The FATF began by noting that Russia’s actions continue to violate its core principles and decided to impose additional restrictions. These include a bar from participating in current and future FATF project teams or participating in meetings of the FATF-Style Regional Bodies as an FATF Member. The FATF will continue to monitor the situation, in the meantime, all jurisdictions should be vigilant to emerging risks from the circumvention of measures taken against Russia.
Updates on recommendations and reports
FATF members agreed to release draft guidance on Recommendation 24 on beneficial ownership, and proposed revisions to Recommendation 25 on transparency and beneficial ownership of legal arrangements. Details of these are below.
Members also approved a report on the illicit proceeds generated from supply chains for fentanyl and related synthetic opioids and discussed a report on money laundering through arts, antiquities and other cultural objects.
Other ongoing initiatives discussed included countering the laundering of proceeds from ransomware attacks, plus work to update the FATF best practices paper on combating the abuse of non-profit organisations.
There were updates too on implementing the March 2022 Strategic Vision for the Global Network. The 206 jurisdictions have jointly agreed to strengthen their regimes to tackle money laundering, terrorist and proliferation financing.
Compliance with FATF Standards
There were changes in the status of various jurisdictions:
- Increased Monitoring – jurisdictions under increased monitoring are actively working with the FATF to address the strategic deficiencies in their regimes. New jurisdictions subject to increased monitoring are the Democratic Republic of Congo (DRC), Mozambique and Tanzania.
- Subject to a call for action – certain jurisdictions with serious strategic deficiencies are subject to a call for action to protect the international financial system. Myanmar has been added to the list.
Two jurisdictions are no longer under increased monitoring:
- Nicaragua – the jurisdiction has responded to its action plan, particularly in addressing technical deficiencies, so is no longer subject to increased monitoring. However, there’s still concern about potential misapplication of the FATF Standards resulting in the suppression of Nicaragua’s non-profit sector.
- Pakistan – there’s been significant progress in improving their anti-money laundering and counter-terrorist financing (AML/CFT) regime, in particular addressing technical deficiencies. Pakistan is therefore no longer subject to increased monitoring.
Improving asset recovery
The FATF is working hard to enhance asset recovery results and thereby remove the financial incentives that drive criminal activity. Delegates supported the key takeaways agreed at the inaugural joint FATF-INTERPOL Roundtable Engagement (FIRE), held in Singapore in September.
Confiscations amount to less than 1% of total criminal proceeds, so ambitious action is needed. Participants agreed on the importance of higher FATF standards, a strong legal framework, and faster, smoother international cooperation.
Participants also discussed cyber-enabled fraud, including better understanding of the risks and the need for more proactive inter-agency action to trace financial flows and seize criminal assets.
Delegations emphasised the need to continue to work closely with INTERPOL, the Egmont Group, UNODC, the World Bank and other partners to promote effective asset recovery action. The FATF should continue to take the lead in improving international cooperation and driving greater global asset recovery.
Improving access to beneficial ownership information
Guidance on Beneficial Ownership (Recommendation 24) – the FATF is releasing their Guidance on Beneficial Ownership for full public consultation. When the FATF has completed its review of Recommendation 25, this guidance will be updated
Strengthening the FATF Standard on Beneficial Ownership Information – following public consultation, the FATF has proposed modifications to the FATF Standard on beneficial ownership of trusts and other legal arrangements (Recommendation 25). The aim is to ensure a balanced and coherent approach.
In each case, finalisation is expected in February 2023.
Illicit proceeds from synthetic opioid supply chains
The FATF discussed countering the growing illicit trade in synthetic opioids. In North America, fentanyl has caused a record number of overdose deaths, while a tramadol epidemic is significantly impacting parts of Africa. Asian countries are also reporting growing numbers of cases.
Despite most countries identifying drug trafficking as a major predicate offence for money laundering, and the growing number of incidents leading to loss of life, investigations and prosecutions of laundering of proceeds from synthetic opioids trafficking remain low.
A FATF report in mid-November will include risk indicators for identifying suspicious activity and make recommendations on detecting and disrupting financial flows relating to this illegal trade. These will include training for law enforcement and prosecutors, international cooperation between source, transit and destination countries, and public-private partnerships to share red flag information.
Find out more
You can read more about the outcomes on the FATF website. The next FATF Plenary will again be in Paris, in February 2023.
For information on how RiskScreen can help you meet any challenges that result from the outcomes of the latest FATF plenary, please contact us.