The FATF held its plenary meeting last week in Paris. It began by expressing its concerns about the situation in Ukraine and the impact on the risk of money laundering, terrorist financing and proliferation financing, as well as on the integrity of the financial system, the wider economy and security. It will respond, as appropriate, to new and emerging threats and risks of importance to the integrity of financial systems.
As usual, the FATF has reviewed its list of strategic AML/CFT deficient jurisdictions, i.e. jurisdictions subject to enhanced scrutiny and high risk jurisdictions subject to a call to action. The list now welcomes a new member: the United Arab Emirates. Zimbabwe is no longer subject to the FATF enhanced scrutiny process. The list of countries and potential new entrants are always given due consideration in the risk analysis and procedures of financial institutions.
The FATF has been very active with regard to its current and future policy initiatives, including the announcement that:
- It has finalised and approved its methodology for assessing countries' measures to combat money laundering and terrorist financing, as well as the FATF procedures for the fifth round of mutual evaluations. The latter will focus on risk and context, to ensure that countries prioritise their efforts in areas of greatest risk, and on designated non-financial businesses and professions. The on-site visit to Luxembourg is expected to take place in November 2022.
- It agreed to revise its Recommendation 24 on beneficial ownership. The Plenary endorses the multi-dimensional approach to the collection of information on beneficial ownership, the measures to prevent the misuse of bearer shares and nominee schemes, the risk-based approach and the access to relevant and up-to-date information.
- With regard to the FATF project on "unintended consequences resulting from the incorrect implementation of the FATF Standards" (including de-risking), the FATF working groups will refine how the FATF can mitigate the unintended consequences of the FATF standards without diminishing the effectiveness of global AML/CFT measures. The FATF will continue to engage with external stakeholders as this work develops.
The next plenary meeting of the FATF and its Working Groups will take place in June.
By Julien Leroy, Senior Legal Adviser