The FATF Plenary meeting was held in Paris on October 17-19, 2018.
1. Operations and Streamlining the FATF
Strengthening the governance and accountability of the FATF
FATF Members agreed to strengthen FATF governance and accountability through increasing the engagement of ministers and senior officials of FATF members.
Status of expansion of membership
The FATF adopted the assessment of the Kingdom of Saudi Arabia’s AML/CFT legal framework in June 2018. Saudi Arabia has prepared an accession action plan that will be reviewed by FATF.
Following the discussion of Israel’s mutual evaluation, the report needs to undergo a quality and consistency review before publication. If Israel’s assessment meets the FATF’s membership requirement, the country will become an official member of the FATF at the publication of this report.
2. Major Strategic Initiatives
Combating the financing of terrorism
During this Plenary meeting, delegates heard an update on the financing methods used by ISIL, Al Qaeda and affiliates, and released a public statement on the evolution of these terrorist financing strategies since the FATF’s 2015 report.
The Plenary also approved a report on disruption of the financial flows on which terrorists rely.
Combating the financing of terrorism remains a top priority for the FATF under the US Presidency, and the Plenary agreed to focus its work on three areas:
- Implementation, to ensure that countries can prosecute and convict terrorist financiers, FATF will prioritise work on the effective investigation and prosecution of this crime.
- Guidance, to help countries better identify and understand the terrorist financing risks.
- Training, to build knowledge on terrorist financing risks, asset freezing, information sharing and disrupting terrorist financing.
Amendments to the FATF Recommendations to address the regulation of virtual assets
The FATF Plenary discussed and adopted amendments to the FATF Standards to respond to the increasing use of virtual assets for money laundering and terrorist financing and at the request of the G20 Ministers. This includes an amendment to the FATF Recommendations and glossary to clarify to which businesses and activities the FATF requirements apply in the case of virtual assets. Exchanges and wallet providers will be required to implement AML/CFT controls, and to be licensed or registered and supervised or monitored by national authorities.
As a next step, the FATF will update its Guidance to assist countries with the full and effective implementation of these requirements of the FATF Standards.
Future work on proliferation financing
The FATF has started a project that will consider the feasibility of expanding the FATF Recommendations applicable to proliferation financing as well as enhancing implementation of existing obligations. The project will consider amendments in these areas within the framework of FATF and UN mandates. The project will also consider developing best practices on combating proliferation financing, and consider how such best practices can help countries strengthen implementation of the existing FATF requirements.
3. Mutual Evaluations and Follow-Up Reviews, and Compliance
Mutual evaluation reports of Israel and the United Kingdom
The Plenary discussed the mutual evaluation reports of Israel and the United Kingdom with respect to the key findings, priority actions and recommendations regarding each country’s AML/CFT regime. The mutual evaluation reports are expected to be published by December 2018.
Follow-up reports for the mutual evaluations of Austria, Denmark and Malaysia.
The Plenary discussed the progress that Austria, Denmark and Malaysia have made since their mutual evaluation reports were adopted (in 2015 for Austria and Malaysia and in 2017 for Denmark). For each country, the FATF Plenary agreed to re-rate a number of FATF Recommendations to reflect the country’s current level of technical compliance.
New jurisdictions subject to monitoring
The FATF has identified the Bahamas, Botswana and Ghana as jurisdictions with strategic AML/CFT deficiencies. Each country has developed an action plan with the FATF to address the most serious deficiencies.
Monitoring Iran’s actions to address deficiencies in its AML/CFT measures
The FATF decided at its meeting to continue the suspension of counter-measures. However, the FATF expresses its disappointment that part of the Action Plan remains outstanding and expects Iran to proceed swiftly in the reform path by completing the necessary AML/CFT reforms. By February 2019, the FATF expects Iran to have brought into force the necessary legislation in line with FATF standards, or the FATF will take further steps to protect against the risks emanating from deficiencies in Iran’s AML/CFT regime.
4. Other Strategic Initiatives
Adoption of a report to the G20 Leaders’ Summit
The Plenary discussed the FATF’s report to the G20 Leaders. This report sets out FATF’s progress on its work programme to respond to the increasing use of virtual assets for ML/TF, including the adoption of revisions to its standards to clarify how they apply to virtual assets.