Preliminary Draft (June 7, 2002 version)
Communique of the International Monetary and Financial Committee of the Board of Governors of the InternationalMonetary Fund(April 20, 2002).
The FATF Working Group will meet June 18, 2002.
For a discussion of the ROSC principles see, Summing Up by the Acting Chairman Assessing the Implementation of Standards—A Review of Experience and Next Steps, SUR/01/13 (2/9/01), Executive Board Meeting 01/10, January 29, 2001. Assessing the Implementation of Standards—A Review of Experience and Next Steps, SecM2001-0032, January 17, 2001
OFCs typically assess compliance of the trust company service provider sector. A few of the AML/CFT assessments in FSAPs using Annex I have also reviewed the implementation of the regulatory framework in the case of exchange bureaus.
They would have to observe an approach that was uniform, including using the same methodology for all assessments (the FATF’s NCCT process uses a different methodology from those of mutual evaluations), voluntary (the F ATF NCCT process is mandatory and can result in the imposition of sanctions) and cooperative, including not using a pass-fail approach (the FATF NCCT process labels jurisdictions either “cooperative” or “non-cooperative”) and giving the jurisdiction the opportunity to publish a right of reply alongside the ROSC (the FATF NCCT process does not allow such a right of reply).
See Fund and Bank Methodology for Assessing Legal, Institutional, and Supervisory Aspects of Anti-Money Laundering and Combating the Financing of Terrorism (SM/02/40, February 8, 2002), and SECM2002-0006 January 22, 2002 Proposed Action Plan for Enhancing the Bank’s Ability to Respond to Clients in Combating Money Laundering and the Financing of Terrorism.
In these cases the FIU or general civil or criminal justice system is typically charged with implementation.
Some regions such as West and Central Africa, the Middle East, and Central Asia are not covered by FSRBs.
Under Artide X of Agreements, the Fund must cooperate with any general international organization and with public organization having specialized responsibilities in related fields (see Annex to Selected Decisions). Outside experts from cooperating institutions routinely participate in FSAP exercises, including for assessments of standards and codes. Use of outside experts is necessitated by a wide range of expertise required for the FSAP and assessment of standards and codes within the FSAP. At the time of the latest FSAP review, the number of cooperating institutions including central banks, supervisory and standard setting agencies providing experts exceeded 50. See staff report SM/00/263: Financial Sector Assessment Program (FSAP)—A Review: Lessons from the Pilot and Issues Going Forward, section “Involvement of outside experts”, pp. 23-25.
For example, in the cases of misreporting in Russia (1999) and Ukraine (2000), the Fund relied on external auditors’ reviews (PriceWaterhouseCoopers) of central banks’ accounts.
While because of the way in which staff undertakes AML/CFT assessments it is unlikely information on individual cases would come to light (assessments are of the regulator’s capacity and implementation efforts, and not of the financial sector persons themselves), it is still possible.
ROSCs publication is voluntary (see Transparency and Fund Policies—Decisions and Modalities (SM/00/190, Supplement 7, 1/11/00). In the period January 4, 2001 through March 31, 2002, about three-quarters of ROSCs and about half of the Financial System Stability Assessments (FSSAs) have been published (see “The Fund’s Transparency Policy—Review of the Experience and Next Steps, “ (EBS/02/90, May 28, 2002). The “Review of Technical Assistance Policy and Experience “ (forthcoming) a broadening of the policy on the dissemination of technical assistances reports.
FSAP documents, which are not shared with the Boards of the Bank or the Fund (nor published), normally contain detailed and confidential information on individual FSPs. Systemic information on financial sector vulnerability is drawn from the FSAP into Financial Sector Stability Assessments (FSSAs) for discussion by Fund’s Board, and broad financial sector development issues from the FSAP are the basis for Financial Sector Assessments (FSAs) for the Bank’s Board.
Summing Up—Enhancing Contributions to Combating Money Laundering (BUFF/01/54 April 13, 2002).
The core issues for surveillance are exchange rate policies and their consistency with macroeconomic polices; financial sector issues; the balance of payments and capital account flows and stocks, and related cross-country themes. See Summing Up by the Acting Chairman for 2000 Biennial Review of Surveillance (SUR/00/32).
