Financial Crime World

Here’s the article in markdown format:

Combating Money Laundering and the Financing of Terrorism & Proliferation: FATF Recommendations

The Financial Action Task Force (FATF) is an inter-governmental organization that develops and promotes policies to protect the global financial system against money laundering, terrorist financing, and proliferation financing. The following recommendations outline measures for countries to implement in order to combat these crimes.

Recommendations for Countries

Customer Due Diligence (CDD)

  • Financial institutions should perform CDD measures on their customers, including verifying their identities and assessing their risk profiles.
  • This helps to prevent the misuse of financial systems for illicit purposes and protect the integrity of the global financial system.

Record-Keeping

  • Financial institutions should maintain records of transactions and information obtained through CDD measures for at least five years after the business relationship is ended.
  • Accurate record-keeping enables effective monitoring and enforcement of AML/CFT regulations.

Politically Exposed Persons (PEPs)

  • Financial institutions should apply enhanced due diligence when dealing with PEPs, including obtaining senior management approval, conducting ongoing monitoring, and determining the source of wealth and funds.
  • This ensures that financial institutions understand the higher risks associated with PEPs and take necessary measures to mitigate them.

Correspondent Banking

  • Financial institutions should assess the AML/CFT controls of respondent institutions before establishing correspondent relationships and ensure that they understand the respective responsibilities of each institution.
  • This helps to prevent the misuse of correspondent banking relationships for illicit activities.

Money or Value Transfer Services (MVTS)

  • Countries should license or register MVTS providers, subject them to effective systems for monitoring compliance with relevant measures, and identify and apply sanctions to unlicensed providers.
  • This ensures that MVTS providers operate in a transparent and accountable manner.

New Technologies

  • Countries and financial institutions should identify and assess the money laundering or terrorist financing risks associated with new products, business practices, and technologies.
  • This enables proactive measures to mitigate potential risks and protect the integrity of the global financial system.

Conclusion

The FATF recommendations outlined above aim to help countries implement effective AML/CFT measures, prevent the misuse of financial systems for illicit purposes, and protect the integrity of the global financial system. By implementing these measures, countries can contribute to a safer and more secure financial environment for all.