FATF to Drive Digital Transformation of AML/CFT Systems

Digital transformation of AML/CFT systems will help to ensure their resilience in future and build their efficiency, the FATF says.

The FATF (Financial Action Task Force) plans to “drive forward the digital transformation of AML/CFT systems” under its German Presidency, the intergovernmental body said in a statement following its 32rd plenary meeting.

In the statement, the FATF pointed to its May guidance for managing Covid-19 related AML risks, saying that the challenges, good practices and policy responses in the guidance remain relevant.

“Criminals continue to exploit the pandemic, with mounting cases across the globe of counterfeiting of medical goods, investment fraud, adapted cyber-crime scams and exploitation of economic stimulus measures put in place by governments,” the FATF said.

“At the same time, the pandemic has severely impacted some government and private sectors’ ability to implement measures to detect, prevent and investigate money laundering and terrorist financing.”

While survey findings indicate the May guidance remains relavant, the FATF says the impact of the pandemic, the nature of the risks, the resilience of national AML/CFT regimes, and the risks faced by private sector all vary significantly from country to country.

It remains “critical” that jurisdictions continue to actively identify, assess, and understand how criminals and terrorists can exploit the Covid-19 pandemic, and apply a risk-based approach when mitigating these risks, the FATF says.

Over the coming months, vulnerabilities for criminal exploitation could come from rising unemployment, increases in remote transactions, and accelerated implementation of stimulus programmes.

In addition, increased cash circulation as a result of economic uncertainty, and the closure of borders, are also likely to impact money laundering activity.

The FATF points to the use of new technologies, saying they have “helped the private sector adapt to the pandemic, for example using digital forms of identity to enable non-face-to-face interaction with customers.”

“Other digital solutions could support information sharing, and detection and analysis of suspicious activities.”

The statement says work under the FATF’s German Presidency will seek to drive forward the digital transformation of AML/CFT systems, helping to “ensure their resilience in future and building their efficiency”.

See full public statement is available here.

Other FATF initiatives progressed at the plenary include:

  • work to strengthen FATF Global Network, including to enhance cooperation with the FSRBs (FATF-Style Regional Bodies) to improve implementation of the FATF Standards
  • adoption of a new report on TBML (trade based money laundering), to be published in the near-future; the report will serve as a practical tool to assist the public and private sectors to better identify and disrupt TBML activity using a risk-based approach
  • adoption of amendments Recommendations 1 and 2 and their Interpretive Notes to further strengthen the global response to WMD proliferation financing [Read More]

The FATF will hold an Joint Experts’ Meeting virtually from 23-25 November.

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