Outcomes of the FATF Plenary, 20-22 February 2013

A critical part of the FATF’s work is a programme of rigorous, comprehensive assessments of whether countries are compliant with the FATF Recommendations. The FATF itself assessed 40 countries as part of its 3rd round of Mutual Evaluations. Over 180 countries were assessed by the FATF’s global network. The main focus of the last round of Mutual Evaluations was on strengthening the foundations of a global AML/CFT system, by ensuring all countries have adequate laws, regulations and institutions to combat money laundering and terrorist financing.

The FATF’s next round of assessments, which will commence this year, will focus much more on assessing how effectively countries are combating money laundering and terrorist financing in practice. While the FATF remains committed to rigorous and comprehensive assessment of technical compliance with the Standards, the next round will have a major focus on whether countries’ laws, regulations, and institutions are really achieving their objectives. So the FATF has developed a new framework for assessing the effectiveness of AML/CFT systems, which will help countries focus much more intensively on practical steps to improve their performance.

FATF issues new Mechanism to Strengthen Money Laundering and Terrorist Financing Compliance

Statement on Turkey

In October 2012, the Financial Action Task Force (FATF), the international standard-setter for combating money laundering, the financing of terrorism and proliferation of weapons of mass destruction, released a statement conveying its deep concerns about Turkey’s continued failure to take action to fully criminalise terrorist financing and establish an adequate legal framework for identifying and freezing terrorist assets consistent with the FATF Recommendations. The statement indicated that Turkey’s membership in the FATF would be suspended on 22 February 2013 unless Turkey had adopted legislation to remedy deficiencies in its terrorist financing offence and establishes a legal framework for identifying and freezing terrorist assets consistent with the FATF Recommendations before that date.

On 7 February 2013, the Turkish Grand National Assembly adopted the Law on the Prevention of the Financing of Terrorism, which was signed into law on 15 February 2013. The new law addresses many of the shortcomings identified in Turkey’s terrorist financing offence and creates the legal basis for the freezing of terrorist assets. The FATF welcomes this significant step made by Turkey, which improves the country’s compliance with the international standards. As a consequence, the FATF has decided not to suspend Turkey’s membership.

In spite of this positive step, there still remain a number of ongoing shortcomings in the Turkish counter-terrorist financing regime. Turkey must address these shortcomings in order to reach a satisfactory level of compliance with the FATF standards. Turkey has committed to addressing these deficiencies and will submit, prior to the next FATF meeting in June 2013, a report on how these deficiencies are being addressed.

The FATF has updated the 2011 Guidance on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion, to bring it in line with the revised FATF Recommendations. The paper aims to provide support in designing AML/CFT measures that meet the goal of financial inclusion, without compromising the measures that exist for the purpose of combating crime. The revised Guidance focuses in particular on the reinforcement of the risk-based approach (RBA), as a general and underlying principle of all AML/CFT systems.

This will be a key step for countries that wish to build a more inclusive formal financial system, and give access to appropriate financial services to a larger proportion of the population, including the most vulnerable and unserved groups. 

Revised Guidance on AML/CFT and Financial Inclusion

The 2012 FATF Recommendations require that countries identify, assess and understand the money laundering and terrorist financing risks facing them and adapt their AML/CFT system accordingly. The FATF has adopted a new guidance which is intended to assist in the conduct of risk assessment at the country or national level. Once ML/TF risks are properly understood, country authorities may apply AML/CFT measures in a way that ensures they are commensurate with those risks – i.e. the risk-based approach (RBA) – which is central to the FATF standards as is set out in Recommendation 1.

National money laundering and terrorist financing risk assessment