Financial Action Task Force Financial Action Task Force Leading global action against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction 1 fF lea Financial Action Task Force 30 Years The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti- money laundering (AML) and counter-terrorist financing (CFT) standard. For more information about the FATF, please visit www.fatf-gafi.org This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Citing reference: FATF (2019), Financial Action Task Force – 30 years, FATF, Paris, www.fatf-gafi.org/publications/fatfgeneraldocuments/FATF-30.html © 2019 FATF/OECD. All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the FATF Secretariat, 2 rue André Pascal 75775 Paris Cedex 16, France (fax: +33 1 44 30 61 37 or e-mail: [email protected]) Photocredits ©FATF/OECD, G7 Italy (p.15) G20 Argenting (p. 79) GettyImages (p. 7, 8, 57, 91) UN Photo (p. 20, 45, 78) UK National Crime Agency (p. 44) Wikimedia Commons (p. 12, 44) as well as photos from private collections of John Carlson, Gil Galvão, Patrick Moulette, Vincent Schmoll and Heather Smeeton. Financial Action Task Force Contents 3 Acronyms 4 Letter from Marshall Billingslea, FATF President 1. A new task force to keep drug money out of the financial system 7 Drug Cartels and Money Laundering 13 FATF Leadership 20 President's Priorities 23 FATF Plenary 26 Working Groups 31 FATF Secretariat 2. What have we achieved? 33 Identifying the Risks to the Global Financial System 38 Ensuring a Comprehensive and Timely Framework of Measures 48 Ensuring Implementation of the FATF Standards 62 Identifying High-Risk and Uncooperative Jurisdictions 66 Expanding FATF's Global Network 3. The future 81 FATF's New Mandate as an International Organisation 88 Updating the FATF Standards in the Future 90 Assessing the Effectiveness of AML/CFT Tools 92 Global Approach to AML/CFT 1 Financial Action Task Force 2 Financial Action Task Force Abbreviations and acronyms AML Anti-money laundering APG Asia-Pacific Group on Money Laundering CFATF Caribbean Financial Action Task Force CFT Countering the financing of terrorism EAG Eurasian Group ESAAMLG Eastern and Southern Africa Anti-Money Laundering Group FATF Financial Action Task Force FSRB FATF-Style Regional Body GABAC Task Force on Money Laundering in Central Africa GAFILAT Financial Action Task Force of Latin America GIABA Inter Governmental Action Group against Money Laundering in West Africa GPFI Global Partnership for Financial Inclusion ICRG International Co-operation Review Group IMF International Monetary Fund MENAFATF Middle East and North Africa Financial Action Task Force MONEYVAL Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism OECD Organisation for Economic Cooperation and Development SSB Standard-Setting Bodies UN United Nations UNSCR United Nations Security Council Resolutions WMD Weapons of mass destruction 3 Financial Action Task Force Letter from Marshall Billingslea, FATF President This week the Financial Action Task Force (FATF) celebrates its 30th anniversary. First created in 1989 as a force to fight organized criminal and narcotics financial flows, the FATF has since become a dynamic contributor to peace and security. The FATF’s mandate has expanded to include the fight against terrorist financing and the financing of proliferation of weapons of mass destruction. Our membership has more than doubled to thirty six countries and two regional organisations, and through our network of nine regional bodies, we now bring together more than two hundred countries committed to preventing criminals and terrorists from abusing the international financial system. By many measures, the FATF has proven its value to our collective security. Member nations have used the FATF to provide themselves and others with robust and powerful tools to protect the financial system. As a result, we are seeing successful investigations and prosecutions every day in countries around the world, with financial institutions and other businesses playing a key role. Authorities now demonstrate that they are effectively cooperating, nationally and internationally, in the pursuit of proceeds of crime or funds with links to terrorism. Using our evaluation processes, the FATF has been instrumental in bringing about this collaborative effort to reduce the harm caused by crime, terrorism and the proliferation of weapons mass destruction. 4 Financial Action Task Force I am pleased that during the tenure of the U.S. Presidency, we have seen several important advances that secure the ongoing role of the FATF in the fight against illicit finance. First, the FATF’s mandate is now open-ended. Second, Ministers have pledged to provide the organisation with the resources it needs to combat money laundering. Third, we have decided on sweeping new standards to prevent the future use of virtual assets for illegal purposes. Fourth, we have moved forward in defining more clearly how nations should work to prevent the financing and proliferation of weapons of mass destruction. Finally, under French leadership, the FATF member nations have now secured as binding international law, through United Nations Security Council Resolution 2462, the FATF principle that all types of terrorist financing must be criminalized. It has been an honor to serve as the President of the Financial Action Task Force. The value of the organisation to the security of our nations and integrity of the international financial system has never been more clear. As we celebrate our first thirty years of success, at this Plenary in Orlando, Florida, we also recommit our nations to making enduring new contributions in the fight against illicit finance for the decades to come. Marshall Billingslea FATF President 2018-2019 5 14 July 1989 6 Financial Action Task Force During the G7 Summit at the Arche de la Défense in France, G7 leaders created the Financial Action Task Force. They mandated this new task force, the FATF, with examining money laundering techniques and trends, reviewing the action which had already been taken at a national or international level, and setting out the measures that needed to be taken to combat money laundering. During the three decades that have passed since then, the FATF has done much to protect the global financial system from abuse, but its mission is far from complete. From left to right: Jacques Delors (European Commission), Ciriaco De Mita (Italy), Margaret Thatcher (United Kingdom), George Bush (United States), François Mitterrand (France), Helmut Kohl (Germany), Brian Mulroney (Canada) and Sosuke Uno (Japan). 7 1. A new task force to keep drug money out of the financial system 8 Financial Action Task Force Drug Cartels and Money Laundering In the 1980s, our society started to face a serious problem from hard drugs such as cocaine and heroin as well as crack cocaine: cheap to manufacture and terrifyingly addictive. A highly profitable drug trade developed, spanning continents and bringing drugs, organised crime and violence from city centres into the suburbs. Drug crime remains a significant problem. Drug traffickers use banks to manage the financial transactions for their activities, just as any other legitimate business would. The financial system, at that time, allowed them to launder their profits, through international investments and the purchase of luxury items, often in cash. The international drug trade is a money making machine, wreaking havoc on our society and introducing funds with links to drugs and crime into the financial system. The United Nations estimated the drug trafficking proceeds worldwide at USD 300 billion in 1987. The most effective way to put a stop to this was to go after the money: take away the profits and prosecute those involved. National governments faced an insurmountable challenge to deal with this growing problem. Some countries had adopted legislation that allowed authorities to go after money laundering, but many did not. As the financial system developed and international transactions became easier to conduct, the proceeds of the drug trade would disappear into the financial system as soon as it crossed the border. 9 Financial Action Task Force Pablo Escobar was at the head of the Medellín cartel that dominated cocaine trade in the 1980s, with estimated proceeds of USD 420 million every week. Reports suggest that Escobar was responsible for the death of over 4 000 people, including policemen and politicians. Escobar used his vast personal wealth, estimated at USD 25 billion, to fund a lavish lifestyle. He owned several luxurious homes, including the Hacienda Nápoles. The plane that Escobar used on his first drug run to the United States, tops the gate to Hacienda Nápoles. It was clear that there needed to be a coordinated response. No country could fight money laundering on its own. In 1989, the