Financial Crime World

Financial Crime Risk Management: Challenges and Recommendations for Systemic Reform

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Addressing Key Issues in Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

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The field of AML/CFT faces significant challenges that hinder effective systemic reform. These include:

Standards for Information Sharing

  • Data Privacy Considerations: Balancing information sharing with data protection is crucial.
  • Multilateral Cooperation on Financial Crime Data: Encouraging collaboration among jurisdictions.

Public-Private Partnerships and Asset Recovery

  • Fraud Detection and Prevention: Improving methods to identify and prevent financial crimes.
  • Whole System Capabilities: Enhancing the ability of financial systems to detect and prevent crime.

Measuring Effectiveness Combined with Prioritization in the Anti-Financial Crime Framework

The Role of the FATF in AML/CFT Reform

The Financial Action Task Force (FATF) has made significant progress in revising recommendations on national cooperation and coordination between AML authorities and data privacy authorities. However, challenges persist in group-wide sharing and inconsistency in application across jurisdictions.

Steps Towards Systemic Reform

  1. Review of Recommendation 18: The FATF should review the implementation status of R.18 through its Mutual Evaluation Report (MER) process.
  2. Future Horizontal Reviews: Consider potential future horizontal reviews of intragroup information sharing for practical application.
  3. Strengthening Interpretative Notes: Review INR.2 to strengthen the basis for implementation and clarify operative information gateways in legislation or existing rules.
  4. Incorporating New Standards: Incorporate a new standard on establishing domestic and cross-border information sharing mechanisms as part of an effective anti-financial crime system.

These steps aim to facilitate increased sharing of information, more effectively using financial activity, threat, and risk data linked to crime and terrorism domestically and internationally, and enhancing cooperation between authorities to achieve a fuller picture of financial criminal activity.