenges and opportunities to the FATF.
Last February, the FATF plenary decided to launch an initiative to assess the impact of the global financial and economic crisis on AML/CFT.
Last April, the G20 Leaders agreed at their London summit to ‘take action against non cooperative jurisdictions’ and asked the FATF to ‘’revise and reinvigorate the review process for assessing compliance by jurisdictions with AML/CFT standards’’. Moreover, they ‘’called upon the FATF to report to the next G20 Finance Ministers and Central Bank Governors’ meeting in September on adoption and implementation by countries’’.
The FATF is, therefore, currently looking at the consequences of the financial and economic crisis with the objective of identifying vulnerabilities exposed by the financial crisis. Such analysis should enable us react appropriately. In particular the issues of international co-operation, transparency, and global compliance will be addressed.
It is foreseen that FATF will present its report to the G20 Finance Ministers meeting in early September.
Also relevant in this context is the work on a Global Threat Assessment. This work should be completed by June 2010 and analyses the overall threat of money laundering and terrorist financing.
All this should result in an even stronger AML/CFT framework and I would like to thank you for your contributions.
International cooperation
A few separate words about the FATF’s work on international cooperation which is presently so high on the agenda.
Some jurisdictions expose us all to unacceptable risks by failing to implement effective AML/CFT systems.
When a country chooses not to engage with the FATF in a meaningful way, the FATF must be ready to take firm action. As you know, the FATF has made public its concerns with certain jurisdictions, allowing others to alert their financial institutions to take into account the increased risks.
At the June plenary new procedures –the so called ICRG process - have been agreed which are designed to identify high risk and uncooperative jurisdictions. After the initial review (the so called ‘prima facie review’) of those jurisdictions has been made, it will be decided which of these should be publicly identified. The FATF will consider the progress of every publicly identified jurisdiction on an ongoing basis and apply countermeasures where necessary.
When developing this new procedure the main objective was the creation of an inclusive and transparent process. A key element of this process is the strong cooperation with the FSRBs through the establishment of regional review groups. These groups will be co-chaired by representatives of the FATF and FSRBs.
In its most recent statement, the FATF reaffirms its call on FATF members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from risks to the integrity of the international financial system emanating from Iran. The FATF statement also notes that progress has been made by several jurisdictions. I am happy to note that the northern part of Cyprus is no longer under scrutiny.
Mutual evaluations and the 4th round
Let me turn to the mutual evaluation process. Currently, we are heading towards the end of the 3rd round of evaluations of FATF members. At this moment, 25 of the FATF’s 32 members have been assessed. In APG’s ongoing second round, you will have completed 25 out of 39 evaluations after this meeting. All together, since 2004, 118 jurisdictions have been evaluated using the common AML/CFT Methodology.
As you know, the FATF is about to consider some parts of the Recommendations in preparation of its fourth round of evaluations. Particular emphasis will be given to the impact and effectiveness of AML/CFT systems.
All FATF delegations, including the APG, have provided comments and identified issues to be considered in this context.
In February the FATF Plenary agreed on an initial list of topics for consideration under this project. I will mention a few of them:
1.Customer Due Diligence (Recommendation 5)
2.Law enforcement (Recommendations 27/28)
3.Beneficial ownership (Recommendations 33 & 34)
4.International Cooperation (Recommendations 35-40)
5.Tax crimes as a predicate offence for money laundering
The FATF’s Working Group on Evaluations and Implementation will co-ordinate this work. The APG is also doing important work with its SIP framework.
In parallel to this important exercise, work will also be conducted on preparing the processes, procedures and the methodology for FATF’s 4th Round of Evaluations.
As I already noted, I sincerely hope the APG will continue to provide input to this work.
Conclusion
In conclusion,
1.The commitment of FSRBs to the FATF standards is crucial for the long term viability of the fight against money laundering and terrorist financing. And I repeat: it is impossible to envisage a successful implementation of the FATF standards without FSRBs.
2.FATF is entering a new phase in its existence with a financial crisis that requires attention and action, in any case in the area of uncooperative jurisdictions. FSRB’s will from now on be fully integrated in FATF’s work through their participation in the Regional Review Groups.
3.A new round of FATF country evaluations will provide for a perfect opportunity to draw the lessons of the past years and to further improve our monitoring system, with an appropriate place for effectiveness and law enforcement.
Hon. Minister, APG co chairs, ladies and gentlemen, I am honoured to be here at your annual meeting and I hope to speak with many of you this week.
