AUSTRAC Regulatory Guide
The European Union has adopted a robust approach to member states' compliance with AML/CTF standards. The 'Third Directive' (on the prevention of the use of the financial system for purposes of money laundering or terrorism financing) prohibits money laundering and terrorism financing. It applies to the financial sector as well as to some non-financial professions (for example, lawyers, notaries, accountants, auditors, tax advisers, trust and company service providers, real estate agents, casinos, money service businesses and all providers of goods to the extent payments are made in cash in excess of Euro 15,000).
In essence, the Directive requires these institutions and persons to:
The Directive is completed with a section on supervision and monitoring by national authorities and it also calls on member states to establish appropriate penalties in case of non-respect.
The Directive was adopted in October 2005 and is to be implemented at the latest in December 2007. (45)
Foreign lists and sanctions
Financial Action Task Force - Non-Cooperative Countries and Territories list
The FATF is an intergovernmental body whose purpose is to develop and promote national and international policies to combat money laundering and terrorism financing.
The Non-Cooperative Countries and Territories initiative began in 1998 at a time when many countries around the world did not have adequate AML measures in place. The goal of the initiative is to ensure that all financial centres adopt international standards to prevent, detect and punish money laundering and thereby effectively cooperate internationally in the global fight against money laundering.
In February 2000 FATF published the initial report on Non-Cooperative Countries and Territories, which included 25 criteria identifying detrimental rules and practices that impede international cooperation in the fight against money laundering. Currently, there are no countries on the Non-Cooperative Countries and Territories list. Further information is available at www.fatf-gafi.org.
U.K. - HM Treasury - Consolidated List of Financial Sanctions Targets
HM Treasury is the UK's economics and finance ministry and administers financial sanctions in the UK.
A consolidated list of targets compiled by the UN, European Union and UK under legislation relating to current financial sanctions regimes is available in various formats.
Reporting entities can subscribe to updates when a news release on sanctions is issued.
The list is available at www.hm-treasury.gov.uk/documents/financial_services/sanctions/fin_sanctions_index.cfm
European Union - financial sanctions list
In order to facilitate the application of financial sanctions, the European Banking Federation, the European Savings Banks Group, the European Association of Co-operative Banks and the European Association of Public Banks (the European Union (EU) Credit Sector Federations) and the European Commission recognised the need for an EU consolidated list of persons, groups and entities subject to common financial sanctions related to foreign and security policy.
It was therefore agreed that the EU Credit Sector Federations would set up a database containing the consolidated list for the Commission, which would host and maintain the database and keep it up-to-date. This database was developed to help members of the EU Credit Sector Federations comply with financial sanctions.
The list is available at www.ec.europa.eu/comm/external_relations/cfsp/sanctions/list/consol-list.htm.
United States Treasury, Office of Foreign Assets Control
The Office of Foreign Assets Control administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers and those engaged in activities related to the proliferation of weapons of mass destruction.
The Office of Foreign Assets Control manages several sanctions lists, including the Specially Designated Nationals List. Reporting entities may consider referring to this list for screening potential and existing customers.
The list is available at www.treas.gov/offices/enforcement/ofac/index.shtml.
Foreign jurisdiction assessment
Financial Action Task Force - mutual evaluation report
FATF regularly conducts mutual evaluations on each member country and produces a report on compliance. This consists of a team of individuals from member countries assessing to what extent a country has an effective system to counter money laundering and highlighting areas where further progress is required.
As the countries being assessed are FATF members, there is an inherent minimum level of AML/CTF legislation in place. However, the mutual evaluation reports provide information on whether each country is currently fully compliant, partially compliant or non-compliant. This may help in determining jurisdiction risk.
The reports are available at www.fatf-gafi.org.
United States Department of State - International Narcotics Control Strategy Report
The US Department of State issues an annual narcotics control report describing the efforts of key countries to attack all aspects of the international drug trade each calendar year. Volume I covers drug and chemical control activities, while volume II covers money laundering and financial crimes. Reporting entities may find this information about the extent of AML/CTF regulations and controls in other jurisdictions useful.
United States Central Intelligence Agency - The World Factbook
The Central Intelligence Agency created The World Factbook as an annual summary and update to the Encyclopaedic National Intelligence Survey. The first unclassified version was published in 1971. The World Factbook contains country profiles, including information on location, climate, population, ethnic groups, literacy, government type, legal system, economy and transnational issues.
Transparency International - Corruption Perceptions Index
Transparency International is a global network including more than 90 locally established national chapters and chapters-in-formation. These bodies fight corruption in the national arena by bringing together relevant representatives from government, civil society, business and the media to promote transparency in elections, public administration, procurement and business. Transparency International's global network of chapters and contacts also uses advocacy campaigns to lobby governments to implement anti-corruption reforms.
The annual Corruption Perceptions Index, first released in 1995, is the best known of Transparency International's tools. It has been widely credited with putting Transparency International and the issue of corruption on the international policy agenda. The Index ranks more than 150 countries by their perceived levels of corruption, as determined by expert assessments and opinion surveys.
The index, which may help reporting entities determine jurisdiction risk, is available at www.transparency.org.
United Nations Office on Drugs and Crime
The Global Programme against Money Laundering was established in 1997 in response to a mandate arising from the 1988 Convention. This convention required member states to criminalise money laundering related to the proceeds of illicit trafficking in drugs and to put legal frameworks in place to facilitate the identification, freezing, seizing and confiscation of the proceeds of crime.
The United Nation Office on Drugs and Crime provides information on money laundering, including the characteristics of an ideal financial haven, at www.unodc.org/unodc/en/money_laundering_haven_features.html.
International Money Laundering Information Network
The United Nations Office on Drugs and Crime is also responsible for the International Money Laundering Information Network, an internet-based network to help government organisations and individuals in the fight against money laundering. It contains a database on legislation and regulation throughout the world (AMLID), an electronic library and a calendar of events related to AML. Certain aspects of the network are secured and therefore not available for public use.
It is available at www.imolin.org/imolin/index.html.
The International Monetary Fund/World Bank - Financial Sector Assessment Program
The International Monetary Fund (IMF) is concerned about the possible consequences of money laundering on its members' economies. Consequences could include risks to the soundness and stability of financial institutions and financial systems and increased volatility of international capital flows. The IMF is contributing to international efforts in several important ways, consistent with its core areas of competence. As a collaborative institution with near universal membership, the IMF is a forum for sharing information, developing common approaches to issues and promoting desirable policies and standards.
All evaluations of financial sector strengths and weaknesses conducted under the Financial Sector Assessment Program or the Offshore Financial Centers Program include an assessment of a jurisdiction's AML/CTF regime. Such assessments, conducted by either the IMF, the World Bank, FATF, or FATF-style regional bodies, measure compliance with the FATF recommendations according to an agreed common methodology.
The results of these assessments may be useful to reporting entities in determining jurisdictional money laundering risk. The Financial Sector Assessment Program and the Offshore Financial Centers Program can be accessed at www.worldbank.org/finance/html/fsap.html and www.imf.org/external/np/ofca/ofca.asp.