FATF, MoneyVal and the assessment process
Financial Action Task Force (FATF)
- The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. It makes recommendations which, if implemented and followed, combat the misuse of financial systems. Initially these recommendations were aimed at the laundering of drug money, but this has been revised to reflect evolving money laundering trends and to deal with specific issues such as:
- organised crime
- It also helps authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes. The FATF also works to stop funding for weapons of mass destruction.
- The 40 recommendations have been endorsed by over 200 countries and jurisdictions. They are universally accepted to set the international standard for anti-money laundering (AML) and countering the financing of terrorism (CFT).
- The FATF (fatf-gafi.org)
- Moneyval is a body of the Council of Europe based in France, and Guernsey is one of 34 European and other countries and jurisdictions that are part of the Moneyval process. Moneyval reports examine both technical measures and, importantly, the effectiveness of measures taken in the financial, regulatory and criminal justice sectors to combat money laundering and terrorist financing, and make recommendations to improve the AML/CFT system. The last evaluation of Guernsey undertaken by Moneyval was in 2014 and showed that Guernsey had made good progress against the evolving international standards in these areas - and had surpassed the equivalent International Monetary Fund report that assessed Guernsey in these areas back in 2010.
- Having said that, expectations and assessments by international bodies normally become stricter rather than weaker with the passage of time, and we are expecting this to be the case when Moneyval inspect us next, in April 2024. In any case, we will be evaluated against stronger international standards than was the case in 2014 and it is the effectiveness of our compliance with those stronger standards rather than technical compliance which will be key. This inspection will be significant for our finance industry and wider community.
- The Bailiwick is absolutely committed to combatting financial crime and recognises its strategic significance and the adverse impact it can have on our community, finance industry and reputation as a good place to conduct business. We have taken a considerable number of steps in recent years to further strengthen our capabilities to tackle economic crime as well as ensuring compliance with continually evolving international standards. This includes the establishment of the Economic and Financial Crime Bureau (EFCB) in June 2021 that centralises resources, expertise and capabilities dedicated to tackling the financial risks set out in Guernsey's National Risk Assessment for money laundering and recovering the proceeds of crime - particularly in respect of cross jurisdictional wrongdoing.
- Legislation agreed by the States of Deliberation sets out the Bureau's purpose, powers and the legal tools to discharge its functions and gives its Director strategic responsibility for the Financial Intelligence Unit. Other significant legislation has bolstered our armoury to tackle money laundering (and other financial crimes) and recovering the proceeds of unlawful conduct using enhanced civil remedies.
- MONEYVAL in brief (coe.int)
How the MoneyVal assessment process works
- Moneyval evaluates AML and CFT measures within Europe. It does so by first assessing compliance with the international standards (including the FATF Recommendations) and then reviewing the effectiveness of their implementation.
- Moneyval assesses members' compliance with all relevant international standards in the legal, financial and law enforcement sectors. This is done through a peer review process of mutual evaluations, which involves questionnaires and a visit to conduct interviews with relevant stakeholders. Following this process the Bailiwick's performance will be assessed.
- Moneyval's representatives need to have particular knowledge and experience of their domestic AML and CFT regimes and should have expertise in the following areas:
- regulation and supervision of financial institutions
- law enforcement and financial intelligence units
- representatives of ministries of justice and/or judicial and prosecutorial
- Its reports provide highly detailed recommendations on ways to improve the effectiveness of domestic regimes to combat money laundering and terrorist financing and members capacities to co-operate internationally in these areas.
- Mutual Evaluations - Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (coe.int)
- The full methodology for the evaluation can be read at FATF Methodology 22 Feb 2013.pdf.coredownload.pdf (fatf-gafi.org)