Remarks at Network AML/CFT Institute International Scientific and Research Conference "Threats and Risks to Global Economy”

Remarks by David Lewis
FATF Executive Secretary
Moscow, 1st November, 2016

Distinguished guests,
ladies and gentleman,

I would like to start by saying that Russia is a strong and valued member of the FATF and I am pleased and proud to be here on the 15th Anniversary of Rosfinmonitoring.

Money motivates criminals and enables terrorism. FATF’s role is simple. It is to deprive criminals and terrorists of this money. FATF’s objective is that “financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security’’.

We are a task force of 37 members and 9 regional bodies working in partnership with the United Nations, IMF, World Bank and others. The FATF Global Network today includes 198 jurisdictions, all committed at the highest level to implementing the FATF standards and being assessed by their peers.

The FATF does three things:

  • we research the ways criminals launder money and terrorist organisations raise and access funds;
  • we set global standards to make life harder for criminals and terrorists; and
  • we assess how effective countries are at fighting money laundering and terrorist financing.

The FATF published its first set of Recommendations in 1990, a year after its creation. These set out the legal and regulatory measures that countries should take. They were the turning point in the fight against money laundering. For the first time, there was an international consensus on how to tackle this and the tools necessary to do so. Since then, as a result of its success, the FATF has seen its mandate expand to include the financing of terrorism and the proliferation of weapons of mass destruction.

Thanks to FATF, most countries now have the legal, regulatory and operational tools. Money laundering and terrorist financing investigations are common, and lead to successful prosecutions on a daily basis. Organised crime groups are being disrupted, terrorist networks identified and terrorist organisations cut off from the financial system.

The FATF has been especially successful in identifying those countries with deficiencies that pose a risk to the global financial system. These countries are subject to special scrutiny which includes naming and shaming. This increases the costs of doing business and deters investment. It is a powerful incentive for countries to act.  

In the last ten years, the FATF has subjected over 80 potentially high-risk and non-cooperative countries and has publicly identified 59 of them. This helps safeguard the integrity of the global financial system, which is only as strong as the weakest link.

Most of these countries have successfully completed action plans with the FATF. And as of today I am pleased to report that only 10 countries are listed, all of which have committed to take action. FATF will continue to name countries, including in the future, for poor results in the fight against money laundering and terrorist financing.

It should come as no surprise that the top priorities for the FATF today are counter terrorist financing, with a particular focus on ISIL, and improving the transparency of beneficial ownership – which as the Panama papers show, remains opaque in many countries around the world, facilitating rampant corruption and tax evasion as well as other serious crimes.

We have a clear strategy and operational plan for countering terrorist financing. The FATF President addressed the first ever meeting of Finance Ministers of the UN Security Council in December 2015, which adopted UN Resolution 2253, targeting ISIL. The FATF has published the most authoritative reports to date on the financing of ISIL and emerging terrorist financing risks. As a result of a targeted review last year of nearly 200 jurisdictions, we know that most countries have the basic tools they need. However we found that too many countries are failing to take adequate action. We have strengthened our standards on criminalising terrorist financing and on the abuse of non-profit organisations. In the past week we issued guidance supporting this and published a new report on terrorist financing in West and Central Africa.  

We identified the risks of abuse of companies and trusts long ago. In response, in 2003 we developed the first comprehensive standards on beneficial ownership. We further strengthened these standards in 2012 and have since issued guidance to countries on improving the transparency of beneficial ownership. Today we are working closely with the Global Forum on Tax, and we are regularly advising the G20 on what more they and other countries need to do to prevent such abuse.

So while we continue to review and strengthen our standards, the biggest challenge we face is effective implementation by countries. That is why in 2013 the FATF went beyond assessing laws and regulations, to start assessing the results countries can show for combatting money laundering and terrorist financing. This is a new process which is proving challenging for all countries.

Finally, I would like to say a few remarks about Russia and its role in FATF. As I said at the start, Russia is a strong and valued member. This was recognised by your Presidency of the FATF in 2013, which I understand was supported directly by the now President of the Russian Federation.

Russia plays a leading role in FATF’s work to counter terrorist financing. It leads with Australia, FATF’s work to identify risks, trends and methods and it has led important projects on terrorist financing. The FATF has come to rely on Russia’s experience, knowledge and expertise to closely monitor how ISIL is financed and to inform action by countries to prevent and disrupt this.

Russian leadership in the Eurasian Group, an FATF-style Regional Body, led to many more countries joining the Global Network. And the International Training Centre based here will be a significant help to our newly established Training and Research Institute.

I would like to thank Yuri Chikhanchin and his excellent team at Rosfinmonitoring for inviting me again to Russia. Thanks to them and the Governor of the Bank of Russia, I had the pleasure of visiting Russia for the first time ever in July this year. I experienced the legendary Russian hospitality, as well as the sights and culture of Moscow and St Petersburg. I am delighted to have this opportunity to return and to recognise the friendship and support of our Russian colleagues in the FATF.

Finally, I would like to congratulate Rosfinmonitoring on its 15th Anniversary and to wish it continued success in its work to help protect the global financial system and our safety and security.