Thank you very much for your attention.
Brisbane, Australia, 7 July 2009
Minister O’Connor, Commissioner Keelty, Director Ong, ladies and gentlemen,
It is one week ago now that I took over the Presidency of the FATF. This meeting marks the first occasion that I have the honour of visiting a FSRB in this new capacity.
I start this new assignment while the world is in one of the worst economic and financial crisis in recent history. Although we are all still struggling with the why and the how questions, it is already clear that the enormous growth in the size and complexity of the financial sector over the past decades has contributed to it.
In that same period FATF has evolved substantially as well, putting it in a well prepared position to play its part in fighting undesirable consequences of the crisis. In fact the G20 and the OECD are looking at the FATF model in their search for instruments how to handle the crisis in areas such as regulation and tax. Now in its 20th year of existence, FATF has a very strong structure, both in terms of mandate and geographical coverage:
1.FATF’s mandate has grown in two decades to cover not only drugs related financial streams, but as a consequence of 9/11 also terrorist financing and, more recently, also proliferation financing. That is an extensive mandate!
2.FATF is the only standard setter in its field of expertise in the world; but on top of that it also globally monitors compliance with the standards. And, unique in intergovernmental cooperation, it maintains the standards through public action, including if need be countermeasures. Transparency and accountability are the key driving principles. Jurisdictions that are affected may not be pleased, but history has already shown its effectiveness.
3.FATF has grown enormously in its geographical coverage. From a few members in the early years to a substantial membership of 32 + 2 jurisdictions \ organisations and, and that is the secret of FATF, the 8 FSRB’s. That means that more than 180 jurisdictions are working to achieve the shared objectives against money laundering and terrorist financing. And with the prospect of a 9th FSRB, we can really speak of a FATF family!
FSRBs
I am convinced that the commitment of FSRBs to the FATF standards is crucial for the long term viability of FATF’s mandate. Therefore, it seems impossible to envisage an FATF as effective as it is today without FSRBs.
Here in Australia I would like to underline the close relationship between the FATF and the APG. That relationship is close because of interlinked membership: at this moment 8 FATF jurisdictions – including China - are member of both the FATF and the APG, while Korea and India have applied for full FATF membership. The Mutual Evaluation Report of Korea has been discussed extensively in the last FATF plenary in Lyon, and I am sure that the work with the contactgroup and Korea will lead to a positive discussion in October.
Workwise, the FATF-APG relations are equally close and still growing. Over the past year we have together conducted the mutual evaluations of New Zealand, Japan and Korea, and we also finalised the typologies project on money laundering through the casinos and gaming sector, on which the APG took the lead.
This proves the vital role you have - as APG members - in contributing to FATF work. And I am also looking forward to your contributions on FATF strategic directions, like the planned fourth round of mutual evaluations. I will get back to this issue.
In view of these extensive membership and work related FATF-APG links, I would encourage you to continue attending and contributing to FATF plenaries and working groups.
For the coming year there are a few topics related to FATF-FSRB cooperation that I would like to explore further:
1.I will consider organising a FATF – FSRBs Presidents meeting if that would be appropriate, preferably in the context of a FATF plenary meeting. It is my understanding that APG is in favour of such an initiative. In addition to this, the FATF Secretariat is ready to continue holding regular FATF – FSRBs Secretariat meetings.
2.Another point which could also lead to a closer cooperation with the FSRBs would be the establishment of a closer working relationship for the chairs of working groups in FATF and the FSRBs. A model for this could be the existing cooperation between FATF and APG typology co-chairs.
3.In addition to this, the FATF has developed guidance on the implementation of the FATF standards in low capacity countries (LCC) and jurisdictions, which is now being used by the FSRBs. I would like to encourage all FSRBs, including the APG, to provide feedback to the Working Group on Evaluations and Implementation (WGEI) on the implementation of that LCC guidance. This would contribute to an improvement of the LCC guidance.
At the June FATF meeting in Lyon I presented my priorities for the coming year. FSRB relations is clearly one of them: now I’ll take a couple of minutes to highlight three more issues:
1.The FATF initiative related to the global financial crisis.
2.The work FATF is doing on International Co-operation.
3.Preparations for a new round of mutual evaluations.
The FATF initiative related to the global financial crisis
As you know, the global financial and economic crisis has affected most of the countries in the world, undermining financial markets, with direct consequences on societies and the world’s economy at large. The current financial and economic crisis could present specific new challenges and opportunities to the FATF.
