FATF advances efforts to counter AML and terrorist financing

Included in the new initiatives are the protection of non-profit organisations from misuse, the overall strengthening of asset recovery, combating terrorist financing, as well as addressing the illicit finance risks that are associated with citizenship and residency by investment programs. The overall focus will be set on safeguarding the global financing system and optimising the collective efforts to address financial crime. 

According to the press release, FATF members adopted several revisions to its asset recovery standards, aiming to strengthen the products available to law enforcement, criminal justice system, and asset recovery agencies, with the aim to target and recover criminal proceeds and improve mutual legal assistance. 

In addition, FATF members also adopted a report on how multiple terrorist groups use crowdfunding techniques to raise money for their attacks. At the same time, the organisation adopted a report with information on the misuse of citizenship and residency by investment (CBI/RBI) programs, in which it highlighted the way corrupt actors, tax evaders, and other criminals and fraudsters exploited these programs in order to disguise their identity, open banks account for shell companies, as well as conceal where they owe taxes or other liabilities from FIs by using new identification data and documents. 

The Financial Action Task Force also revised Recommendation 8, the standard related to the protection of NPOs from misuse by terrorist financiers. FATF members sent draft guidance to implement the revised standards on beneficial ownership of trust, as well as similar legal arrangements. 

The organisation is set to undertake work relating to countries’ compliance with Recommendation 5, which will require them to criminalise terrorist financing. 

FATF’s recent developments

France-based global money laundering and terrorist financing watchdog Financial Action Task Force had multiple developments in the last couple of months, covering several different geographic areas around the world. 

In June 2023, FATF added Croatia to its `grey list`, making the country the sole EU member on the organisation’s list. Alongside Croatia, the FATF also included Cameroon and Vietnam on the list. As per the information published in the official press release, Croatia’s inclusion was based on shortcomings in its efforts to combat and detect money laundering and terrorism financing. At the same time, Croatia was committed to implementing an action plan that aimed to ensure its compliance. 

Among other action points that were listed in the plan, the firm focused on the process of evaluating the potential hazards linked to the overall misuse of legal entities, as well as legal arrangements. In addition, the company was set on the usage of cash within the real estate industry. 

Earlier in February 2023, the Financial Action Task Force announced its plan the strengthen the standards for the Travel Rules, aiming to make countries accommodate safer virtual asset solutions. The global anti-money laundering watchdog called out for improved adoption of crypto assets, as well as the procedure of prioritising the need of countries to curb the flow of illegitimate funds while using cryptocurrencies. 

The roadmap raised awareness of improved virtual asset regulation and was published in a report on FATF, and it applied to all member-states and FSRBs. Furthermore, it was set to allow them to apply the Travel Rule and other anti-money laundering recommendations to crypto as well.