Professional Documents
Culture Documents
Force
Reference Guide
Kalyanaraman K
kalyanaramanca@yahoo.co.in
04-Oct-08
The Financial Action Task Force (FATF)
Focuses on three principal areas
FIRSTLY, IT SETS STANDARDS FOR NATIONAL ANTI MONEY LAUNDERING AND COUNTER – TERRORIST FINANCING
PROGRAMS AND PROMOTES THE ADOPTION AND IMPLEMENTATION OF APPROPRIATE MEASURES GLOBALLY
SECONDLY, IT MONITORS AND EVALUATES THE DEGREE TO WHICH MEMBER COUNTRIES HAVE IMPLEMENTED
NECESSARY MEASURES TO MEET THOSE STANDARDS .
FINALLY, IT IDENTIFIES AND REVIEWS MONEY LAUNDERING AND TERRORIST FINANCING TECHNIQUES AND TRENDS.
FATF works in close cooperation with other international bodies involved in this area.
• United Nation (UN) office for Drug Control and Crime Prevention
• Council of Europe
• Asia – Pacific Group on Money Laundering
• Caribbean Financial Action Task Force
All serious offences are to be made predicate offence for the crime of money laundering (Recom., 1)
No Anonymous accounts or accounts in fictitious names. Ongoing customer due diligence & verification of
customer identity including occasional customer & beneficial owners
Financial Institutions, for occasional customer the designated thresholds for transactions USD
/EUR 15,000/-(Recom., 5)
For Politically Exposed Persons (PEP), institute appropriate risk management system
Additional due diligence measures for correspondent banking & other similar relationship
Collect information about respondent’s business, reputation & quality of supervision
Assess AML & Terrorist financing controls
Documents respective responsibilities
Respondent bank of verify identity & perform due diligence on customers saving access &
Correspondent account (Recom., 7)
Financial institution to have policy to counter risks due to increasing advancement and use of IT (Recom.,
8)
In countries where financial institutions are allowed to engage third parties for performing customer
identification, ultimate responsibility for identification & verification remains with the financial institution
(Recom., 8)
Pay attention to Large / unusual Transactions & Keep record for 5 years (Recom., 10 &11)
CDD & Record keeping requirement extended to Casinos, Real Estate Agents, Dealers in precious metals &
stones, lawyers, notaries
The designated threshold for transaction of casinos, including internet casinos USD /EUR 3,000/- (
Recom., 12 &16)
Financial Institutions & their employees are protected from breach of confidentiality & prohibited form
disclosing suspicious transaction (Recom., 14)
It is the obligation all financial institutions to develop AML programs, ongoing employee training and audit
function to test the system
The designated threshold for transactions for dealers in precious metels and dealers in precious
stones when engaged in any cash transaction USD / EUR 15,000/-(Recom., 15 &16)
Financial institutions to discontinue correspondent relationship with Shell banks (Recom., 18)
Countries to detect or monitor, physical cross border transportation of currency & bearer N.I & establish
reporting of transaction over a fixed amount (Recom., 19)
Apply FATF recommendations to business posing Risk and encourage secure techniques of money
management ( Recom., 20)
Measures to be taken with respect to countries that do not or insufficiently comply with the FATF
Recommendations
Recommendation 21 & 22
All financial institutions should be properly regulated & supervised to prevent criminals form being
beneficial owners or from acquiring controlling interest or holding management function (Recom., 23)
Non financial business & Professions should be subject to regulatory & supervisory measures (Recom., 24)
Guidelines & feedback to be provided to financial institutions & non financial business to assist them in
combating money laundering & terrorist financing (Recom., 25)
Institutional and other measures necessary in systems for combating money
laundering and Terrorist Financing
Competent authorities, their powers and resources
Recommendation 26, 27, 28, 29, 30, 31 & 32
Countries are required to setup financial intelligence unit to receive STRs, To assign law enforcement
duties to investigate money laundering & Terrorist financing, to co ordinate between various AML
agencies, compel production of documents & impose sanctions for short comings ( Recom., 26 - 320
Countries will combat abuse of legal persons by money launderers by accessing adequate, accurate &
timely information on beneficial ownership & control (Recom., 33)
Singles out trusts & needs for information on settler, trustee & beneficiaries (recom., 34)
International Co operation
Recommendation 35
Seek to strengthen international action by mutual assistance amongst countries. They call for widest
possible co-operation at all levels & Data protection safeguards to ensure information relayed in not used
other than for the purpose intended ( Recom., 36 – 40)
Countries should also immediately implement the United Nations resolutions relating to the
prevention and suppression of the financing of terrorist acts, particularly United Nations Security
council Resolution 1373.
-IMPLEMENT UN RESOLUATIONS
-DEFINITION AS CRIME
III. Freezing and confiscating terrorist assets
Each country should implement measures to Freeze without delay funds to other assets of terrorist,
those who finance terrorism and terrorist organizations in accordance with the United Nations
resolutions relating to the prevention and suppression of the financing of terrorist acts.
Each country should also adopt and implement measures, including legislative ones, which would
enable the competent authorities to seize and confiscate property that is the proceeds of, or used in,
or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist
organizations.
Countries should also take all possible measures to ensure that they do not provide safe havens for
individuals charged with the financing of terrorism, terrorist acts or terrorist organizations and
should have procedures in place to extradite, where possible, such individuals.
Each country should ensure that persons or legal entities that carry out this service illegally are
subject to administrative, civil or criminal sanctions.
Non profit organizations are particularly vulnerable and countries should ensure that they cannot be
misused by terrorist organisations posing as legitimate entities to exploit legitimate
legitimate entities as
conduits for terrorist financing, including for the purpose of escaping asset freezing measures; and
to conceal or obscure the clandestine diversion of funds intended for legitimate purposes to terrorist
Organisations.
Countries should ensure that their competent authorities have the legal authority to stop or restrain
currency or bearer negotiable instruments that are suspected to be related to terrorist financing or
money laundering, or that are falsely declared or disclosed.
Countries should ensure the effective, proportionate and dissuasive sanctions are available to deal
with persons who make false declaration(s) or disclosure(s) and enable the confiscation of such
currency or instruments.