International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, November 9, 2016

The Global Forum on Transparency and Exchange of Information for Tax Purposes  held its annual meeting in Tbilisi, Georgia OECD on November 2-4, bringing together 220 delegates from 84 jurisdictions and 12 International organisations to further their shared goal of improving tax transparency and achieving a level playing field.  

The meeting marked the completion of the first round of the Forum’s peer review process, with the release of 17 new reports assessing the level of compliance with the international standard for exchange of information on request (EOIR). Click here to read the details of the reports. 

Many jurisdictions which received less than satisfactory ratings announced that they had already taken or were taking steps to address recommendations made in the review process.  Marshall Islands agreed to its report but highlighted‎ recent progress made. Panama reminded the group of recent significant action taken, both in terms of amending legislation, reorganising its competent authority and signing the multilateral Convention on Mutual Administrative Assistance in Tax Matters on 27 October 2016. Trinidad and Tobago also informed the members of their intention to address outstanding issues at the earliest. 

A special fast-track review procedure was agreed at the meeting to enable Global Forum to recognise, by mid-2017, progress made and to assess changes being made in various jurisdictions. 

A second round of peer reviews now underway will  include an assessment of the availability of and access by tax authorities to  beneficial ownwership information of all legal entities and arrangements.

Global Forum members took stock of the tremendous progress being made in the implementation of the standard for automatic exchange of information (AEOI), with 97% of  jurisdictions  committed to exchanging information in 2017 ready for these exchanges. They  noted progress and some challenges for jurisdictions committed to launching exchanges in 2018, and agreed to implement tighter monitoring of the delivery of key milestones as well as providing support for implementation. Governance arrangements for a Common Transmission System for exchanging data were also agreed.

Against a backdrop of calls for preparation of lists of non-cooperative jurisdictions, a constructive discussion  was held to ensure that all converge around the Global Forum’s transparency  standards in their respective transparency initiatives.‎ 

The Global Forum strongly reaffirmed its commitment to help its developing country members  to meet the international standards and benefit from improvements in international tax transparency. It encouraged them to move towards implementing the AEOI Standard as soon as practicable.

In the margins of the Global Forum meeting, Saudi Arabia and Uruguay took an important step towards implementing automatic exchange of financial account information in 2018 by signing the Multilateral Competent Authority Agreement‎.

For additional information on the Global Forum:

November 9, 2016 in GATCA, OECD | Permalink | Comments (0)

Tuesday, November 8, 2016

Terrorist Financing in West and Central Africa

West and Central Africa continues to experience the terrible impact of terrorism. Boko Haram in particular, has developed into the most deadly terrorist organisations in the world, responsible for 6000 casualties in 2015 alone. Terrorism not only threatens civilians’ lives in this region, but also contributes to political instability and undermines economic gain and future development.

In today’s globalised world, and as ISIL has demonstrated, a regional terrorist threat, can quickly become a global one. The international community must work together with West and Central Africa to deprive terrorist organisations of their funds, and take away their ability to finance terrorist attacks.

This joint FATF- GIABA-GABAC report updates the 2013 report on Terrorist Financing in West Africa and extends it to Central Africa. The report looks at the confirmed and suspected funding source of terrorist groups that are operating in this region. It identifies the terrorist financing risks that are unique to the region, such as cattle rustling. Cash, including foreign currency, also plays an important role in terrorist financing in the West and Central African region. The report identifies challenges that the region faces to regulate financial products and sectors, and emphasizes the need for better cross-border collaboration. 

