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INTERVENTION BY MR. BJØRN S. AAMO, PRESIDENT OF THE FATF

ON THE FATF PROGRAMME FOR 2012-2013 AT THE 40TH PLENARY MEETING OF THE COMMITTEE OF EXPERTS ON THE EVALUATION OF ANTI-MONEY LAUNDERING MEASURES AND THE FINANCING OF TERRORISM (MONEYVAL)

Strasbourg, France, 3 December 2012


I would like to take a few minutes to outline some of the key elements of work that the FATF is undertaking this year during the Presidency of Norway.

THE FATF STANDARDS AND THE NEXT ROUND OF MUTUAL EVALUATIONS

Since my predecessor addressed you last year, the FATF completed the review of the FATF Recommendations which were adopted and published in February of this year. I know that MONEYVAL has taken a keen interest in following this process. The key role of the risk-based approach is the most important feature of the revision. It should help us in using our resources better, with more attention to high risk sectors and activities and less where the risks are low. It should also help in promoting financial inclusion, which should be of high priority in many countries.

Implementing the revised Recommendations effectively and efficiently will be a challenge for FATF members as well as for other countries. The changes may, to varying degrees, require countries to amend legislation and rules along with the practical organisation of their AML/CFT effort. Information and training on the revised standards will be important tasks over the coming year and beyond. The FATF will need to work with the FSRBs to determine types of training needed (for assessed countries, assessors, Secretariats, etc.). I am pleased to hear that MONEYVAL has already held training on the new standards which was organised for MONEYVAL and EAG members this past September.

It is the mutual evaluation process that gives the FATF Recommendations their force. We must continue to strengthen our AML/CFT systems through this process, and I expect therefore that all countries in the global network will now be assessed for compliance with the revised Recommendations. The FATF will begin its next round of assessments in the 4th quarter of 2013, and most FSRBs should start their next evaluation rounds then or soon thereafter.

The new round of mutual evaluations will place a much stronger emphasis on the assessment of effective implementation of the revised FATF Standards and not only of technical compliance. The new approach for assessing effectiveness is based on objectives and will be fully integrated into the assessment methodology. As one important example, I would like to mention the practical availability of information on legal persons and beneficial ownership. The revised standards go into more detail on what is required by countries in ensuring availability of this information (to the banks, the public and so on), and the evaluation process – from the effectiveness point of view – will look closely at whether this information is indeed available to those that need it. We are currently working to finish this new methodology, as well as to develop guidance on issues where further advice on implementation may be useful. We are grateful for the active contribution of MONEYVAL.

As we look forward to the next round of mutual evaluations we must, however, not neglect the very important work of follow-up on earlier evaluations. Indeed, MONEYVAL is in the process of completing its “fourth” round of evaluations with the specific aim of following up on the work of the previous round (as I mentioned in my earlier intervention today). In my view, the MONEYVAL follow-up round will provide a strong foundation on which to base the implementation of the revised FATF Recommendations. Furthermore, the FATF hopes to work with MONEYVAL and other FSRBs to develop a more common approach to assessment and follow-up procedures that will increase the comparability of evaluations and help to further strengthen our processes in the context of the global network.

FURTHER DEVELOPMENT OF THE GLOBAL NETWORK

The global network is under constant development. Our ministers provided us with a mandate this April, strengthening the role of the FSRBs as their right to take part in all FATF activities was made clear. In October last year, we agreed on a new set of high level principles and objectives. It is important to stress that these newly agreed objectives apply to all bodies – both the FATF and the FSRBs; it is a mutual process – and thus form a clearer and more balanced foundation for the global AML/CFT network.

Based on the new FATF Mandate and these newly agreed objectives, we also created the Global Network Coordination Group, a new FATF working group, which met for the first time in June 2012 and then again in October. The purpose of the group is to serve as a forum for raising – and when necessary resolving – issues of interest to the FSRBs and the FATF. In addition, the group will also serve as a mechanism for sharing good practices and ideas relevant to such bodies. As a demonstration of our commitment to involve FSRBs in this process, for the first time, we have a working group co-chair who comes from an FSRB.

The work of this new group has had a good start, and I am quite confident we shall see concrete results coming from the work of the group. I hope that I can count on the continued and active support of all FSRBs – including in particular MONEYVAL as a more experienced regional body – to ensure that this initiative succeeds.

ENGAGEMENT WITH THE PRIVATE SECTOR AND CIVIL SOCIETY

Implementation of the revised FATF standards will continue to require dialogue and consultation with the private sector and representatives of civil society. Private institutions have a vital role to play in the fight against money laundering and terrorist financing. It will therefore be important to maintain and improve the mechanisms through which we formulate new guidance and carry out research on money laundering and terrorist financing. The FATF plans during this Presidency to convene another consultative forum meeting to discuss further work relating to the implementation of the new FATF Recommendations. There may also be other forms of dialogue. Our dialogue with non-governmental organisations will naturally also include how Recommendation 8 on non-profit organisations should be followed-up in practice.

CONTINUED WORK ON IDENTIFYING AND ASSESSING THREATS

The FATF continues to study developments in markets and economies, as well as to identify new threats to financial integrity. Of special importance to this effort are general and special typologies projects. Currently five general type research projects are underway and expect to be completed under the Norwegian Presidency. In addition, since tax crimes have now been included as a predicate offence for money laundering under the revised Recommendations, the FATF has initiated a special research project to compare experiences from countries where tax crimes have been a predicate offence for some time. The inclusion of tax crimes as a predicate offence will increase the basis for international co-operation in this area, and it should be of interest to the many governments who need to strengthen their revenues and tax systems.

REFINING ORGANISATION AND WORKING METHODS

In April of this year, the FATF Ministers met and adopted a new 8-year Mandate for the task force. Furthermore, FATF has received applications for membership recently from a couple of countries. There are indications that others may follow. The question of FATF membership is not easy, as a significant expansion may influence the working methods and decision-making procedures which are now based on consensus of FATF (with its 34 member countries). The FATF Plenary has thus agreed to undertake careful considerations of a possible expansion of the FATF membership. In these considerations, the further development of the role the FSRBs may play in the global network should also be included.

Based on the new mandate along with the fact that the FATF will soon begin its 4th round of mutual evaluations according to the new standards, it seems to be the right time for the FATF to examine and as necessary refine its internal working methods and structure. I have initiated a process to look at the work of the FATF to try to better prioritise and co-ordinate it and ensure that any unnecessary duplication can be avoided. Though this process has started now, I expect that implementing any new internal structures or working practices will likely continue under my successor.

Dear colleagues, the present economic and financial problems in many countries add to our challenges. At the same time, effective implementation of the FATF Recommendations will contribute to the confidence in our financial systems that is required if economic growth and prosperity are to be rebuilt in Europe and elsewhere.

Mr Chairman, ladies and gentlemen, I am very happy to have had the opportunity to speak to you today and to outline some of the main initiatives of the current Presidency. I plan to remain for a couple of days to listen to your Plenary discussions, and I wish you all the success in your Plenary meeting this week.

Bjørn S. Aamo FATF President