On the 24th of February 2023 the second Plenary of the FATF was concluded with the following outcomes:
FATF Statement on the Russian Federation
Following the statements issued since March 2022, the FATF Plenary has suspended the membership of the Russian Federation. The FATF reiterates that all jurisdictions should be vigilant to current and emerging risks from the circumvention of measures taken against the Russian Federation in order to protect the international financial system.
Compliance with the FATF Standards
The FATF discussed and adopted the mutual evaluation report of Indonesia, an observer to the FATF since June 2018, and Gulf Cooperation Council Member Qatar. The FATF will publish the Indonesia and Qatar reports by May after the FATF’s quality and consistency review is completed.
Jurisdictions under Increased Monitoring
Jurisdictions under increased monitoring are actively working with the FATF to address the strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.
New jurisdictions subject to increased monitoring are South Africa and Nigeria.
Jurisdictions under Increased Monitoring (the ‘Grey List’):
- Burkina Faso
- Cayman Islands
- Democratic Republic of Congo
- South Africa
- South Sudan
- United Arab Emirates
Jurisdictions No Longer Subject to Increased Monitoring by the FATF
Jurisdictions subject to a call for action
FATF identifies countries or jurisdictions with serious strategic deficiencies to counter money laundering, terrorist financing, and proliferation financing, which are subject to a call for action to protect the international financial system.
No new countries/jurisdictions have been added to this list. Democratic People’s Republic of Korea, Iran and Myanmar have remained on this list.
5th Round of FATF Mutual Evaluations
In preparation for the next round of mutual evaluations that will commence in 2024, FATF delegations agreed on the sequence of countries to be assessed during the first year of the assessment cycle. It was agreed that the 5th round of mutual evaluations would take six years assessing approximately seven countries each year.
The FATF also discussed the preparation by the FSRBs for the next round of mutual evaluations.
Strategic initiatives – Beneficial ownership
The FATF has made it a priority to improve the transparency of beneficial ownership, and to prevent criminals, the corrupt and sanctions evaders from hiding their illegal activities and assets behind anonymous shell companies, other businesses or legal arrangements.
Beneficial Ownership of legal persons:
The FATF Plenary has finalized a guidance document which will help countries implement the revised requirements of beneficial ownership information being held by a public authority or body functioning as a beneficial ownership registry (Recommendation 24), including assessing and mitigating the money laundering and terrorist financing risks associated with foreign companies to which their countries are exposed.
The guidance will be published in March 2023.
Beneficial Ownership of legal arrangements:
The Plenary also agreed on enhancements to Recommendation 25 on legal arrangements to bring its requirements broadly in line with those for Recommendation 24 on legal persons to ensure a balanced and coherent set of FATF standards on beneficial ownership. FATF will also start working on a guidance document to help countries implement the revised requirements of Recommendation 25.
Disrupting the financial flows from ransomware
The FATF has completed the research on disrupting the financial flows from ransomware attacks. The report will be published in March 2023 and shall include a list of risk indicators that can help public and private sector entities identify suspicious activities related to ransomware.
Implementation of FATF requirements for virtual assets and virtual asset service providers
The Plenary has agreed on a roadmap to strengthen implementation of FATF Standards on virtual assets and virtual asset service providers (Recommendation 15), which will include a stock take of current levels of implementation across the global network.
In the first half of 2024, the FATF will report on steps FATF members and FSRB countries with materially important virtual asset activity have taken to regulate and supervise virtual asset service providers.
Money Laundering and Terrorist Financing in the Art and Antiquities Markets
The FATF has finalized a report, published on 27 February 2023, that explores the link between money laundering and art and antiquities.
The report includes a list of risk indicators that can help public and private sector entities identify suspicious activities in the art and antiquities markets, and also highlights the importance of rapidly identifying and tracing cultural objects involved in money laundering or terrorist financing. The report includes some good practices that countries have taken to address the challenges they face, including the establishment of specialized units and access to relevant databases and cooperation with experts and archaeologists to help identify, trace, investigate and repatriate cultural objects.
The Plenary has also agreed to undertake new projects on money laundering and terrorist financing related to cyber-enabled fraud and on the use of crowdfunding for terrorist financing.
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