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Outcomes from FATF Week

Tuesday 27 February 2018

 
At the Financial Action Task Force (FATF) Plenary discussion during FATF week, there was agreement by the Plenary to adopt a new ‘operational plan of action’.

FATF said that “This operational plan is a living document that provides a framework for a flexible and dynamic response to terrorist-financing threats.”

The areas of focus will include:

  • Further improving the identification and understanding of terrorist financing risks, both at country level and more broadly, which will have an impact on the effectiveness of international efforts to tackle terrorist financing.
  • The carrying forward of FATF’s work to enhance information-sharing, which will build on the work that FATF has already completed on domestic inter-agency information-sharing and sharing within the private sector.
  • Ensuring efforts to detect terrorist financing lead to successful investigations, prosecutions and convictions, including the President’s initiative on increased engagement with the criminal justice system and prosecution services.
  • Ensuring a better global implementation of effective counter-terrorist financing measures through closer coordination with FATF’s regional bodies and the actions they are taking. 
 
Some key discussion points
The discussion looked at FATF’s report to the G20 Finance Ministers and Central Bank Governors, which focused on improving access to beneficial ownership when it comes to correspondent banking and remittances.
There was also further recognition in the areas of AML/CTF risks, and in potential benefits and the development of technological solutions in the business space.
The specific areas of interest include:

  • Fintech
  • RegTech
  • Digital currencies
With the work being done in Australia in both the fintech and RegTech spaces, it will be interesting to see what filters down here.

With FATFs attempt to understand digital currencies and how they can be used to facilitate financial crime, how will the amendments to Australia’s AML/CTF laws be viewed in relation to understanding the risks presented—now and in the future—by digital currencies?
Will further amendments be necessary?

The Plenary discussion also promised to look in greater depth at transaction history, with particular attention being paid to the proceeds of human trafficking.

 

Revisions to information sharing
At a group-wide level, FATF adopted revisions as it pertains to information-sharing. At the same time, it adopted revisions to the methodology of assessments of compliance to the 40 FATF recommendations.

Specifically, they mentioned information-sharing that is secure and prevents ’tipping-off’.

Another key area of discussion centred on enhancing the effectiveness of reporting suspicious matters and in so doing to improve the quality of financial intelligence.

“The private sector plays an important role in detecting and reporting suspicious transactions, and participants discussed the practical/operational considerations in further developing public/private partnerships and the application of IT tools to improve the quality of financial intelligence.”

However, at least in the Australian context, there is still the challenge of getting this reporting right, and to be able to report within the time stipulated under the AML/CTF Act. There is also the ongoing complaint that AUSTRAC should also be delivering more specific guidance.

There has also been a bit of a question mark from the industry perspective, when it comes to the development of the ‘public/private’ relationship—a relationship that has been brought into question with CBA’s response to the further allegation of 100 contraventions brought against the bank in December.

CBA indicated that, despite their relationship with the FIU, there was no warning that AUSTRAC was going to bring action against them.

It will be interesting to note what discussions will come out of the Counter-Terrorism Financing Summit later this year, with countries in the Asia-Pacific now looking at the outcomes of the Plenary to see how these might affect their regional strategies and priorities.