APPENDIX 4: THE FATF FORTY RECOMMENDATIONS:
A SUMMARY
Background
The FATF first issued its Forty Recommendations in
1990 aimed at governments and financial institutions. Together,
these Recommendations form a comprehensive regime against money
laundering and have been accepted world-wide as one of the most
comprehensive bases for tackling money laundering. The Recommendations
were revised in 1996 to reflect all serious crimes.
In June 2003 the FATF published a significantly revised
set of Forty Recommendations. The new Recommendations set out
extended basic principles to prevent money laundering and drew
heavily on the Basel Customer Due Diligence Principles. The need
for a risk-based approach was specifically recognised. Specific
focus was placed on three principal areas:
- customer due diligence and the categories of
customers or transactions that posed a potentially higher risk;
- the transparency of corporate vehicles and identification
of the beneficial owners with a particular emphasis on bearer
shares and trusts;
- the role of the non-financial businesses and
professions in money laundering ('the gatekeepers').
The FATF recommendations have been endorsed and adopted,
either in whole or in part, by more than 180 jurisdictions, the
United Nations, the IMF and the World Bank. In July 2005 the UN
Security Council in its Resolution 1617 determined that it "...
strongly urges all Member States to implement the comprehensive
international standards embodied in the FATF Forty Recommendations
on Money Laundering and the FATF Nine Special Recommendations
on Terrorist Financing".
The FATF principles for money laundering prevention
- Money laundering should be criminalised on the
basis of the UN conventions and applied to all individuals and
legal persons, determining as appropriate which serious crimes
should be covered in addition to drugs. (FATF Recommendations
1 & 2).
- Appropriate measures should be put in place to
confiscate the proceeds of crime. (FATF Recommendation 3).
- Banking secrecy laws must not conflict with or
inhibit the effectiveness of the money laundering strategy. (FATF
Recommendation 4).
- Administrative and regulatory obligations to
develop systems and guard against money laundering should be imposed
on all financial institutions. (FATF Recommendations 5-12 &
15).
- Obligations should be placed on all financial
institutions, that if they know or suspect, or have reasonable
grounds to suspect, that funds derive from criminal activity,
they should report those suspicions promptly to the competent
authorities. (FATF Recommendations 13 & 16).
- The obligations for developing anti-money laundering
systems, controls and reporting procedures should be applied to
designated non-financial businesses and professions, recognising,
as appropriate, the concept of legal privilege. (FATF Recommendations
16, 20 & 24-25).
- Financial and non-financial sector businesses,
their directors and employees, should be protected against breach
of confidentiality if they report their suspicions in good faith.
(FATF Recommendation 14).
- Appropriate, proportionate and dissuasive sanctions
should be introduced for non-compliance with anti-money laundering
or terrorist financing requirements. (FATF Recommendation 17).
- Countries should not approve the establishment
or accept the continued operation of shell banks. (FATF Recommendation
18).
- Countries should consider implementing feasible
measures to detect or monitor the physical cross-border transportation
of cash and bearer-negotiable instruments, and should impose a
requirement on financial institutions and intermediaries to report
all transactions above a certain amount. (FATF Recommendation
19).
- Appropriate measures should be taken to ensure
that financial institutions give special attention to business
relationships and transactions whose anti-money laundering and
anti-terrorist measures are inadequate. (FATF Recommendations
21-22).
- Countries should ensure that financial institutions,
designated non-financial businesses and professions are subject
to adequate regulation and supervision, and that criminals are
prevented from owning and controlling financial institutions.
(FATF Recommendations 23-25).
- Appropriate law enforcement mechanisms should
be put in place to process, investigate and prosecute suspected
reports of money laundering, and an FlU should be established
as the national receiving centre for information on money laundering
and terrorist financing. (FATF Recommendations 26-32).
- Countries should ensure the transparency of legal
persons, and structures can be accessed on a timely basis. (FATF
Recommendations 33 & 34).
- Countries should rapidly, constructively and
effectively provide the widest possible range of mutual legal
assistance in relation to money laundering and terrorist financing
investigations, prosecutions and related proceedings, and provide
the widest range of international co-operation to their foreign
counterparts. (FATF Recommendations 36-40).
The complete text of the FATF Recommendations and
interpretative notes can be accessed through the FATF website
www.fatf-gafi.org
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