ANNUAL REPORT 2014 ЕВРАЗИЙСКАЯ ГРУППА по противодействию легализации преступных доходов и финансированию терроризма EURASIAN GROUP on combating money laundering and financing of terrorism EAG ANNUAL REPORT 2014 CONTENTS Ajay Tyagi – EAG Chairman 3 Vladimir Nechaev – EAG Executive Secretary 4 1. About the EAG 5 1.1. History 5 1.2. Goals and Objectives 5 1.3. Member States 6 1.4. Eurasian Group Structure 6 1.5 EAG Secretariat 8 1.6. Observers 8 1.7. 10 Years of EAG 9 2. STRATEGIC ACTIONS AND INITIATIVES 12 2.1. Development of National AML/CFT Systems 12 2.2. Information and Communications Strategy 12 2.3. Single Information Space 13 3. EAG IN THE INTERNATIONAL AML/CFT SYSTEM 16 4. MUTUAL EVALUATIONS 20 4.1. EAG Mutual Evaluations 20 4.2. Follow-Up Reports 20 5. TECHNICAL ASSISTANCE 22 5.1. Technical Assistance System 22 5.2. AML/CFT Training for Personnel 23 6. ML/TF TYPOLOGIES RESEARCH 25 7. COUNTERACTION TO FINANCING OF DRUG BUSINESS, CRIME 27 AND TERRORISM 7.1. Counteraction to Financing of Drug Business and Crime 27 7.2. Counteraction to the Financing of Terrorism 28 8. KEY OBJECTIVES FOR 2015 29 9. SCHEDULE OF MAJOR EAG EVENTS IN 2014 30 LIST OF ABBREVIATIONS 31 2 EAG ANNUAL REPORT 2014 EAG Chairman Ajay Tyagi The year 2014 ended. It will remain In October 2014 the FATF Plenary in the EAG history not only as the year of meeting discussed the first mutual its 10 years anniversary, but also as the evaluation report of Spain and Norway period of great achievements in its under the new methodology. I believe that development. analyzing the reports on these countries One such achievement is the for the purpose of "fine-tuning" anti- improvement of the national AML/CFT money laundering mechanisms will systems. All member states have become an important step for the Group. confirmed it by their progress in the I want specifically to note the mutual evaluations process. The Eurasian strengthening of horizontal ties - during group became the first regional group the year we held joint workshops with the whose member states are not reviewed by EAG partners: MONEYVAL, APG, the FATF International Cooperation MENAFATF and the OSCE. One of the Review Group (ICRG). This is largely due latest examples of successful to the EAG mechanisms of work which collaboration was the joint typologies allow to share experiences and find workshop with MENAFATF in Qatar. common understanding of the problems. The 2014 priority was preparation for the new round of mutual evaluations in the FATF and EAG. I would like to note that all plans in this field were met. During the year much attention was paid to the training of assessors. 3 EAG ANNUAL REPORT 2014 EAG Executive Secretary Vladimir Nechaev October 6, 2014 marked the 10th This will require significant anniversary of the Eurasian group. resources from the EAG and its members. Celebrating its anniversary, the Group Additional efforts will be required to finishes an important stage of rapid and ensure the quality of evaluations and the great and difficult development. During preparation of national AML/CFT this time, the EAG has become an systems to function within the framework influential group on combating money of the new FATF Recommendations and laundering, the authority of which is Methodology. recognized at both the regional and global In 2014, the Group continued to levels. develop horizontal links with FSRBs by In 2014 the EAG became the first the joint event with MENAFATF, using and only as of the end of the year FATF- its experience and the expertise of Style Regional Group, none of the member member states. states of which are included in the list of I would like to thank Mr. Boris countries under FATF monitoring. Toropov, the previous EAG Executive The key achievements of the Group Secretary for his great work in the are largely due to its full involved in the transformation of the Secretariat into an global and regional security system, effective body of the Group and the effective cooperation with the FATF and formation of the positive team FSRBs, as well as with partner atmosphere. organizations. Certainly, it is necessary to I would also like to thank the mention the high professionalism of the Russian Federation for providing Secretariat staff and experts. technical assistance in the functioning of Undoubtedly, conducting the Secretariat, as well as the member successfully the second round of mutual states and observers for their work and evaluations will be one of the key support over the past year. priorities in the coming period. 