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U.S. DEPARTMENT OF STATE
INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT MARCH 1996:
FINANCIAL CRIMES AND MONEY LAUNDERING
United States Department of State
Bureau for International Narcotics and Law Enforcement Affairs
FINANCIAL ACTION TASK FORCE (FATF) YEAR IN REVIEW
The Financial Action Task Force (FATF) was established by the G-7
Economic Summit in Paris in 1989 to examine measures to combat money
laundering worldwide. In April 1990, the FATF issued a report with 40
Recommendations which, when implemented, establish a framework of
comprehensive programs to address money laundering and facilitate
greater international cooperation. FATF membership comprises 26
jurisdictions and two regional organizations, representing the world s
major financial centers. Member jurisdictions are committed to adopting
and implementing the 40 FATF Recommendations and agree to have their
implementation progress evaluated by other FATF members.
In 1995, the FATF focused on several major areas in its fight against
global money laundering. An experts group met to assess recent trends
in money laundering, emerging threats, and effective countermeasures.
Among the topics discussed was review of information available on money
laundering in the securities and insurance industries. The results are
being reviewed by the FATF plenary.
Also in 1995, the FATF completed the first set of mutual evaluations of
its members progress in implementing the 40 FATF Recommendations. In
1996, the second round of mutual evaluations is beginning, focusing on
the effectiveness of each member s anti-money laundering measures in
practice. United States Treasury Undersecretary for Enforcement Ronald
K. Noble is the FATF President for its seventh round during 1995-1996.
Later this year, Director General Fernando Carpentieri of the Italian
Ministry of the Treasury will assume the FATF Presidency for FATF VIII.
The stocktaking review of the 40 Recommendations, which was initiated
last year, is continuing. This review is being undertaken to ensure
that the Recommendations remain current and are updated as needed to
effectively address today s money laundering situation, which has
evolved significantly since the 40 Recommendations were originally
issued six years ago. Emerging technologies and future vulnerabilities
to money laundering are being addressed in the stocktaking review.
Through its external relations program, the FATF continues to encourage
non-member countries to adopt and implement the anti-money laundering
measures outlined in the 40 Recommendations. During 1995, the FATF
conducted high-level missions to Morocco, China, Korea, Macao, and Egypt
to actively promote anti-money laundering action. The expectation for
1996 is that the FATF will give priority to its external relations
efforts in Eastern Europe, the Caribbean, and Asia. Missions to
Bulgaria, Russia, the Czech Republic, Indonesia, and the Philippines are
proposed. A regional seminar with the Black Sea Economic Cooperation
will be held in Turkey in April 1996.
In October 1995, for the first time, an experts group met in Hong Kong
to assess money laundering methods specific to the Asia/Pacific region
and counteractions indicated. In December 1995, the FATF and the
Commonwealth Secretariat jointly conducted the Third Asia Money
Laundering Symposium in Tokyo, Japan. General agreement was reached to
create an Asia/Pacific Steering Group on Money Laundering to provide a
focus for anti-money laundering efforts in the region. The mandate for
the Steering Group will be to encourage and facilitate the adoption and
implementation within the Asia/Pacific region of the FATF 40
Recommendations, as well as to provide practical support to regional
anti-money laundering initiatives including training and technical
assistance.
The FATF continues to coordinate extensively with other international
organizations involved in combating money laundering and to mutually
foster efforts in this area.
In September 1995, the FATF convened a Financial Services Forum planning
meeting to establish a dialogue and to develop a closer relationship
with the financial services community worldwide. The purpose of the
meeting was to exchange ideas about ways in which the FATF could reach
out to the financial services industry to form a partnership in
instituting global anti-money laundering measures. Discussion with
industry representatives centered on the 40 FATF Recommendations. The
Financial Services Forum was held in conjunction with the January 1996
FATF Plenary. At the January meeting, discussion focused on changing
trends in money laundering, how to best provide feedback to financial
institutions, views of the industry on the 40 FATF Recommendations, and
implications of payment technology developments.
Five FATF members (United States, United Kingdom, France, the
Netherlands, and Canada) continued to support and finance the Caribbean
Financial Action Task Force (CFATF). The US Treasury Department
provided staff to the CFATF Secretariat, housed in Trinidad and Tobago.
The CFATF continues to encourage its 26 member jurisdictions to
implement the 40 FATF Recommendations plus 19 additional recommendations
specific to the region. The CFATF has begun to conduct mutual
evaluations of its members to assess their progress in implementing the
59 recommendations. A typologies exercise is being planned to assess
current money laundering trends in the region. A technical meeting of
the CFATF is planned for March 1996 to discuss implementation and
enforcement of anti-money laundering measures by members. A Ministerial
meeting is planned to be held in May.
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