Key highlights of the 40 recommendations

  • Risk based approach: countries and financial institutions should understand the risks they face, and take measures against those risks. This allows limited resources to be targeted.

  • Designated categories of offenses: where the money derived from the specific offense is concealed in the financial system, this would constitute criminal money laundering. Countries should also confiscate the proceeds of crime.

  • Terrorist financing and proliferation: countries should criminalize terrorist financing, freeze the assets of any entity that is identified by the UN Security Council as involved in terrorism. Also control against the use of non-profits for terrorist support.

  • Knowledge and criminal liability: willful blindness (deliberate avoidance of knowledge of the facts) should not shield an entity from money laundering offences. Civil, or if possible, criminal offenses should apply to legal entitles .

  • Customer due diligence: should occur when business relations are started, when occasional transactions occur above a specified threshold, suspicions of money laundering or terrorist financing arise, doubts about previous customer identification exist.

  • Financial institutions should:

    • on a risk basis, identify customers and verify their identity using independent source documents.

    • identify the beneficial owner and verify their identity.

    • understand the nature of the business relationship.

    • scrutinize transactions and ensure they match the knowledge of the customer.

    • maintain records.

  • Heighted CDD on:

    • PEPs including verifying source of funds.

    • Cross-Border correspondent banking, understanding the respondent’s business and customers, levels of AML controls, mitigate risks of payable through accounts.

    • Money or value transfer services (MVTS) should be licensed and be subject to AML requirements.

    • New technologies should be risk assessed, especially new products, delivery mechanisms and business practices. Risks should be mitigated.

    • Wire transfers – accurate originator, intermediary and beneficiary information, and monitor for missing data, also sanctions screen the data.

  • Suspicious transaction reporting: institutions must report to the FIU any suspicions.

  • Expanded coverage of industries: casinos, real estate agents, dealers in precious metals and stones, lawyers, notaries, accountants, legal professionals (when they manage client money or other assets, buy or sell real estate, create or manage companies), trust and company service providers (when they act as formation agents, act as a director or secretary, act as a trustee or nominee shareholder for another person).

  • FATF designated thresholds:

    • Financial institutions for occasional customers: €15,000

    • Casinos, including internet: €3,000

    • Dealers in precious metals and stones, when dealing in cash €15,000

  • Transparency and beneficial ownership of legal persons: particularly those that issue bearer shares

  • Powers and responsibilities of authorities: ensure FATF recommendations are being implemented in financial institutions, and are not owned or controlled by criminals

  • International co-operation and mutual assistance

Next Topic: Non-Cooperative Counties

Previous Topic: Overview of the 40 recommendations

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