AUSTRAC Regulatory Guide

Appendix C:
International AML/CTF organisations and initiatives

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International AML/CTF organisations and initiatives

The following organisations and initiatives have been included in the AUSTRAC Regulatory Guide because they provide valuable reference material for reporting entities developing and implementing AML/CTF control frameworks and in particular, AML/CTF awareness and training programs.

Comments have generally been sourced from the relevant organisation's own publicly available information.


The Financial Action Task Force Recommendations

The Financial Action Task Force (FATF) is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing. (41)
The FATF was established in 1989 by the G7 and Australia was a founding member.

The FATF Forty Recommendations on Anti-Money Laundering and Nine Special Recommendations on Counter Terrorism Financing (the FATF Recommendations) are an important matter of international concern and FATF regards its members as bound to implement them. The FATF Recommendations also form part of broader international financial sector standards and are recognised and used by the IMF and the World Bank when they conduct assessments of a country's financial sector. A report of Australia's assessment under the IMF Financial Sector Assessment Program will be released later this year. On 29 July 2005, the United Nations Security Council endorsed the FATF Recommendation in Resolution 1617.

The 2003 revised FATF Forty Recommendations are recognised as the international AML standard and extended the scope of recommended AML measures to a wider range of industries, including businesses and professions outside the financial sector.

Following the terrorist attacks on the United States of 11 September 2001, the FATF issued eight Special Recommendations on Terrorist Financing. A ninth Special Recommendation was added in 2004. The Special Recommendations build on the measures outlined in the Forty Recommendations and are the recognised international counter‑terrorist financing (CTF) standard.


Asia/Pacific Group on Money Laundering

The Asia/Pacific Group on Money Laundering (APG) is a FATF-style regional body (FSRB). (42) Its purpose is to facilitate the adoption, effective implementation and enforcement of internationally accepted standards against money laundering and terrorism financing, in particular the FATF 40 Recommendations and the 9 Special Recommendations on Terrorist Financing.

Australia is a leading member of the APG and AUSTRAC continues to take an active role in the activities of the group. This includes providing technical assistance to other members and participating in APG money laundering or terrorism financing typologies workshops. These workshops result in thematic money laundering or terrorism financing typologies reports, which are published on the APG website. These documents provide a valuable resource for reporting entities in developing awareness and training materials on money laundering and terrorism financing.


Other FSRBs include:

  • Caribbean Financial Action Task Force (CFATF)
  • Eurasian Group on combating money laundering and financing of terrorism (EAG)
  • Intergovernmental Action Group against Money-Laundering in Africa (GIABA)
  • Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
  • FATF on Money Laundering in South America (GAFISUD)
  • Intergovernmental Action Group against Money-Laundering in Africa (GIABA)
  • Middle East & North Africa Financial Action Task Force (MENAFATF)
  • Council of Europe's action against money laundering and financing of terrorism (OGBS)

 

The Egmont Group of Financial Intelligence Units

At a meeting of financial intelligence unit representatives from a number of countries at the Egmont Arenberg Palace in Brussels in 1995, a decision was taken to establish an informal group to stimulate international cooperation. Now known as the Egmont Group (43), these financial intelligence units meet regularly to find ways to cooperate, especially in the areas of information exchange, training and sharing of expertise. The ongoing development and establishment of financial intelligence units exemplify how countries around the world continue to intensify their efforts in research, analysis and information exchange in order to combat money laundering, terrorism financing and financial crimes.

The Egmont Group has also published a compilation of 100 cases on money laundering. While this document is focused on financial intelligence units, it does provide valuable money laundering and terrorism financing typologies information for reporting entities developing awareness and training materials.


United Nations Office on Drugs and Crime

The United Nations Office on Drugs and Crime's (UNODC) (44) Global Programme against Money Laundering was established in 1997, in response to a 1988 mandate under which member states were required 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. This led to resolution S-20/4 D of 10 June 1998, under which member states were called upon to put a number of specific measures in place, in particular with reference to the activities of financial institutions. The UNODC was specifically requested to continue its work within the framework of the Global Programme against Money Laundering.

