International and regional bodies that combat money laundering (part C)

Introduction

Money laundering is a global phenomenon that thrives parasitically on the world’s financial markets. It ignores national boundaries in much the same way that the financial market place does. It has been accepted that this problem requires both national and international countermeasures.

Economies built on the back of criminal activity are unstable and pose significant risks to neighbouring countries and those with close economic ties. The impetus for international governmental action against money laundering also stems from a fear of national or regional economic destabilisation resulting from over exposure to illegally derived funds.

The global financial market provides criminals with unlimited opportunities to launder money. Global efforts to prevent money laundering are only as strong as the weakest national AML framework. International initiatives have been designed to encourage national governments into taking or strengthening measures to prevent money from being laundered within their borders. Such initiatives come from international bodies like for example the Financial Action Task Force (FATF) and prompt regional action such as EU Directives, which in turn result in national legislation.

The criminalization of money laundering is a relatively recent legal development and all the international efforts to prevent money laundering are relatively young:

  • The first international initiative during the early 1980s focused on the prevention of the laundering of funds derived solely from drug trafficking.
  • Then the focus was expanded to include the prevention of the laundering of the proceeds of a wider range of criminal activity.

After the terrorist attacks in the US on 11 September 2001, the international community recognized the importance of preventing the financing of terrorism and international and regional bodies previously responsible for money laundering prevention expanded their remits to include the prevention of terrorist financing.

Some of the most influential international and regional bodies in the anti money laundering

A.  The Asia Pacific Group on Money Laundering (APG)

  • The Asia/Pacific Group on Money Laundering (APG) is an autonomous and collaborative international organisation founded in 1997 in Bangkok, Thailand.
  • It consists of 41 members and a number of international and regional observers
  • Some of the key international organisations who participate with, and support, the efforts of the APG in the region include the Financial Action Task Force, International Monetary Fund, World Bank, OECD, United Nations Office on Drugs and Crime, Asian Development Bank and the Egmont Group of Financial Intelligence Units

The APG has five important functions:

  1. To assess compliance by APG members with the global AML/CFT standards through a robust mutual evaluation programme;
  2. To coordinate bi-lateral and donor-agency technical assistance and training in the Asia/Pacific region in order to improve compliance by APG members with the global AML/CFT standards;
  3. To participate in, and co-operate with, the international anti-money laundering network - primarily with the FATF and with other regional anti-money laundering groups;
  4. To conduct research and analysis into money laundering and terrorist financing trends and methods to better inform APG members of systemic and other associated risks and vulnerabilities; and
  5. To contribute to the global policy development of anti-money laundering and counter terrorism financing standards by active Associate Membership status in the FATF.

B.  The Caribbean Financial Action Task Force (CFATF)

  • It was established as the result of meetings convened in Aruba in May 1990 and Jamaica in November 1992;
  • The Caribbean Financial Action Task Force (CFATF) is an organisation of twenty-seven states of the Caribbean Basin, which have agreed to implement common countermeasures to address the problem of criminal money laundering;
  • In Aruba representatives of Western Hemisphere countries, in particular from the Caribbean and from Central America, convened to develop a common approach to the phenomenon of the laundering of the proceeds of crime. Nineteen recommendations constituting this common approach were formulated. These recommendations, which have specific relevance to the region, are complementary to the additional forty recommendations of the Financial Action Task Force;
  • The Jamaica Ministerial Meeting was held in Kingston, in November 1992. Ministers issued the Kingston Declaration in which they endorsed and affirmed their governments’ commitment to implement the FATF and Aruba Recommendations, the OAS Model Regulations, and the 1988 U.N. Convention. They also mandated the establishment of the Secretariat to co-ordinate the implementation of these by CFATF member countries;
  • The main objective of the Caribbean Financial Action Task Force is to achieve effective implementation of and compliance with its recommendations to prevent and control money laundering and to combat the financing of terrorism;
  • The CFATF Secretariat monitors members’ implementation of the Kingston Ministerial Declaration through the following activities:

– Self-assessment of the implementation of the recommendations

– An ongoing programme of Mutual evaluation of members

–  Co-ordination of, and participation in, training and technical assistance programmes

–  Biannual plenary meetings for technical representatives

– Annual Ministerial meetings

C.  The  Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – MONEYVAL (formerly PC-R-EV)

  • It was established in 1997 and its functioning was regulated by the general provisions of Resolution Res(2005)47 on committees and subordinate bodies, their terms of reference and working methods
  • MONEYVAL currently comprises 30 members which are subject to its evaluation processes and procedures
  • The aim of MONEYVAL is to ensure that its member states have in place effective systems to counter money laundering and terrorist financing and comply with the relevant international standards in these fields
  • Such standards are those contained in the recommendations of the FATF, including the Special Recommendations on Terrorist Financing, the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, the United Nations Convention against Transnational Organised Crime, the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism, the Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing and the relevant implementing measures and the 1990 Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, concluded within the Council of Europe
  • MONEYVAL assesses its members’ compliance with all relevant international standards in the legal, financial and law enforcement sectors through a peer review process of mutual evaluations
  •  Its reports provide highly detailed recommendations on ways to improve the effectiveness of domestic regimes to combat money laundering and terrorist financing and states’ capacities to co-operate internationally in these areas
  • MONEYVAL also conducts typologies studies of money laundering and terrorist financing methods, trends and techniques.