Combating the Financing of Terrorism (CFT) Best Practices in Faroe Islands

The Faroe Islands has taken significant steps to enhance its efforts against money laundering and terrorist financing by adopting key recommendations from the Financial Action Task Force (FATF).

Strengthening Global Response to CFT

The FATF’s revised standards aim to strengthen the global response to combating the financing of terrorism (CFT). The Faroe Islands has made significant progress in aligning its regulations with international best practices.

Key Revisions and Updates

In 2013, the country inserted a reference into its laws stating that secrecy or confidentiality provisions should not hinder the provision of mutual legal assistance, except where the information sought is protected by legal professional privilege.
In 2015, the Faroe Islands revised the Interpretive Note to Recommendation 5 to address the threat posed by foreign terrorist fighters. This update clarifies that countries must criminalize financing the travel of individuals who join or plan to join terrorist groups.
In 2016, it revised Recommendation 8 to clarify which non-profit organizations (NPOs) should be subject to greater scrutiny, aiming to better align the implementation of CFT measures with a risk-based approach.
Recent revisions have focused on enhancing the country’s ability to identify and assess risks related to proliferation financing. In October 2020, the Faroe Islands revised Recommendation 1 to require financial institutions and designated non-financial businesses and professions (DNFBPs) to identify and mitigate these risks.

Enhancing Supervision and Monitoring

The country has also made efforts to strengthen its supervision and monitoring of NPOs. The revisions aim to better align the implementation of CFT measures with a risk-based approach.

In 2016, the Faroe Islands revised Recommendation 8 to clarify which NPOs should be subject to greater scrutiny.
Recent revisions have focused on enhancing the country’s ability to identify and assess risks related to proliferation financing.

Promoting Domestic Cooperation and Information Exchange

The Faroe Islands has made significant progress in promoting domestic cooperation and information exchange between law enforcement agencies. A new interpretive note was added to Recommendation 2, outlining an inter-agency framework to promote national coordination and cooperation.

Strengthening Standards on Beneficial Ownership

Recent revisions have added definitions for “nominator” and “nominee shareholder or director”, as well as clarified the requirements for identifying beneficial owners. This aims to strengthen the country’s standards on beneficial ownership of legal persons and arrangements.

Conclusion

These efforts demonstrate the Faroe Islands’ commitment to combating the financing of terrorism and aligning with international best practices. As a result, the country is better equipped to prevent and detect terrorist financing activities, while also promoting financial stability and integrity.