Last February, the FATF plenary decided to launch an initiative to assess the impact of the global financial and economic crisis on AML/CFT.
Last April, the G20 Leaders agreed at their London summit to ‘take action against non cooperative jurisdictions’ and asked the FATF to ‘’revise and reinvigorate the review process for assessing compliance by jurisdictions with AML/CFT standards’’. Moreover, they ‘’called upon the FATF to report to the next G20 Finance Ministers and Central Bank Governors’ meeting in September on adoption and implementation by countries’’.
The FATF is, therefore, currently looking at the consequences of the financial and economic crisis with the objective of identifying vulnerabilities exposed by the financial crisis. Such analysis should enable us react appropriately. In particular the issues of international co-operation, transparency, and global compliance will be addressed.
It is foreseen that FATF will present its report to the G20 Finance Ministers meeting in early September.
Also relevant in this context is the work on a Global Threat Assessment. This work should be completed by June 2010 and analyses the overall threat of money laundering and terrorist financing.
All this should result in an even stronger AML/CFT framework and I would like to thank you for your contributions.
International cooperation
A few separate words about the FATF’s work on international cooperation which is presently so high on the agenda.
Some jurisdictions expose us all to unacceptable risks by failing to implement effective AML/CFT systems.
When a country chooses not to engage with the FATF in a meaningful way, the FATF must be ready to take firm action. As you know, the FATF has made public its concerns with certain jurisdictions, allowing others to alert their financial institutions to take into account the increased risks.
At the June plenary new procedures –the so called ICRG process - have been agreed which are designed to identify high risk and uncooperative jurisdictions. After the initial review (the so called ‘prima facie review’) of those jurisdictions has been made, it will be decided which of these should be publicly identified. The FATF will consider the progress of every publicly identified jurisdiction on an ongoing basis and apply countermeasures where necessary.
When developing this new procedure the main objective was the creation of an inclusive and transparent process. A key element of this process is the strong cooperation with the FSRBs through the establishment of regional review groups. These groups will be co-chaired by representatives of the FATF and FSRBs.
In its most recent statement, the FATF reaffirms its call on FATF members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from risks to the integrity of the international financial system emanating from Iran. The FATF statement also notes that progress has been made by several jurisdictions. I am happy to note that the northern part of Cyprus is no longer under scrutiny.
Mutual evaluations and the 4th round
Let me turn to the mutual evaluation process. Currently, we are heading towards the end of the 3rd round of evaluations of FATF members. At this moment, 25 of the FATF’s 32 members have been assessed. In APG’s ongoing second round, you will have completed 25 out of 39 evaluations after this meeting. All together, since 2004, 118 jurisdictions have been evaluated using the common AML/CFT Methodology.
As you know, the FATF is about to consider some parts of the Recommendations in preparation of its fourth round of evaluations. Particular emphasis will be given to the impact and effectiveness of AML/CFT systems.
All FATF delegations, including the APG, have provided comments and identified issues to be considered in this context.
In February the FATF Plenary agreed on an initial list of topics for consideration under this project. I will mention a few of them:
1.Customer Due Diligence (Recommendation 5)
2.Law enforcement (Recommendations 27/28)
3.Beneficial ownership (Recommendations 33 & 34)
4.International Cooperation (Recommendations 35-40)
5.Tax crimes as a predicate offence for money laundering
The FATF’s Working Group on Evaluations and Implementation will co-ordinate this work. The APG is also doing important work with its SIP framework.
In parallel to this important exercise, work will also be conducted on preparing the processes, procedures and the methodology for FATF’s 4th Round of Evaluations.
As I already noted, I sincerely hope the APG will continue to provide input to this work.
Conclusion
In conclusion,
1.The commitment of FSRBs to the FATF standards is crucial for the long term viability of the fight against money laundering and terrorist financing. And I repeat: it is impossible to envisage a successful implementation of the FATF standards without FSRBs.
2.FATF is entering a new phase in its existence with a financial crisis that requires attention and action, in any case in the area of uncooperative jurisdictions. FSRB’s will from now on be fully integrated in FATF’s work through their participation in the Regional Review Groups.
3.A new round of FATF country evaluations will provide for a perfect opportunity to draw the lessons of the past years and to further improve our monitoring system, with an appropriate place for effectiveness and law enforcement.
Hon. Minister, APG co chairs, ladies and gentlemen, I am honoured to be here at your annual meeting and I hope to speak with many of you this week.
Thank you very much for your attention.
No comments:
Post a Comment