Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)

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Speech of the President of the Financial Action Task Force (FATF)

MR. VLADIMIR NECHAEV

9 December 2013


Good morning,
Mr. Jan Kleijssen,
Dr Anton Bartolo,
Mr John Ringguth,
distinguished delegates, colleagues and friends.

I am happy to be back here in Strasbourg for a MONEYVAL Plenary meeting, even though I am in a different capacity this time. Eight months since I was here last time seem a long time to me and I miss the opportunity to come to MONEYVAL events and be among you. In a way I feel deprived of some very special part of my life. I’m proud to have been coming here as a delegate for 10 years and to have served for almost 4 years as the MONEYVAL Chairman. This unique experience helps me a great deal in my new role as the FATF President. You have all heard me speak before as a MONEYVAL insider. Now, I have the opportunity to talk to you from outside and thus to let you hear my views from a broader perspective.

These days we speak a lot about the Global AML/CFT Network and the efforts we should invest to make it stronger. For me personally, it is both easy and difficult to speak about MONEYVAL’s role in the Global Network. It is easy because for quite a long period of time this had been an integral part of my life and I’m more familiar with it than maybe any other FATF President. On the other hand it is difficult because it is an inherently difficult task to make an objective assessment of your own work. Nevertheless I feel it is my duty to emphasise the critical role that MONEYVAL plays in the Global Network. I refer here not only to the statements of my predecessors and other stakeholders acknowledging the many accomplishments of MONEYVAL. It is not an exaggeration to say that MONEYVAL is an indispensable partner of the FATF in promoting the Global AML/CFT Network. This was certainly what I thought when I was MONEYVAL Chairman, and it is still my view as the President of the FATF.

Role and place of MONEYVAL

Why is MONEYVAL so important? Here are a number of reasons: First of all, MONEYVAL has a special position as a part of a larger body, the Council of Europe. Not only does this give the MONEYVAL a strong political framework to achieve its goals, but also creates additional responsibility to ensure the high quality of its work. The close co-operation and synergy between MONEYVAL and the rest of the Council of Europe has produced quite impressive results, especially in the area of technical assistance and capacity building activities.
An important recent development to ensure a better integration in the region was the decision to grant equal voting rights for all jurisdictions that participate in the work of MONEYVAL and I am glad that I stood at the beginning of the process that led to this decision. This also serves to reinforce the Global Network.

Another strong point of MONEYVAL is its high-quality mutual evaluation process. Now in the second half of its 4th “follow-up” round, MONEYVAL is the most experienced FSRB in terms of conducting mutual evaluations in the AML/CFT field. A consistent and accurate interpretation of the FATF standards in the European region sets an example for others. The special focus on effectiveness in this “follow-up” round gives MONEYVAL unique experience which will be highly relevant as the global network as a whole moves into assessing countries according to the revised FATF standards. Another strong feature of your process is that the experts from MONEYVAL and FATF already participated in each other’s assessments on reciprocal basis and we hope this will continue in the future to reinforce the Global Network
Mutual evaluations can only be truly effective as a process if they are complemented by robust and consistent follow-up monitoring. And again this is the area where MONEYVAL has excelled. It has developed very detailed (and some might say quite complex) follow-up and compliance enhancing procedures. Indeed, MONEYVAL’s 4th round of evaluations has the specific aim of ensuring action is taken to remedy previously identified shortcomings.

MONEYVAL has also demonstrated its willingness to strengthen the Global Network by sharing experience and engaging in constructive cooperation with other members of that network. Here I’m speaking about work on typologies and various training events.

FATF Objectives

So now I would also like to take a few minutes to outline the main objectives for the FATF under the current term of the Russian Presidency.

Start of new round of evaluations and putting new standards and procedures into practice

As you all know the FATF will start its 4th round of evaluations in 2014 – in fact, we have already started working on the first evaluations. To give this process a good start is a high priority. This year has been very productive in terms of developing documents that are going to set the framework for these activities. Earlier this year the FATF Secretariat made a presentation on the new Methodology, and later this week the Secretariat will give another presentation on the new ME process and procedures – as the FATF will carry it out for its members. You will see that there are a number of very important novelties to the process, such as the new “peer review” mechanism and more ambitious follow-up procedures. While recognising, that all FSRBs could have their own particularities there are a number of (minimum) “core” elements that every associate member of the FATF should have in order to ensure a level-playing field. Those elements will be further elaborated in the Secretariat’s presentation, and we hope that the MONEYVAL experience can provide a strong contribution to this discussion. We hope that MONEYVAL procedures will be as close as possible to those of FATF.

Risk and effectiveness

What will also be new for the upcoming round is the increased focus on effectiveness of implementation. This issue is challenging to deal with without having better understanding of the ML/TF risks that a jurisdiction is facing. Therefore, work on national risk assessments will be one of the cornerstones of the effective AML/CFT regimes. Some MONEYVAL members have already started working on this, and the FATF is keenly interested in understanding the lessons learned from this experience. The new working group (RTMG – the former Working Group on Typologies) now has a specific role in following work on national risk assessments (NRAs). We plan to leverage the experience countries have in developing NRAs to help reinforce this effort. As well, we hope that collecting and analysing NRAs will provide substantial input to a future “global’ assessments of risk.

Reinforcing the Global Network

One of the priorities of the Russian Presidency is reinforcing the Global AML/CFT Network. We will continue to work within the mandates of the ICRG and GNCG which have proved their effectiveness, including by continuing to encourage direct participation of MONEYVAL. However we will also seek new approaches in dealing with this subject. One aspect of the global AML/CFT covering is far from being solved. That is – the breakaway territories or self-declared or partially declared states or even parts of states where central authorities have limited or no control. These territories remain outside any or almost any monitoring processes. Without any political consequences the issue has to be looked into and a form of interaction should be sought. The FATF would like to see financial institution and DNFBPs in these territories to be obliged to implement AML/CFT Standards with a possibility of obtaining information from those territories.

When we are talking about the Global Network we also should not forget about an important player here, which is the Egmont Group. It is widely known that financial intelligence units (FIUs), as the key bodies in a country’s AML/CFT system, play a prominent role heading the member delegations in many FSRBs, including the MONEYVAL. Therefore, the FATF under the Russian Presidency is promoting efforts to enhance co-operation with this body including by focusing on the role played by FIUs in their domestic regimes. And we already see positive reactions to this from the Egmont Group. Incidentally I met my first day of the FATF Presidency at the Egmont plenary and this seems symbolic to me.

Other issues

In addition to the issues that I have just mentioned a number of other initiatives will remain on the FATF agenda for the coming years. Among them is the continued engagement with the private sector and civil society. This engagement is a crucial element for different work streams in the FATF such as policy development and research of emerging trends and methods and further work to promote financial inclusion.

Conclusion

Concluding my remarks, I will just underline once again that there is a lot of work in front of us all and accomplishing this work will not be possible without constructive cooperation in the framework of the Global Network. This is something where MONEYVAL can make difference and where the FATF could count on your support. I look forward to continued dialogue between the MONEYVAL and the FATF on the ways that can further strengthen the relationship between FATF and its associate members.
Mr Chairman, Mr Executive Secretary, ladies and gentlemen, I would like to thank you for the opportunity to come here again and for your kind attention, and I wish you all success and fruitful work this week.

Thank you.