The Four Strategic Initiatives Accomplished During FATF Plenary

Terri Luttrell, CAMS-Audit, CFCS

March 4, 2019

The Financial Action Task Force (FATF) conducted their first Plenary meeting of the new year in Paris on February 20-22. The FATF is a global inter-governmental “policy-making body” with objectives to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

Four major strategic initiatives were accomplished during this global meeting, including:

• Combating the financing of terrorism – this remains a top priority for the FATF. Al Qaeda, ISIL, and other terrorist organizations continue to have a significant impact in the region where they are active. FATF aims to be at the forefront of responding to these emerging threats through innovation and cooperation to deny terrorists funds and prevent them from accessing and using the international financial system to their benefit. The FATF continues to identify areas where jurisdictions are not taking targeted, impactful, and disruptive action against terrorist financing to protect the global financial system from being accessed by terrorist financiers.

• The release of a public statement on its current actions concerning the following countries:

  • Democratic People’s Republic of Korea (DPRK)

    The FATF remains concerned by DPRK’s failure to address significant anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies and the serious concerns they pose to the international financial system. In addition to continuing enhanced scrutiny of business relationships and transactions with the DPRK, the FATF calls on its members to apply effective counter-measures to protect their financial sectors from money laundering, financing of terrorism, and weapons of mass destruction proliferation financing.

  • Iran

    The FATF has welcomed Iran’s political commitment to address its strategic AML/CFT deficiencies. In August 2018, Iran enacted amendments to its Counter-Terrorist Financing Act and in January 2019, enacted amendments to its Anti-Money Laundering Act. Both bills have passed Parliament but are not yet in full force. The FATF recognizes the progress of these legislative efforts.

Since the bills have not been implemented, the FATF will review legislation once in full force to determine whether the measures address Iran’s official action plan, in line with the FATF standards. In the meantime, the FATF urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence towards business relationships and transactions with ties to Iran.

• Mitigating risks from virtual assets - Recognizing the need to adequately mitigate the money laundering and terrorist financing risks associated with virtual asset activities, the FATF is setting implementation requirements for effective regulation and supervision/monitoring of virtual asset service providers. FATF clarified how the FATF standards apply to activities or operations involving virtual assets. The text of the Interpretive Note has been finalized and can be read here.
• Identifying jurisdictions with strategic AML/CFT deficiencies :
  • FATF added Cambodia as a jurisdiction with strategic AML/CFT deficiencies. The country developed an action plan with FATF to address the most serious deficiencies. The comprehensive list can be found here.

Other Strategic Initiatives

• The FATF emphasizes a risk-based approach to applying resources where the risks are highest. In line with that, they approved three risk-based guidance papers for the following higher-risk groups:
  • Lawyers
  • Accountants
  • Trust and Company Service Providers

These new guidance documents will be released for public consultation before their final adoption in June 2019.

The full FATF Plenary meeting report can be read here. The FATF will meet again June 16-21.

About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director

Abrigo

Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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