Terrorist Financing in West and Central Africa

Download pdf ( 1,575kb)

More on:

Terrorist Financing in West Africa, October 2013

November 8, 2016 | Permalink | Comments (0)

Monday, November 7, 2016

UK Telegraph's Expose on the Cost for an Accidental American under FATCA

An interesting read by the Telegraph that walks an Accidental American through the process of renunciation of American citizenship to avoid paying a life time of US taxes, penalties, interest, and potentially criminal offences for non-filing. Read it here.  Excerpts below:

Renouncing citizenship was particularly onerous as she had no social security number, which is a requirement for any US tax filing. To obtain one, she had to provide documentary IRS CID evidence for every year she had not been in the US – almost 50 years.  She had to present a record of her life’s movements in person to US tax representatives, via microphone through a glass panel, in a room with other people waiting.  Going through a “streamlined” process, she then had to provide five years of US tax returns, and six years of a “foreign bank and financial account” reports, providing specific details of all financial assets. Any mistakes can elicit potential fines of $10,000 (£8,200) per error.  The specialist advice she required to go through this process cost $6,000 (£4,900), on top of the $2,350 (£1,900) renunciation fee, plus further costs involved in obtaining documentation. There is also the potential of an "exit tax" for wealthier individuals who pass certain thresholds, and inheritance tax implications. The exit tax applies to their total wealth, as measured at the point of citizenship renunciation. 

Updated U.S. Treasury data shows 55,800 taxpayers have come into the Offshore Voluntary Disclosure Program (OVDP) to resolve their tax and financial reporting anti-money laundering obligations, paying more than $9.9 billion primarily in FBAR financial reporting money laundering penalties which are 50% confiscation of foreign assets per year of non-compliance, for up to six years.  In addition to the financial reporting asset seizures imposed on US taxpayers, the IRS has also collected tax, interest and tax penalties since 2009.  In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions, such as Accidental Americans, paying approximately $450 million in taxes, interest and penalties in addition to their foreign taxes paid.

Read the Telegraph expose here!

What is FATCA and an Accidental American?  download my article here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2742383

 

November 7, 2016 | Permalink | Comments (0)

Sunday, November 6, 2016

Do Accountants Have Legal Privilege To Protect Client's Tax Information from Summons?

While the trend in Canadian jurisprudence over the last decade has been a steady increase in the protection of solicitor-client privilege, the question of its application to other Canada-revenue-agencyprofessionals, including accountants has been raised both in Canada and abroad. In 2013, the UK Supreme Court in Prudential v Special Commissions of Income Tax declined to extend solicitor-client privilege to taxpayers who seek advice from professional accountants. In the United States, federal legislation offers only narrow protection to accountants who are “federally authorized” tax practitioners.  In Canada, the courts have refused to extend solicitor-client privilege to other tax professionals unless such communication is in furtherance to a function essential to the solicitor-client relationship or the continuum of legal advice provided by the solicitor.

Canadian solicitors Christopher Steeves and Jenna Ward of Fasken Martineau DuMoulin LLP analyze whether accountants are able to exercise legal privilege to protect client's tax information from summons in the context of the recent case Redhead Equipment v Canada. Read their analysis here.

November 6, 2016 in Tax Compliance | Permalink | Comments (0)

Saturday, November 5, 2016

Embraer Agrees to Pay More than $107 Million to Resolve Foreign Corrupt Practices Act Charges

Parallel Resolutions with the Securities and Exchange Commission and Brazilian Authorities Equaling $97 Million in Disgorgement Also Announced Today

Brazilian aircraft manufacturer Embraer S.A. (Embraer) entered into a resolution to resolve criminal charges and agreed to pay a penalty of more than $107 million in connection with FBISeal (1)
schemes involving the bribery of government officials in the Dominican Republic, Saudi Arabia and Mozambique, and to pay millions more in falsely recorded payments in India via a sham agency agreement.

“Embraer paid millions of dollars in bribes to win government aircraft contracts in three different continents,” said Assistant Attorney General Caldwell.  “But this prosecution shows that the Criminal Division will hold accountable those who treat corruption as a mere cost of doing business.  Between U.S., Brazilian and Saudi authorities, bribe payers and bribe takers alike have been brought to justice for their wrongdoing.”

“Embraer tried to bribe their way into several profitable aircraft contracts around the world,” said Assistant Special Agent in Charge Maddalena.  “Instead of reaping a nice profit, their criminal conduct earned the Brazilian aircraft manufacturer a substantial penalty that more than wiped out their gains from these contracts.  Crime does not pay!”

