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The Financial Action Task Force (FATF) Plenary concluded on February 23, 2024 marked another pivotal event in international financial regulation. This comprehensive summary highlights the significant discussions, decisions and goals that emerged during this important gathering.


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The Financial Action Task Force (FATF) Plenary concluded on February 23, 2024 marked another pivotal event in international financial regulation.  This comprehensive summary highlights the significant discussions, decisions and goals that emerged during this important gathering. 

Increasing Beneficial Ownership Transparency Globally 

Following the February 2023 revisions to FATF Recommendation 25 on Beneficial ownership and transparency of legal arrangements, the FATF has updated its risk-based guidance for this Recommendation. The guidance complements the existing guidance on Recommendation 24 on legal persons and aims to help stakeholders from the public and private sectors that are involved in trusts or similar legal arrangements to assess and mitigate money laundering and terrorist financing risks. 

The finalised guidance reflects input from public consultations on the draft guidance following the October Plenary.  The FATF extensively engaged with the private sector and other stakeholders on this initiative. The updated guidance completes a comprehensive body of work aimed at improving transparency of beneficial ownership globally. FATF’s strengthened standards and guidance in this area will help identify the corrupt, sanctions evaders, money launderers and tax evaders who hide or launder their criminal property or activities in shell companies or other complex structures as well as trusts or other legal arrangements.   

The FATF will assess countries’ implementation of these requirements during its upcoming round of mutual evaluations. 

The guidance will be published at the end of February. 

Payment Transparency 

The FATF has worked on proposed amendments to Recommendation 16, to reflect the rapid development of cross-border payment systems, and changes to industry standards particularly ISO20022.  

These revisions aim to help make cross-border payments faster, cheaper, more transparent and more inclusive whilst ensuring AML/CFT compliance and ensure that FATF Recommendation 16 remains technology-neutral. 

The Plenary agreed to release the proposed revisions for public consultation.  

Protecting Non-Profit Organisations from abuse for Terrorist Financing 

At its October 2023 Plenary, the FATF agreed on amendments to Recommendation 8 that aim to protect non-profit organisations (NPOs) from potential terrorist financing abuse through the effective implementation of risk-based measures. The FATF also updated its best practices to reflect the amendments to Recommendation 8 and to help countries, the non-profit sector and financial institutions understand how best to protect relevant NPOs from abuse for terrorist financing, without unduly disrupting or discouraging legitimate NPO activities. 

The FATF has now agreed on changes to its assessment methodology for the next round of mutual evaluations, which clarify the existing obligations to apply risk-based measures to protect NPOs that are most vulnerable to potential terrorist financing abuse and prevent the unintended consequences of the incorrect application of the FATF’s requirements. 

Leveraging Digital Transformation: Virtual Assets 

Many countries have yet to fully implement the FATF’s revised Recommendation 15. Given the inherently borderless nature of virtual asset activity, this lack of implementation leaves significant loopholes globally, that criminals and terrorists exploit. 

In February 2023, the FATF Plenary agreed on a roadmap to strengthen implementation of the FATF Standards on virtual assets and virtual asset service providers.  The FATF conducted a stock take of current levels of implementation across the global network. 

The Plenary agreed to publish an overview of the steps that FATF and FSRB member jurisdictions with the most materially important virtual asset activity, based on trading volume and user base, have taken to regulate and supervise virtual asset service providers (VASPs). The purposes of this exercise are to enable the FATF network to support these jurisdictions in regulating and supervising VASPs for AML/CFT purposes and to encourage jurisdictions to fully implement Recommendation 15. 

Statement on the Russian Federation 

FATF members note with concern the potential risks to the international financial system, including growing financial connectivity of Russia with countries subject to FATF countermeasures, risks of proliferation financing, and malicious cyber activities and ransomware attacks. Due to the gravity of these risks, many FATF members are taking proactive measures to protect themselves and the global financial system. 

The FATF calls upon all jurisdictions to continue to remain vigilant due to the above-mentioned risks. As they have done since the Russian Federation commenced its war of aggression, FATF members will continue to monitor the situation and the risks posed to the global financial system. As a suspended member of the FATF, the Russian Federation remains accountable for its obligation to implement the FATF Standards.  

Jurisdictional Monitoring Progress and Setting Future Goals 

The FATF plenary congratulated Barbados, Gibraltar, Uganda, and the United Arab Emirates for their significant progress in addressing the strategic AML/CFT deficiencies previously identified during their mutual evaluations. These jurisdictions had committed to implement an Action Plan to resolve swiftly the identified strategic deficiencies within agreed timeframes. These countries will no longer be subject to the FATF’s increased monitoring process.  

This comes after a successful on-site visit to each of these countries. Each country will work with the FATF-Style Regional Body, of which it is a member, to continue strengthening their AML/CFT/CPF regimes. 

Jurisdictions under increased monitoring are actively working with the FATF to address the strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to implement an Action Plan to resolve swiftly the identified strategic deficiencies within agreed timeframes. At this Plenary, the FATF added Kenya and Namibia to the list of jurisdictions subject to increased monitoring. 

Country Risk Scoring Impact: 

The insights gained from the February 2024 FATF Plenary have an impact on our country risk scoring outcome.  As countries adapt to the changing regulatory scene, our team at cleversoft diligently incorporates the latest findings into our risk assessment models.  By closely monitoring developments, we ensure that our clients receive the most accurate and up-to-date risk assessments, helping them make informed decisions in an ever-changing global economy.  In conclusion, the February 2024 FATF Plenary has left a lasting imprint on the global financial landscape, triggering shifts in country risk assessments.    

 

cleversoft Services 

cleversoft remains your trusted compliance and regulatory partner committed to delivering the latest insights and developments. Please send a message to our support team for any questions on our assessments and on how it is applied in our compliance solutions

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For more detailed insights, you can explore the FATF website.