Concluding Remarks by the Acting Chairman Bank-Fund Collaboration—Report of the Managing Director and the President; and Review of Collaboration in Strengthening Financial Systems Executive Board meeting 98/102, 9/22/1998.
The Acting Chairman Summing Up—Intensified Fund Involvement in Anti-Money Laundering and Combating the Financing of Terrorism Executive Board Meeting 01/116 (BUFF /01/176).
Summing Up by the Acting Chairman for Offshore Financial Centers—The role of the IMF (BUFF/00/98).
SecM2001-0228, April 30, 2001 Enhancing Contributions to Combating Money Laundering: Policy Paper.
I.F.I. Shihata, Prohibition of Political Activities in the Bank’s Work, July 11, 1995 (SecM95-707, July 12, 1995) reproduced at Shihata, World Bank Legal Papers at p. 229.
See January 22, 2002 Proposed Action Plan for enhancing the Bank’s Ability to Respond to Clients in Combating Money Laundering and the Financing of Terrorism (SecM2002-0006).
SecM2001-0228, April 5, 2001 Enhancing contributions to Combating Money Laundering: Policy Paper: SecM200-0532, August 31, 2001 Anti-Money Laundering (AML)—Progress Report SecM2002-0006 January 22, 2002 Proposed Action Plan for enhancing the Bank’s Ability to Assist Clients in Combating Money Laundering and the Financing of Terrorism; and SecM2002-0165, April 9, 2002 Intensified Work on Anti-Money Laundering and Combating of Financing of Terrorism (AML/CFT)
See April 5, 2001 Enhancing Contributions to Combating Money Laundering: Policy Paper (SecM2001-0228.
FATF press release October 30, 2001.
The draft was sent for information to the Boards of the Fund and Bank on February 8, 2002 and, simultaneously, to standard setters for comment. See SM/02/40; February 8, 2002.
Part IV. A. 1. (v), the processes for collection, analysis, and dissemination of financial information and intelligence, relies on best practices as indicated by a review of the existing laws and regulations on FIUs of 14 Fund/Bank member countries, as well as on standards and principles adopted or used by the Egmont Group of FIUs and by the UNDCCP model laws.
Other financial services subject to regulation (e.g., company and trust service providers in OFCs) for assessment purposes are addressed under Part 3.
FIUs may also play important roles in helping to uncover crimes other than ML or terrorism finance (e.g., bank fraud). However, because the subject of this methodology is AML/CFT only, these other roles are not subject to assessment.
The Egmont Group of FIUs defines an FIU as a central, national agency responsible for receiving (and, as permitted, requesting) analyzing and disseminating to the competent authorities, disclosures of financial information (i) concerning suspected proceeds of crime; or (ii) required by national legislation or regulation in order to counter ML.
Financial service providers should ensure that the criteria relating to customer due diligence are also applied to branches and majority owned subsidiaries located abroad, subject to local laws and regulations.
See Criterion 3.8 for appropriate knowledge standards.
The FIU is a central, national agency responsible for receiving (and, as permitted, requesting), analyzing and disseminating to the competent authorities, disclosures of financial information (i) concerning suspected proceeds of crime; or (ii) required by national legislation or regulation, in order to counter money laundering.
Criteria drawn from draft materials prepared by the FATF Working Group collaborating on the assessment methodology for the FATF 40 Recommendations.
It should be understood that the sector-specific information in the AML/CFT methodology will not replace any of the individual core principles of the actual standards issued by the Basel Committee, IAIS and the IOSCO.
As defined in Customer due diligence for banks (Basel publication 85—October 2001), politically exposed persons are individuals who are or have been entrusted with prominent public functions, including heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of publicly owned corporations and important political party officials.
Ibid-Paragraphs 68 to 69.
Other financial service providers that could be included are institutions or individuals that (i) accept deposits or funds from the public; (ii) make loans or leases; (iii) provide financial guarantees and commitments; and (iv) provide safekeeping and administration of cash or liquid securities on behalf of clients (see Annex to FATF Recommendation 9).
Table references are to the relevant criteria within the AML/CFT methodology.
The consultation with the Fund and Bank does not constitute endorsement or approval of the Working Group’s proposal.
All core elements embody both institutional capacity (the capacity needs of supervisory authorities to ensure effective implementation of AML/CFT rules) and implementation (implementation of AML/CFT rules).
See footnote 2.
See footnote 2.
see footnote 2.