According to the company’s admissions, Embraer executives and employees paid bribes to government officials and falsified books and records in connection with aircraft sales to foreign governments and state-owned entities in multiple countries.  In 2008, Embraer paid $3.52 million to an influential government official in the Dominican Republic via a false agency agreement to secure a contract to sell the Dominican Air Force eight military aircraft for approximately $92 million.  In 2010, Embraer paid $1.65 million to an official at a Saudi Arabian state-owned and -controlled company via a false agency agreement to secure that instrumentality’s agreement to purchase three aircraft from Embraer for approximately $93 million.  In 2008, Embraer paid $800,000 via a false agency agreement with an intermediary designated by a high-level official at Mozambique’s state-owned commercial airline, Linhas Aéreas de Moçambique S.A. (LAM), to secure LAM’s agreement to purchase two aircraft from Embraer for approximately $65 million.  In 2009, Embraer paid an agent $5.76 million pursuant to a false agency agreement with a shell company in connection with a contract it secured to sell the Indian Air Force three aircraft for approximately $208 million. 

In total, Embraer earned profits of nearly $84 million on the foregoing aircraft sales. 

Embraer entered into a three-year deferred prosecution agreement (DPA) to resolve the case.  As part of the DPA, Embraer admitted to its involvement in a conspiracy to violate the FCPA’s anti-bribery and books and records provisions and to its willful failure to implement an adequate system of internal accounting controls.  Embraer agreed to pay a criminal penalty of $107,285,090; continue to cooperate with the department’s investigation; enhance its compliance program; implement a more adequate system of internal accounting controls; and retain an independent corporate compliance monitor for a term of three years. 

The Criminal Division’s Fraud Section reached this resolution based on a number of factors, including the fact that Embraer did not voluntarily disclose the FCPA violations, but did cooperate with the department’s investigation after the Securities and Exchange Commission (SEC) served it with a subpoena.  After Embraer began cooperating, it did so fully and disclosed all relevant, non-privileged facts known to it, including about individuals involved in the misconduct.  Embraer did not, however, engage in full remediation.  It disciplined a number of company employees and executives engaged in the misconduct, but did not discipline a senior executive who was aware of bribery discussions in emails in 2004 and had oversight responsibility for the employees engaged in those discussions.  As a result, the criminal penalty in this case is 20 percent below the bottom of the applicable range under the U.S. Sentencing Guidelines, a discount that reflects Embraer’s full cooperation but incomplete remediation.

In related matters, Embraer reached settlements with both the SEC and Brazilian authorities.  Embraer reached a settlement with the SEC, under which it agreed to pay $83.8 million in disgorgement and $14.4 million in prejudgment interest.  The SEC has agreed to credit the disgorgement that Embraer pays to Brazilian authorities.  Embraer also reached a settlement with Brazilian authorities under which it agreed to pay $20 million in disgorgement.  With the cooperation of U.S. authorities, Brazilian authorities have charged 11 individuals for their alleged involvement in Embraer’s misconduct in the Dominican Republic.  Saudi Arabian authorities have charged two individuals for their alleged involvement in Embraer’s misconduct in Saudi Arabia. 

The Fraud Section appreciates the cooperation and assistance provided by the SEC in this matter.  Authorities in Brazil, the Dominican Republic and South Africa also provided assistance and cooperation.  The Criminal Division’s Office of International Affairs also provided assistance during the investigation.

November 5, 2016 | Permalink | Comments (0)

Friday, November 4, 2016

Risk Management by State-Owned Enterprises and their Ownership

 

More information
Corporate Governance
Risk Management by State-Owned Enterprises and their Ownership
This publication takes stock of how SOEs and those exercising the state’s ownership role address the issue of risk management from the perspective of corporate governance (“risk governance”), as recommended in the OECD Guidelines on Corporate Governance of State-Owned Enterprises.
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  • Download (for institutions with a subscription to OECD iLibrary)

November 4, 2016 in Financial Regulation | Permalink | Comments (0)

