The Financial Action Task Force (FATF) conducted their third and final annual plenary at their headquarters in Paris in October. The meeting took place under the two-year Singapore regime of T. Raja Kumar, where 200 jurisdictions of the global members participated. The delegations discussed the advanced techniques to combat money laundering and terrorist financing. In the FATF plenary, members also emphasized the deficiencies of member anti-money laundering (AML) regulations. They also discussed the possible measures to strengthen global AML regulations. The plenary concluded by adopting the FATF’s new recommendations and standards. Understand the FATF and what regulations have so far been updated by the members in 2023.
FATF Definition and Brief History
The international watchdog was established in 1989 to combat money laundering and terrorist financing. In the initial phase, the FATF included the G7 countries and the European Commission, including eight other countries. The FATF was responsible for designing rigid regulations and AML measures needed to secure the integrity of the global economy. Since then, FATF continuously monitored the trend of money laundering and upgraded the rules according to the regime to prevent scammer’s latest techniques. It also creates a secure environment where countries implement adequate measures to disrupt illicit financial flows and criminal activities. Strict protocols have been established to identify criminals who seek out breakdown measures to proceed with money laundering. In order to help nations and the private sector take the appropriate precautions to mitigate the risks associated with money laundering, terrorism financing, and proliferation finance, FATF also releases reports on an ongoing basis.
Outcomes of the FATF February and June 2023 Plenary Meetings
The plenary is the decision-making body of the FATF. They create legislation and add members to high-risk countries and jurisdictions under increased monitoring regimes. The FATF plenary discussion is arranged three times a year. Usually, they held meetings in February, June, and October. After the meeting, FATF published decisions that were taken by the plenary. On the February 24th, 2023 first plenary meeting was arranged in the paris under the supervision of Singapore. In this meeting, FATF delegations overview the Indonesian government’s request to become a full member of the international watchdog. They also discussed Qatar’s latest compliance progress with AML and counter-terrorism financing (CFT). Additionally, the plenary noted Cambodia and Morocco’s achievement in compliance with international standards AML/CFT. The FATF stated each country has overcome its AML program deficiencies to meet its commitments.
The second plenary meeting was arranged for 21st to 23rd June under the Singapore presidency. The FATF delegations discussed Luxembourg’s mutual evaluation report, which evaluated the impact of that nation’s measures to prevent money laundering and terrorism funding as well as its adherence to FATF recommendations. It was reviewed and approved by the FATF. The June plenary meeting also discussed the obligations and mutual countries’ follow-up on these laws to operate virtual asset service providers (VASPs). The delegation’s stress on implementing cryptocurrency regulations globally is relatively poor compared to AML compliance with the physical banking system.
Highlights of FATF Plenary 2023
In a recent FATF plenary meeting, delegates from more than 200 countries and global groups gathered, which took place from 25th to 27th October 2023, to talk about important topics such as money laundering, terrorist financing, and financing of proliferation. Below, we have summarized the key points discussed in the final FATF plenary meeting of 2023:
Introducing Indonesia as a 40th FATF Member
In the October 2023 plenary, FATF welcomed Indonesia as a 40th member of the international watchdog. It will enhance the global investors’ trust in Indonesian financial stability and boost their country’s economy. The Indonesian Financial Transactions Reports and Analysis Center (PPATK), Ivan Yustiavandana, stated that FATF membership will increase the country’s economic credibility and create a positive impact globally, which will lead to economic growth through international investors.
Enhanced Asset Recovery Obligations
Internationally, through the current asset recovery regulations, only a few percent of the assets created by illicit activity are recovered by nations worldwide, encouraging further unlawful conduct. The FATF delegations will amend regulations and design an effective plan for asset recovery from criminals. The draft of these latest regulations will be published in the 2024 plenary meeting. Revised guidelines will enhance the cultural shift and make asset recovery a core of the AML compliance process.
Reduce the Abuse of Non-Profit Organizations for Terrorist Financing
One of the main topics discussed in this plenary meeting is the relationship between the NPOs and terrorist organizations. Most crowdfunding is used in mass weaponization, which is used in terrorist attacks. Terrorist groups utilized these techniques to collect money and then misused that funding. The FATF finalized a report detailing how these groups misuse fundraising platforms on social media to solicit funds globally.
Prevent Illicit Money Flows From Cyberattacks
The FATF highlighted the rise in fraud made possible by technology and its contribution to creating illegal financial flows. Primarily, they discussed money laundering through virtual asset service providers (VASPs). The FATF demanded increased collaboration to address cyber-fraud weaknesses, improved worldwide cooperation on cybercrime probes, and improved exchange of cyber-related data on finances to halt cyberattacks.
Deficiencies in Citizenships and Residency Programs
Citizenships and Residency by Investment (CBI/RBI) facilitate financial criminals to evade money laundering, tax evasion, and jurisdictions. However, this scheme is convenient for the countries to boost their economy and create a positive impact, but FATF claimed it became a multi-billion dollar business in a report. A joint project by the FATF and the Organisation for Economic Co-operation and Development (OECD) highlights how criminals can exploit CBI programs and proposes measures to manage these risks.