Eleventh-Hour law prevents FATF from blacklisting Turkey
By Samuel Rubenfeld, The Wall Street Journal
The Financial Action Task Force said late Friday that Turkish legislation signed 10 days ago into law spared Ankara from its blacklist.
Turkey’s national assembly passed a bill on preventing the financing of terrorism earlier this month, and it was signed into law on Feb. 15. The FATF said Friday the law addressed many of the shortcomings it identified in Ankara’s criminal code for terrorism financing, as well as creating a legal basis for freezing terrorist assets.
“The FATF welcomes this significant step made by Turkey, which improves the country’s compliance with the international standards,” the body said in a statement.
Had Turkey not passed the law by Friday, the FATF said back in October when it last met, Ankara would be suspended by the body, which recommends ways to prevent money laundering and the financing of terrorism.
The FATF met last week in Paris. Countries that fail to implement its recommendations run the risk of being labeled as high-risk or uncooperative jurisdictions, thereby making it more costly and difficult for those nations to do business with the banking systems of FATF members. The FATF’s members include the U.S., Mexico, France and the U.K.
Despite Turkey’s new law, the FATF said “there still remains a number of ongoing shortcomings” in its counter-terrorist financing regime, which Ankara “must address” to “reach a satisfactory level of compliance with the FATF standards.”
The FATF said in the statement that Turkey committed to addressing them, and it will submit a report on how it did so prior to the next FATF meeting in June.
In addition to sparing Turkey, the FATF also upgraded Bolivia, Sri Lanka and Thailand from its “strategic deficiencies” list of countries to its list of improving countries “due to their progress in largely addressing their action plans agreed upon with the FATF,” it said in a statement.
Cuba also was upgraded, the FATF said, because it provided the body with a “high-level political commitment” to implement a plan to address its deficiencies.
Ghana and Venezuela are no longer subject to ongoing monitoring by the FATF, it said, because each country made “significant progress.” Meanwhile, Morocco and Tajikistan were cited as not making sufficient progress, and the FATF threatened to label them as being out of compliance, putting them at risk of blacklisting.
The FATF’s next round of country assessments, which start this year, will focus “much more” on how countries are actually fighting money laundering and terrorism financing instead of examining their laws.
“It remains as important as before that all countries implement the recommendations of the FATF in their legal systems, however, the new methodology lays the foundation for a systematic assessment of the effectiveness of national systems,” said Bjørn S. Aamo, the president of FATF, in a statement*.
For more on this story go to:
*Statement
FATF issues new Mechanism to Strengthen Money Laundering and Terrorist Financing Compliance
Paris, 22 February 2013 – The Financial Action Task Force’s new Methodology for assessing technical compliance with the FATF Recommendations and the Effectiveness of AML/CFT systems sets out how the FATF will determine whether a country is sufficiently compliant with the 2012 FATF Standards [1] and whether its AML/CFT system is working effectively.
The FATF is the global standard-setter in the fight against money laundering, and the financing of terrorism and proliferation of weapons of mass destruction. Over the past twenty years the FATF has developed, used and refined rigorous compliance mechanisms to help ensure global compliance with its Standards. It assesses compliance through a stringent country evaluation and monitoring process. A new round of evaluations will begin in 2013.
The new Methodology will provide the basis for an integrated analysis of the extent to which a country is compliant with the FATF Standards and the level of effectiveness of its AML/CFT system.
Bjørn S. Aamo, President of the FATF, said
“The new Methodology adds a new dimension to the evaluation of countries compliance with FATF-standards. It remains as important as before that all countries implement the Recommendations of the FATF in their legal systems, however, the new Methodology lays the foundation for a systematic assessment of the effectiveness of national systems.”
“The future assessments will determine how well countries achieve the objective of fighting Money Laundering and Financing of Terrorism.”
The Methodology comprises two inter-linked components:
The technical compliance assessment will address the specific requirements of each of the FATF Recommendations, principally as they relate to the relevant legal and institutional framework of the country, and the powers and procedures of competent authorities. These represent the fundamental building blocks of an AML/CFT system.
The level of compliance with each Recommendation will be indicated with one of the following ratings: compliant, largely compliant, partially compliant or non-compliant.
The effectiveness assessment will assess the extent to which a country achieves a defined set of outcomes that are central to a robust AML/CFT system and will analyse the extent to which a country’s legal and institutional framework is producing the expected results.
How effectively each of the Immediate Outcomes in the Methodology is achieved by a country will be set out in the evaluation report and will include one of the following ratings: high-level of effectiveness, substantial level of effectiveness, moderate level of effectiveness and low level of effectiveness.
The Methodology will be used by the FATF, the FATF-Style Regional Bodies (FSRBs) and other assessment bodies such as the IMF and the World Bank.
For the FATF website go to: http://www.fatf-gafi.org/