Brazil's unresolved Money Laundering Issues

In February 2016, the Financial Action Task Force (FATF), the international standard-setter for combating money laundering, the financing of terrorism and proliferation of weapons FATF logoof mass destruction, released a statement conveying its deep concerns about Brazil’s continued failure to remedy the serious deficiencies identified in its third mutual evaluation report adopted in June 2010. Brazil had not criminalised terrorist financing since 2004, when Brazil’s second mutual evaluation report was adopted. And while the FATF welcomed progress by Brazil on the freezing of terrorist assets, further improvements were required to fully satisfy the FATF standards. The FATF called on Brazil to fulfil its FATF membership commitment by enacting counter terrorist financing legislation that would adequately address these shortcomings in line with the FATF Recommendations. If adequate legislation was not enacted by the June 2016 FATF Plenary, the FATF would have considered the next steps in the follow-up process.

On 16 March 2016, Law 13.260 was enacted to  criminalise terrorism and terrorist financing[1]and “deal with investigative and procedural provisions and to reformulate the concept of a terrorist organization” and which covered most of the elements of former SR.II, thereby addressing that Recommendation sufficiently (with minor deficiencies). The FATF welcomed that important development and decided not to consider the next steps in the follow-up process.

Since June 2016, Brazil has taken additional steps towards improving its counter-terrorism (CFT) regime by preparing several ordinances which would in principle contribute to fully implementing UNSCRs 1267 and 1373. These however, are yet to be enacted.

There still remain a number of shortcomings that Brazil must address in order to reach a satisfactory level of compliance with the FATF standards. If sufficient progress is not made by February 2017, the FATF will consider taking other measures, including issuing another Public Statement.

[1] Among the provisions included in the new law, article 5, paragraph 1 establishes penalties to the agents, who with the purpose of practicing acts of terrorism, recruit, organize, carry or equip individuals traveling to a country other than that of their residence or nationality. This is an important provision in line with UNSCR 2178 (2014).  

 Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide (LexisNexis Matthew Bender updated quarterly) is an eBook designed to provide the compliance officer, BSA counsel, and government agent with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide. – See more at: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod-us-ebook-01701-epub#sthash.Bts3dMm7.dpuf

November 4, 2016 | Permalink | Comments (0)

Thursday, November 3, 2016

Panama joins international efforts against tax evasion and avoidance

Panama signed today the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, making it the 105th jurisdiction to join the world’s leading instrument for boosting transparency and combating cross-border tax evasion. The signing shows that Panama is now implementing its commitment to fully cooperate with the international community on transparency.
 
"Panama's decision to sign the multilateral Convention is a confirmation of its commitment to take the necessary steps to meet international expectations in the fight against tax OECDevasion," OECD Secretary-General Angel Gurría said during a signing ceremony with Panama's Ambassador to France, María Del Pilar Arosemena de Alemán. "It also sends a clear signal that the international community is united in its efforts to stamp out offshore tax evasion. We will continue our efforts until there is nowhere left to hide."
 
The Global Forum on Transparency and Exchange of Information for Tax Purposes is expected to publish in early November a peer review assessment of how Panama’s legal framework and practices over the last three years match up against existing international standards of transparency and exchange of information on request. "The forthcoming report will reflect Panama’s past record on transparency issues. Today’s signing, combined with very recent legislative changes opening the door for wide-ranging international cooperation, illustrates the good disposition and commitment by Panama to move forward in the area of tax transparency," Mr Gurría said.
 
The Convention provides for all forms of administrative assistance in tax matters: exchange of information on request, spontaneous exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights. It also allows automatic exchange of information on option.
 
The Convention is global, and is seen as a critical instrument for swift implementation of the new Standard for Automatic Exchange of Financial Account Information in Tax Matters developed by the OECD and G20 countries and slated to go into effect from 2017. It will also be critical for implementation of automatic exchange of country by country reports under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, and is a powerful tool in the fight against illicit financial flows.
 
