Chapter

Appendix VI. Methodology for Assessing Compliance with Anti-Money Laundering and Combating the Financing of Terrorism Standard1

Author(s):
International Monetary Fund
Published Date:
August 2003
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2.1 CRIMINAL JUSTICE MEASURES AND INTERNATIONAL CO-OPERATION

I. Criminalisation of ML and FT

1. The jurisdiction should have ratified and fully implemented the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 (Vienna Convention), the UN International Convention for the Suppression of the Financing of Terrorism 1999, and the UN Convention Against Transnational Organized Crime 2000 (Palermo Convention), as well as other regional AML/CFT conventions (e.g. the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime), where applicable. Countries should also immediately implement the United Nations resolutions relating to the prevention and suppression of the financing of terrorist acts, particularly United Nations Security Council Resolution 1373. (see FATF 1, 35, I).

2. Each jurisdiction should criminalise money laundering on the basis of the Palermo and Vienna Conventions (see FATF 4).

  • 2.1 The offence of ML may extend not only to those persons who have committed ML, but also to persons who have committed both the laundering and the predicate offence.

  • 2.2 It should not be necessary that a person be convicted of a predicate offence to establish that assets were the proceeds of a predicate offence and to convict any person of laundering such proceeds.

  • 2.3 Predicate offences for ML should extend to all serious offences, including drug trafficking and FT offences. (see FATF 4, II) It is possible to identify ML predicate offences by list or generically, including by length of penalty.

  • 2.4 The offence of ML should extend to any type of property that directly or indirectly represents the proceeds of crime.

  • 2.5 The predicate offences for ML should extend to conduct that occurred in another country, and which would have constituted a predicate offence had it occurred domestically.

3. FT should be criminalised on the basis of the Convention for the Suppression of the Financing of Terrorism (see FATF II).

  • 3.1 The FT offence should also apply when the terrorists or terrorist organisations are located in another jurisdiction or when the terrorist acts take place in another jurisdiction (see FATF II).

4. The offences of ML and FT should apply at least to those individuals or legal entities that knowingly engage in ML or FT activity. Laws should provide that the intentional element of the offences of ML and FT may be inferred from objective factual circumstances. (see FATF 5).

  • 4.1 If permissible under the jurisdiction’s legal system, the offences of ML and FT should extend to legal entities (e.g., companies, foundations) (see FATF 6).

5. Laws should provide for effective, proportionate and dissuasive criminal, civil or administrative sanctions for ML and FT.

6. Legal means and resources should be adequate to enable an effective implementation of ML and FT laws.

II. Confiscation of proceeds of crime or property used to finance terrorism

7. Laws should provide for the confiscation of laundered property2, proceeds from, and instrumentalities used in or intended for use in the commission of any ML or predicate offence, and property of corresponding value. Laws should provide for the confiscation of property that is the proceeds of, or used in, or intended or allocated for use in FT. (see FATF 7, III).

  • 7.1 Laws and other measures should provide for the freezing and/or seizing of property that is, or may become, subject to confiscation. Such laws or measures may provide that the initial application to freeze or seize property can be made on an ex parte basis.

  • 7.2 If permissible under the jurisdiction’s legal system, States should consider laws that provide for the confiscation of the property of organisations that are found to be primarily criminal in nature (i.e. organisations whose principal function is to perform or assist in the performance of illegal activities).

  • 7.3 Laws should provide for confiscation of property of corresponding value, in the event that property that is subject to confiscation is not available (see FATF 7, III).

  • 7.4 If permissible under the jurisdiction’s legal system, jurisdictions should consider laws which allow for confiscation without conviction (civil forfeiture), in addition to the system of confiscation triggered by a criminal conviction.

8. Law enforcement agencies, the FIU or other competent authorities should be given adequate powers to identify and trace property that is, or may become, subject to confiscation or is suspected of being the proceeds of crime or used for FT (see FATF 7, III).

9. Laws should provide protections for the rights of bona fide third parties. Such protections should be consistent with the standards provided in the Palermo Convention and Strasbourg Convention, where applicable (see FATF 7).

10. In addition to confiscation and criminal sanctions, if permissible under the jurisdiction’s legal system, there should be authority to void contracts or render them unenforceable where parties to the contract knew or should have known that as a result of the contract the authorities would be prejudiced in their ability to recover financial claims resulting from the operation of AML/CFT laws (see FATF 7).

11. Authorities should keep statistics on the amounts of property frozen, seized, and confiscated relating to ML, the predicate offences and FT (see FATF 7, 38)

12. Training should be provided to administrative, investigative, prosecutorial, and judicial authorities for enforcing laws related to the freezing, seizure, and confiscation of property.

13. Laws and other measures should provide for freezing without delay of funds or other property of terrorists, those who finance terrorism and terrorist organisations, in accordance with the United Nations resolutions relating to the prevention and suppression of FT (e.g., U.N.SCRs 1267, 1269, 1390) (see FATF III)

  • 13.1 Authorities should keep statistics on the amounts of property frozen relating to FT and the number of individuals or entities whose property have been frozen.

