The Financial Action Task Force’s actions to combat de-risking
The Financial Action Task Force (FATF) has issued an online statement concerning their efforts to combat de-risking. It is divided into four areas of concern, which aim to simultaneously raise awareness & prevent any anti-money laundering and terrorism counter financing risks.
De-risking is a matter that the FATF prioritises as per the announcement on its website, and for this purpose it will continue closely monitoring developments in regards to de-risking, including the gathering and analytical work which will be conducted by other bodies.
The analytical work that has been undertaken so far by a number of different institutions, including the FATF itself, shows that de-risking is being driven by many factors. They are considering this to be a serious issue, along with the FATF-style regional bodies, to the extent that de-risking may lead certain financial transactions underground. The FATF suggests that this creates financial exclusion and reduces transparency, hereby increasing potential money laundering & terrorist financing risks.
In order to ensure that anti-money laundering & counter financing of terrorism (AML / CFT) measures are being implemented effectively and in line with its risk based approach, The FATF works actively to clarify regulatory expectations in four areas that are especially relevant to de-risking. The four areas are:
- Developing guidance to clarify how to properly identify & manage risk in the context of correspondent banking & remittance.
- Developing guidance to assist money remitters identify and manage their risks, to assist banks evaluations & effectively manage the risks of providing financial services to payees, in order to assist governments supervise such activities.
- Developing best practices on proper customer due diligence to facilitate financial inclusion in a manner that strikes an appropriate balance with AML / CFT objectives.
- Revising the standard to help governments properly identify those non-profit organisations most vulnerable to terrorist financing abuse, and address such risks in a proportionate way.
The FATF aims to carry out work on these four projects next year in 2016.
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