Under the United Nations Convention against Transnational Organised Crime, the definition of money laundering was expanded to include the proceeds of all serious crime and it was made a legal requirement for member states to adopt legal and administrative measures to regulate financial activities and to facilitate the detection, investigation and prosecution of money laundering.

17-JAN-2012

European Union

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:

  • identify and verify the identity of their customers and/or their beneficial owners and to monitor transactions with their customers, while taking into account a risk-based approach
  • report suspicions on money laundering or terrorism financing to the national authorities (normally the financial intelligence unit)
  • take supporting measures, such as record keeping, training of personnel and the establishment of internal policies and procedures.

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)


Basel Committee on Banking Supervision

In October 2001 the Bank for International Settlements, through its Basel Committee on Banking Supervision, issued a white paper, Customer due diligence for banks. (46) This document addresses a number of KYC issues and includes excerpts from Core Principles Methodology - Principle 15, which states:

Banking supervisors must determine that banks have adequate policies, practices and procedures in place, including strict "know-your-customer" rules that promote high ethical and professional standards in the financial sector and prevent the bank being used, intentionally or unintentionally, by criminal elements.

While the white paper is aimed at the banking sector, the principles are relevant to all parties that have customer identification and verification obligations under the FTR Act and/or the AML/CTF Act.


The Wolfsberg Group

The Wolfsberg Group (47) is an association of 12 global banks that aims to develop financial services industry standards and related products, for KYC as well as AML/CTF policies. The group came together in 2000, in the company of representatives of Transparency International, at the Chateau Wolfsberg in north-eastern Switzerland, to work on drafting AML guidelines for private banking.

The Wolfsberg Anti-Money Laundering Principles for Private Banking were subsequently published in October 2000 (and revised in May 2002). Since that time, the Wolfsberg Group has developed and published a number of documents including:

Statement on the Financing of Terrorism

AML Principles for Correspondent Banking

Statement on Monitoring Screening and Searching

Statement against Corruption

Guidance on a Risk Based Approach for Managing ML Risks

AML Guidance for Mutual Funds and Other Pooled Investment Vehicles

FAQs on issues in the context of investment and commercial banking

FAQs on correspondent banking

FAQs on beneficial ownership, politically exposed persons and intermediaries.

Additionally, in collaboration with Bankers Almanac, the Wolfsberg Group has developed a model aimed at simplifying correspondent banking due diligence. The model can be viewed at www.bankersalmanac.com.


Examples of foreign government AML/CTF administrators

The Financial Crimes Enforcement Network (FinCEN) is the delegated administrator of the Banking Secrecy Act (BSA) in the US. FinCEN was involved in releasing the Federal Financial Institutions Examination Council's BSA/AML Examination Manual, which provides AML/CTF guidance. For more information visit www.fincen.gov

The Financial Services Authority (FSA) is the regulator for financial services in the United Kingdom. The FSA has released several publications that may be of interest to reporting entities, including the 2000 publication New Regulator for the New Millennium, which outlines the FSA's regulatory approach and can be found at www.fsa.gov.uk and the FSA's 2007 strategy on combating money laundering and terrorism financing, which can be found at www.hm-treasury.gov.uk/documents/financial_services/money/fin_money_index.cfm.

The Hong Kong Monetary Authority (HKMA) is the government authority in Hong Kong responsible for maintaining monetary and banking stability, including AML regulation.
The HKMA has published a Supervisory Policy Manual, which is available on its website at www.info.gov.hk/hkma/index.htm.

30-OCT-2009

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.

General resources

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.

14-MAR-2014


161 Further information can be found on the FATF's website www.fatf-gafi.org.

162 Further information can be found on the APG's website www.apgml.org.

163 Further information can be found on the Egmont Group website www.egmontgroup.org.

164 Further information can be found on the United Nations Office on Drugs and Crime website www.unodc.org.

165 Further information can be sourced from the European Union online portal www.europa.eu.

166 Further details and related materials can be found at the Bank for International Settlements website www.bis.org.

167 Further information can be found at the Wolfsberg Group website www.wolfsberg-principles.com.
 
 

04-NOV-2009

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