14. Competent authorities should have the power to identify and freeze the property of suspected terrorists, those who finance terrorism and terrorist organisations, even where the names of such persons do not appear on the list(s) maintained by the relevant committees of the U.N. Security Council.

15. If permissible under the jurisdiction’s legal system, the jurisdiction should consider establishing an asset forfeiture fund into which all or a portion of confiscated property will be deposited and will be used in the management of seized and confiscated property, as well as for law enforcement, health, education or other appropriate purposes (see Interpretative Note to FATF 38).

16. If permissible under the jurisdiction’s legal system, the jurisdiction should consider asset sharing mechanisms to enable it to share confiscated property with other jurisdictions, particularly when confiscation is directly or indirectly the result of co-ordinated law enforcement actions. Unless otherwise agreed, such reciprocal sharing arrangements should not impose conditions on jurisdictions receiving the shared property. (see FATF 38, Interpretative Note to FATF 38).

[…]

V. International Co-operation

34. There should be laws and procedures allowing the provision of the widest possible range of mutual legal assistance in AML/CFT matters, whether requiring the use of compulsory measures or not, and including the production of records by financial institutions and other persons, the search of persons and premises, seizure and obtaining of evidence for use in AML/CFT investigations and prosecutions and in related actions in foreign jurisdictions (see FATF 3, 32, 34, 36, 37, 38, 40, I and V).

  • 34.1 There should be appropriate laws and procedures to provide effective mutual legal assistance in AML/CFT investigations or proceedings where the requesting jurisdiction is seeking: (i) the production or seizure of information, documents, or evidence (including financial records) from financial institutions, other entities, or natural persons; searches of financial institutions, other entities, and domiciles; (ii) the taking of witnesses’ statements; and (iii) identification, freezing, seizure, or confiscation of assets laundered or intended to be laundered, the proceeds of ML and assets used for or intended to be used for FT, as well as the instrumentalities of such offences, and assets of corresponding value (see FATF 34, 37, 38, V).

  • 34.2 Assistance should be provided in investigations and proceedings where persons have committed both the money laundering and the predicate offence as well as in investigations and proceedings where persons have committed the money laundering offence only (see FATF 33).

35. The provision of mutual legal assistance should be used to the fullest extent possible to give effect to requests for assistance from foreign authorities relative to ML and predicate offence investigations, prosecutions, confiscations, extraditions, and other actions and proceedings.

  • 35.1 To the greatest extent possible, differing standards in the requesting and in the requested jurisdiction concerning the intentional elements of the offence under domestic law should not affect the ability to provide mutual legal assistance (see FATF 33).

  • 35.2 The authorities should give timely and effective follow up to requests for mutual legal assistance (see FATF 37, 38).

  • 35.3 Authorities should keep statistics on all mutual legal assistance and other requests that are made or received, relating to ML, the predicate offences and FT, including details of the nature and result of the request.

36. International co-operation should be supported through the use of conventions, treaties, agreements or arrangements, whether bilateral or multilateral (see FATF 3, 34).

37. There should be arrangements in place for law enforcement authorities to exchange information regarding the subjects of investigations with their international counterparts, based on agreements in force and by other mechanisms for co-operation. The authorities should record the number, source, and purpose of the request for such information exchange, as well as its resolution (see FATF 34, V).

38. Co-operative investigations, including controlled delivery, with other countries’ appropriate competent authorities should be authorised, provided that adequate safeguards are in place e.g. a need for judicial authorisation (see FATF 3, 36).

39. There should be arrangements for co-ordinating seizure and forfeiture actions, including, where permissible, authorising the sharing of confiscated assets with other countries when confiscation is directly or indirectly a result of co-ordinated law enforcement actions (see FATF 38, 39).

40. There should be laws and procedures to extradite individuals charged with a ML or FT offence or related offences (see FATF 3, 40, V).

  • 40.1 Where a jurisdiction does not extradite its own nationals pursuant to extradition requests, that jurisdiction should, at the request of the jurisdiction seeking extradition, and in accordance with the general principles relating to mutual assistance, submit the case without undue delay to its competent authorities for the purpose of prosecution of the offences set forth in the request.

41. Countries should also take all possible measures to ensure that they do not provide safe havens for individuals charged with the financing of terrorism, terrorist acts or terrorist organisations, and should have procedures in place to extradite, where possible, such individuals. (FATF V).

42. Relevant authorities should be provided adequate financial, human or technical resources to ensure adequate oversight and to conduct investigations and to respond promptly and fully to requests for assistance received from other countries.

Sections related to the financing of terrorism, wherein all italics are in the original. Endorsed by the International Monetary Fund, the World Bank, and the Financial Action Task Force. For complete text, see http://www.imf.org/external/np/mae/aml/2002/eng/110802.pdf.

Property should include property that is income or profit derived from the proceeds of crime [footnote in original].

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