Dr Marcus Pleyer says supervisors and compliance officers in banks and companies mostly still take a basic tick-box approach.
FATF (Financial Action Task Force) President Dr Marcus Pleyer has called upon the G20 to lead a change in regulatory culture in the fight against financial crime.
“We keep hearing about criminals exploiting the Covid-19 pandemic… This is happening partly due to a widespread failure in effective supervision and compliance of anti-money laundering measures,” Pleyer said in remarks at Second G20 Finance Ministers and Central Bank Governors Meeting on Wednesday (7 April).
“That’s why the FATF wants governments to re-think their regulatory culture in this area.”
Pleyer lamented that while supervisors and compliance officers in banks and companies are meant to understand and mitigate financial crime risks, they mostly still take a basic tick-box approach.
“They make sure forms are filled in correctly but don’t focus on the real risks. As a result, fraudsters, scammers and criminals often get away with their crimes.”
He said a greater focus on the real money laundering or terrorist financing risks is needed, where high-risk transactions face tougher checks and lower risk businesses have fewer hurdles.
“By focusing on the real financial crime risks, you can help detect criminal activity, stop legitimate business from facing unfair competition, and foster confidence in financial markets – all vital to the global economic recovery.”
A focus on the real risks will also prevent financial transactions and remittances in certain regions from being indiscriminately excluded and pushed underground, which would be a boon for financial inclusion, Pleyer added.
The FATF just recently published new guidance on risk-based supervision for the financial sector, intended to serve as a major reference point for applying a risk-based approach to AML/CFT supervision.
“If the G20 promote this change of culture, it will have a real world impact on our joint efforts to ensure economic recovery,” Pleyer said.
In a communique, the G20 reaffirmed its support for the FATF, commending its work to combat environmental crime, estimated to be worth up to USD 260 billion a year.
The G20 also acknowledged the FATF’s second 12-month review on the global implementation of the FATF standards on virtual assets and VASPs (virtual assets service providers).
The G20 Finance Ministers committed to further strengthening the FATF’s Global Network of regional bodies in order to reinforce the effective implementation of the FATF standards.