FATF Toughens AML Rules

EghtesadOnline: The Financial Action Task Force, the global dirty money watchdog, on Friday agreed to revamp its standards to beef up monitoring of financing aimed at evading US and United Nations sanctions and proliferating weapons of mass destruction, the US Treasury Department said.

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26 October 2020

Endorsement of the new standards by the FATF at its meeting this week would strengthen the global response aimed at curbing the proliferation of such weapons, Treasury said in a statement, Reuters reported.

It said North Korea and Iran had established complex and elaborate networks, including front and shell companies incorporated in many FATF member countries, to evade US and UN sanctions and move funds to “further their dangerous purposes.”

Washington began pushing for the changes when it headed the global watchdog in 2018-2019. Germany currently leads the body, which was set up in 1989 and currently includes 37 member jurisdictions and two regional organizations, the European Commission and the (Persian) Gulf Cooperation Council.

“The collaboration of the FATF is vital to addressing global illicit financial activity, including fraud associated with the Covid-19 pandemic, proliferation financing risk, and other (anti-money laundering and counterterrorist) priorities,” US treasury secretary, Steven Mnuchin, said in a statement.

The change requires countries and the private sector to assess and mitigate proliferation financing risks related to the “potential breach, non-implementation or evasion of UN financial sanctions.”

The treasury said US financial institutions and other US businesses were generally already assessing and mitigating the risk of sanctions evasion, but it remained challenging to disrupt sophisticated networks set up by Iran and others.

It said the enhanced FATF standards would allow FATF members to arm their financial institutions and other entities with targeted information to crack down on shell companies and other individuals or entities acting on behalf of sanctioned persons.

Still on the Blacklist

During FATF’s last meeting on October 23, the global anti-money laundering watchdog said Iran, along with North Korea remains on the FATF’s list of “high-risk jurisdictions”.

“For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system,” read an excerpt of the FATF statement.

FATF said that since August 2, 2020, it has decided to “pause the review process for the list of High-Risk Jurisdictions subject to a Call for Action”, saying that FATF’s call for action on these jurisdictions are still in effect as per the watchdog’s statement adopted in February 2020.

Last February, the FATF fully lifted the suspension of counter-measures against Iran and called on its members and all jurisdictions to apply effective counter-measures against the country.