Author: Joshua L. Ray 9 November 2020
Joshua Ray of business crime specialists Rahman Ravelli considers the challenge it faces.
The global watchdog the Financial Action Task Force (FATF) is to revise its standards in an effort to improve the monitoring of financing that attempts to evade US and United Nations sanctions.
The move was announced by the US Treasury Department, which said the move was an attempt to tackle the flow of dirty money in order to prevent the financing of weapons of mass destruction.
In a statement, the US Treasury said that both North Korea and Iran had created intricate networks to evade sanctions. These involved shell companies being created in FATF member countries so that funds could be moved around undetected in order to “further their dangerous purposes.”
The US began calling for the changes at the FATF in 2018-19 when it headed the body, which has 39 members.
US Treasury Secretary Steven Mnuchin said: “The collaboration of the FATF is vital to addressing global illicit financial activity, including fraud associated with the COVID-19 pandemic, proliferation financing risk, and other (anti-money laundering and counterterrorist) priorities.”
The changes that are being introduced require countries and the private sector to assess and reduce the risks related to the “potential breach, non-implementation or evasion of UN financial sanctions.”
The new approach being taken by the FATF is similar to that issued in September by the US Treasury and other federal agencies concerning money laundering and politically exposed persons. Like that guidance, FATF’s announcement reaffirms the need to focus on combatting illicit money flows and specifies the types of risk factors banks should most focus on when conducting due diligence on their clients.
Joshua Ray represents individuals and corporates in complex investigations, prosecutions and regulatory actions regarding market manipulation and multijurisdictional matters involving fraud, bribery and money laundering.