4 EAG ANNUAL REPORT 2014 1. About the EAG 1.1. History The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) is a FATF-style regional body established at the initiative of the Russian Federation on October 6, 2004 at the founding conference in Moscow attended by six founding states: Belarus, China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. Uzbekistan, Turkmenistan and India joined the EAG later. The Declaration on the Establishment of the EAG and the Terms of Reference of Eurasian Group, signed in Moscow, became the basis for the Agreement on the Eurasian Group on Combating Money Laundering and Financing of Terrorism that was signed on June 16, 2011 and that became the part of the legal systems of the EAG member states and the basis for their cooperation. The Agreement defined the EAG as an intergovernmental organization with its own budget and functioning on the basis of equal participation of member states in its activities. The creation of the EAG contributed to the consolidation of efforts towards reducing the threat of terrorism, ensuring transparency, reliability and security of financial systems of countries in the region, and their integration into the international AML/CFT system. Among the first initiatives implemented by the newly created organization was to organize the provision of technical assistance to EAG member states in establishing national AML/CFT systems. 1.2. Goals and objectives According to the EAG Agreement, the main goal of the Eurasian Group is to ensure effective communication and cooperation at the regional level, as well as integration of EAG member states into the international anti-money laundering and counter-terrorist financing system in line with the FATF recommendations and AML/CFT standards of other international organizations in which EAG member states participate. The main objectives of the EAG are to: . assist member states in the implementation of the FATF Standards on Combating Money Laundering and the Financing of Terrorism; . develop and implement joint activities aimed at combating money laundering and financing of terrorism; . implement programs of mutual evaluation of member states in line with the FATF Recommendations and study the effectiveness of the legislative and other measures on 5 EAG ANNUAL REPORT 2014 combating money laundering and terrorist financing in place; . coordinate programs of international cooperation and technical assistance with specialized international organizations, agencies and countries concerned; . carry out an analysis of money laundering and terrorist financing typologies and share experience in combating such crimes with account for regional specifics. 1.3. Member States Under the EAG Agreement 9 countries are members of the EAG: Republic of Belarus, Republic of India, Republic of Kazakhstan, People’s Republic of China, Republic of Kyrgyzstan, Russian Federation, Republic of Tajikistan, Turkmenistan and Republic of Uzbekistan. EAG membership is open to other countries in the region which: . are taking active steps to develop and enforce AML/CFT laws consistent with the FATF Recommendations; . are willing to assume the obligation to participate in EAG mutual evaluation programs; . are willing to assume the obligations to actively participate in plenary meetings and other EAG events. 1.4. Eurasian Group structure The structure of the management and working bodies of the EAG: . Plenary meeting; . Chairman; . Deputy Chairman; . Working groups; . Secretariat. 6 EAG ANNUAL REPORT 2014 Plenary Chairman Secretariat meeting Deputy Chairman WGEL WGTA WGTYP WGCF WGRS The highest body of EAG is the Plenary meeting, which convenes, as a rule, twice a year, but not less than once a year. The Plenary considers the fundamental issues related to the common interests of EAG member states, defines the strategy and directions of activity, and makes decisions aimed at implementing the goals and objectives of the EAG. The EAG Chairman is appointed for a two-year period by the decision of the Plenary meeting. The Chairman leads the work of the Plenary meetings and represents the Eurasian Group in its external relations. The Deputy Chairman is appointed by the decision of the Plenary. The Plenary meeting in November 2014 appointed Mr. A. Tyagi EAG Chairman to continue the implementation of the Action Plan of the EAG Chairman till November 2015 defined by India. Mr. B. Tajiyakov (Kazakhstan) is EAG Deputy Chairman since November 2013. Five working groups on principal lines of activity were functioning in the EAG in 2014: . Working Group on Mutual Evaluations and Legal Issues (WGEL); . Working Group on Technical Assistance (WGTA); . Working Group on Typologies (WGTYP); . Working Group on Counteraction of Financing Drug Business, Crime and Terrorism (WGCF); . Working Group on Risks and Supervision (WGRS). Mr. Boris Toropov (Russia) was EAG Executive Secretary in 2014. In November 2014 the 21st EAG Plenary meeting in Dushanbe appointed Mr. Vladimir Nechaev (Russia) EAG Executive Secretary since the 1st January 2015. 7 EAG ANNUAL REPORT 2014 1.5. EAG Secretariat The EAG Secretariat was established by the decision of the founding conference on October 6, 2004 and was called to perform coordinating functions related to the implementation of main lines of work. The Agreement on the Conditions of Stay of EAG Secretariat in the Territory of the Russian Federation was signed on February 14, 2012.