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FATF Plenary June 2022: Greylist Changes and Upcoming Strategic Initiatives

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The Financial Action Task Force (FATF) has published the outcomes from its plenary meeting, which took place between June 14 and 17 2022. Three plenary sessions are held each year by the FATF, with the plenary year beginning in July and ending in June.

Discussions centered around:

  • Upcoming mutual evaluation reports (MERs) for Germany and the Netherlands to the list of jurisdictions under increased monitoring, commonly known as the greylist
  • Information sharing and data protection
  • Risk-based approach guidance for real estate
  • Standards on virtual assets
  • Possible amendments to current FATF Recommendations concerning beneficial ownership.

The FATF also issued a public statement on its decision to “severely limit the Russian Federation’s role and influence within the FATF”, particularly in regards to decision-making and leadership roles. The statement reiterates a call made by the FATF earlier this year for “all jurisdictions to remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s aggression in Ukraine”.

Mutual evaluation reports for Germany and the Netherlands

While the FATF acknowledged notable improvements to Germany and the Netherlands’ anti-money laundering / countering the financing of terrorism (AML/CFT) frameworks, some outstanding deficiencies remain.  

For Germany, it was noted that the private sector, especially non-financial sectors, requires more effective supervision, and that beneficial ownership information should be made more accessible. The country was congratulated for the positive steps it has taken in developing a deeper national understanding of money laundering and terrorist financing risks. But the FATF said Germany must strengthen the development and use of financial intelligence by all relevant authorities including the Financial Intelligence Unit and Law Enforcement Authorities.

The Netherlands was likewise commended for its strong technical compliance with FATF standards. However, the country was encouraged to strengthen its risk-based supervision and allocate better resources to tackling unlicensed activities. Deficiencies related to the regulation of Virtual Asset Service Providers were also highlighted. 

Following a quality and consistency review, the FATF will publish MERs for Germany and the Netherlands in September.

Changes to the greylist 

Following an on-site visit, it was concluded that Malta should be no longer subject to increased monitoring. The country was taken off the greylist after a year due to its significant progress in addressing the strategic AML/CFT deficiencies previously identified by the FATF and included in its action plan. The FATF also noted that its regional partner, MONEYVAL, will work alongside Malta to continue strengthening its AML/CFT regime. 

Gibraltar, however, was added to the FATF’s greylist due to failings in its gambling sector. FATF chair Marcus Pleyer explained that “Gibraltar needs to take a number of steps including focusing on gatekeepers to the financial system, including gambling operators and lawyers”.  

The FATF’s action plan for Gibraltar includes: 

  • Ensuring supervisory authorities for non-bank financial institutions and designated non-financial businesses and professions (DNFBPs) use a range of effective, proportionate, and dissuasive sanctions for AML/CFT breaches
  • Demonstrating that the country is more actively and successfully pursuing final confiscation judgments, through criminal or civil proceedings based on financial investigations.

Strategic initiatives

The FATF also discussed multiple strategic initiatives ranging from information sharing and data protection to improving access to beneficial ownership details. The next steps include: 

  • At the end of June, the FATF will publish a report on the requirement for virtual asset service providers to implement and enforce the travel rule to prevent the misuse of virtual assets for money laundering and the financing of terrorism
  • A report on increased private sector information sharing while meeting domestic data privacy obligations will be published in July. The report will be based on observations and lessons learned by the FATF and its global network
  • Also in July, the FATF will publish finalized guidance on implementing risk-based measures to prevent money laundering and terrorist financing in the real estate sector. The guidance follows a public consultation the FATF held earlier this year
  • Revised guidance on implementing access to beneficial ownership information will be developed by the FATF and targeted stakeholders to help countries make any necessary changes quickly. The guidance is due to be published in October this year

Compliance staff should ensure they are familiar with the outcomes of the June Plenary – particularly relating to any upcoming MERs in countries they operate in – and take note of the dates relating to the upcoming guidance issued by the FATF. Such guidance will help shape and inform the regulatory approach taken by national bodies going forward. 

The next FATF Plenary is due to take place in October 2022.  

 

Originally published June 24, 2022, updated June 24, 2022

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