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02 July, 2018
The interagency delegation consisting of representatives of the Foreign Ministry, the Federal Security Service, the Interior Ministry, the Finance Ministry and the Bank of Russia, led by Rosfinmonitoring Director Yury Chikhanchin, participated in the joint plenary meeting of the Financial Action Task Force on Money Laundering (FATF) and MENAFATF, an FSRB for Middle East and North Africa, held in Paris on June 24-29, 2018.
The meeting was still held under the Argentine presidency, which is due to be passed on on July 1, 2018, to the USA. M. Billingslea, Assistant Secretary of the U.S. Treasury, is to become the next FATF President, instead of the FATF Vice-President Jennifer Fowler, who resigned at the last moment. Ms Fowler is well known for our joint work in the FATF governing bodies.
Following the consideration of its mutual evaluation report, Saudi Arabia only approached the full member status, having failed to secure upgrades in at least one of the ratings for the AML/CFT system effectiveness (a country needs to have a low or moderate level of effectiveness for fewer than 7 of the 11 effectiveness outcomes to qualify for FATF membership, whereas Saudi Arabia had exactly 7). At the same time, following the completion of the high-level mission to Jakarta in May 2018, whose participants, including from Russia, certified Indonesia's commitment to the speedy fulfilment of its obligations, Indonesia became the latest country to be granted observer status in the FATF.
The FATF updated the list of jurisdictions with strategic deficiencies in national AML/CFT systems. The blacklist remained unchanged (DPRK and Iran), with freezing countermeasures against Iran's FIU still in place. Meanwhile, Vanuatu and Iraq exited the FATF grey list, there are still 8 countries: Yemen, Pakistan, Serbia, Syria, Trinidad and Tobago, Tunisia, Sri Lanka and Ethiopia.
Pakistan endorsed the action plan, developed jointly with the FATF Secretariat, to rectify the situation with the chronic non-fulfilment of the FATF counter-terrorism recommendations. The implementation of the plan is expected to take a long time.
Serbia made good progress in implementing the provisions of a similar action plan, endorsed in February 2018.
With respect to Syria, the Plenary decided to draft proposals before October 2018 for possible ways to overcome the current impasse associated with the inability to organize a visiting mission to Damascus for security reasons.
As planned, the Plenary heard the mutual evaluation report of Bahrain, following which the country was placed on the MENAFATF enhanced follow-up process.
The situation with Brazil remains bad, as the country is still unable to quit the FATF follow-up process after the previous round of evaluations. Although the language of the FATF's revised statement on this situation has been toned down, the country needs to do whatever it takes to pass a law on targeted financial sanctions before February to avoid suspension of its membership.
In order to improve the effectiveness of the FATF's operations, participants continued to discuss options for the transition to the biennial presidency cycle along with the issue of giving the FATF a legal status.
In furtherance of the G20 discussion, a separate discussion was held on the appropriateness and level of regulation of cryptocurrencies/cryptoassets, as well as on possible adjustments to the FATF standards in this area. The plenary reached an unanimous conclusion that the priority should not be the virtual currencies/assets themselves, but rather ML/TF risks arising from their use. In the intersessional period, delegations are invited to present concrete ideas on how to move forward, with the consideration of the submitted proposals to take place at the October session.
In consultation with the FATF Secretariat, the Russian delegation gave a presentation on the Russian International Training and Methodology Centre for Financial Monitoring, which drew considerable interest and attracted positive assessments from 13 representatives of countries and international organizations. In the near future, Rosfinmonitoring jointly with its partners from China and India, will prepare and submit for consideration by the FATF members a concept note for the accreditation of the best AML/CFT training centres.
Members of the BRICS AML/CFT Council, which is still going through the establishment process, and the EAG Consultative Meeting took place on the side-lines of the Plenary. Bilateral meetings were held with the delegations of Argentina, India, Spain, China, the United States and France, followed by negotiations with the Russian assessment team.
As part of the discussion on expanding the FATF's training capacity around the world, the Russian delegation gave a presentation on the work carried out by the International Training and Methodology Centre for Financial Monitoring (ITMCFM). Each year ITMCFM organizes approx. 100 training activities attended by more than 20000 AML/CFT personnel from the EAG and other countries. Since its establishment in 2005, ITMCFM has provided training to representatives of 30 countries.
In addition, the Russian delegation asked the FATF to come up with an accreditation format for ITMCFM in this organization, expressing its readiness to draft, jointly with India and China, an appropriate concept note for consideration by the member countries. Many delegations, including from the APG, Brazil, China, Japan, MENAFATF, MONEYVAL, South Africa and the US, spoke highly of the work carried out by ITMCFM and expressed their willingness to explore the possibility of its accreditation along with other similar training centres.
