The Financial Action Task Force(FATF) is an international financial crime watchdog who oversees money laundering and terrorist financing. FATF establishes international standards for preventing money laundering and terrorist financing and reviews member states that fell short of international anti-money laundering standards on an ongoing basis.
Let’s take a look at what’s been discussed at the FATF Plenary.
1. FATF evaluation of countries: Jurisdictions with increased money laundering risks
At the Plenary in February 2020, FATF announced a new list of jurisdiction subject to its monitoring. With seven countries being newly added to the list, there are a total of eighteen countries with strategic deficiencies: Albania, the Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen, and Zimbabwe.
Only one country has escaped the blacklisting of FATF. Trinidad and Tobago has made significant progress in compliance with the requirements of FATF and is no longer subject to FATF monitoring. Counter-measures are maintained for the two high-risk sanctioned countries: Iran and North Korea.
2. Mitigating the money laundering and terrorist financing risks of virtual assets
The FATF published amended Recommendations last June in which it laid out regulatory requirements for cryptocurrency exchanges and other virtual asset service providers. The implementation of the FATF’s new requirements will be reviewed at the upcoming FATF Plenary in June.
[Key points of FATF review]
- Has the Member state taken any legislative measures to implement the amended FATF international standards?
- Have Virtual Asset Service Providers demonstrated efforts to prevent money laundering and terrorist financing in an attempt to comply with the FATF international standards?
- Are there potential changes in risk, market structure, and ML/TF types in the virtual asset sector?
3. Adoption of digital identity guidance
At the Plenary, FATF issued new guidance on digital identity. Digital identity refers to electronic means of proving one’s official identity in the digital environment. The guidelines aim to help member states understand how digital ID systems could meet FATF’s customer due diligence and AML requirements. FATF recommended national financial agencies worldwide note this guidance to build a risk-based digital ID system.
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