Keeping money laundering under check

Mar 17, 2005

The Financial Action Task Force on Money Laundering is a multi-disciplinary body that brings together the policy-making power of legal, financial and law enforcement experts from its members, who were originally the G7, but are now joined by many other countries.

The Financial Action Task Force on Money Laundering is a multi-disciplinary body that brings together the policy-making power of legal, financial and law enforcement experts from its members, who were originally the G7, but are now joined by many other countries. FATF monitors members’ progress in implementing anti-money laundering measures, reviews and reports on laundering trends, techniques and counter-measures. In 1990, FATF come up with 40 recommendations for states to adopt against money laundering. Also reviewed in 1996, the recommendations are used as a yardstick to measure whether countries are cooperating or not, against money laundering. The 40 recommendations are:
- Each country should endeavor to ratify and implement international anti-money laundering conventions.
- Financial institution secrecy laws should be conceived so as not to inhibit implementation of these recommendations.
- An effective money laundering enforcement programme should include increased multilateral cooperation and mutual regal assistance in money laundering investigations and prosecutions and extradition in money laundering cases, where possible.
- Each country should take measures to criminalise money laundering.
- More knowledge about money laundering, if not reported, should constitute an offence.
- Corporations that are used in money laundering deals (such as banks) should also be held liable.
- Properties and other proceeds acquired through laundered money should be confiscated.
- Non-banking institutions (such as forex bureaus) should be held responsible if they facilitate money laundering.
- Financial institutions should not keep anonymous accounts or accounts in fictitious names.
- Financial institutions should endeavor to establish the true identity of all its customers.
- Financial institutions should maintain all their transaction records for at least five years to be able to trace money laundering trends.
- Countries should pay attention to new technologies of money transfers.
- Financial institutions should pay special attention to all complex, unusual large transaction and treat them as suspicious.
- Financial institutions should report all suspicious transactions to relevant authorities.
- Financial institutions should not be held liable by the confidentiality laws if they reveal suspicious transactions.
- Financial institutions should not warn customers about suspicious transactions on their accounts before informing relevant authorities.
- Financial institutions reporting their suspicions should comply with instructions from the competent authorities.
- Financial institutions should develop programmes against money laundering.

International financial institutions with branches in countries with no or insufficient anti-money laundering measures should endeavor to apply these measures there.
- Feasible measures to detect and monitor cross-border money transfers should be implemented.
The recommendations also enumerate the role of regulatory and other administrative authorities in implementing anti-money laundering measures. They also include measures to strengthen international co-operation, which involve information exchange on suspicious transaction; and enumerate other forms of cooperation which include basis and means for cooperation in confiscation of proceeds, mutual assistance and extradition, urging countries to assist each other to ensure that suspected money launders are brought to book.
Using the above criteria, FATF listed the following countries as non-cooperative: Bahamas, Cayman Islands, Cook Islands, Dominica, Lebanon, Israel, Liechtenstein, Others are Marshall Islands, Nauru, Niue, Panama, Russia, Kitts Philippines, and Nevis, Vincent and Grenadines.
Ends

(adsbygoogle = window.adsbygoogle || []).push({});