The 105 jurisdictions participating in the Convention can be found at: www.oecd.org/ctp/exchange-of-tax-information/Status_of_convention.pdf

November 3, 2016 in GATCA | Permalink | Comments (0)

Developments in the decline of correspondent banking relationships

The decline in correspondent banking relationships, or de-risking, has been a concern for the FATF since 2014.  Some financial institutions have decided to close their corresponding banking relationships with whole classes of customers or entire regions, in order to avoid, rather than mitigate, money laundering terrorist financing risks. This is not in line with the FATF’s risk-based approach, which is central to the FATF Recommendations. De-risking can lead to financial exclusion, by depriving customers from access to the regulated financial sector for their financial transactions. The loss of correspondent banking relationships makes it harder to make cross-border payments in some countries, and can potentially damage the resilience and stability of the financial system.

The FATF is working closely with other relevant organisations such as the Financial Stability Board (FSB), the Committee on Payments and Market Infrastructures (CPMI), the International Monetary Fund (IMF), the World Bank and others, to understand the various drivers for de-risking and clarify the application of the risk-based approach.

Approval of the guidance on correspondent banking services

Responding to concerns by global leaders, including the G20, about a need for further clarification of regulatory expectations, FATF has approved a guidance on corresponding banking services.  Correspondent banking services have an important role in the global economy and to the many sectors and regions that rely on them.  An incorrect understanding of AML/CFT measures, can increase the costs of doing business with correspondents, and cause unnecessary pressure on banks to end correspondent relationships.  This guidance addresses the issue of de-risking and clarifies how money laundering and terrorist financing risks should be managed, customer-by-customer, in the context of correspondent banking relationships and money or value transfer services that provide similar services. The FATF developed this guidance in collaboration with the private sector, and with the FSB, which is coordinating international work to assess and address the extent and causes of the decline in correspondent banking relationships.

Read more

Download the guidance  (pdf)

 Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide (LexisNexis Matthew Bender updated quarterly) is an eBook designed to provide the compliance officer, BSA counsel, and government agent with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide. – See more at: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod-us-ebook-01701-epub#sthash.Bts3dMm7.dpuf

November 3, 2016 | Permalink | Comments (0)

Wednesday, November 2, 2016

FATF work to improve transparency and beneficial ownership information

 Improving transparency and beneficial ownership has been a focus of the FATF since 2003.  The FATF standard on beneficial ownership was strengthened in 2012 to address FATF logovulnerabilities such as bearer shares and sets out comprehensive measures to ensure transparency and to prevent the misuse of corporate vehicles.  Over the years, the FATF has developed a comprehensive body of guidance and research on this issue.

Today, the FATF standards on beneficial ownership remain and are recognised as the gold standard globally. Nevertheless, recent developments, as well as the review of the first nine assessments in the fourth round of mutual evaluations, reveal that countries are still not fully and effectively implementing the measures to prevent the misuse of companies, trusts and other corporate vehicles. Building on its existing work, the FATF will undertake the following work to better understand the risks and to improve the effective implementation of the international standards on transparency:   

  • Undertake a detailed study on the risks and the mechanisms that are used to hide and obscure the beneficial ownership of companies, trusts etc, including by focussing on the role played by professional intermediaries.
  • Prepare a horizontal study on the effective supervision and enforcement of beneficial ownership obligations, to review the different models that countries can use to exercise oversight of gatekeepers and ensure they are properly applying the FATF requirements.
  • Focus on beneficial ownership in the follow-up processes to FATF mutual evaluations.
  • Provide clear and consistent recommendations to assessed countries on how to improve effective implementation of beneficial ownership requirements.
  • Enhance co-operation between the FATF and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum) to reinforce each other’s work to improve transparency in relation to beneficial ownership.

Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide (LexisNexis Matthew Bender updated quarterly) is an eBook designed to provide the compliance officer, BSA counsel, and government agent with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide. – See more at: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod-us-ebook-01701-epub#sthash.Bts3dMm7.dpuf

November 2, 2016 | Permalink | Comments (0)

The Cook Islands become the 106th jurisdiction to Agree to Automatic Sharing of Taxpayer Financial Information With Foreign Governments

Mr. Andrew Haigh, Collector of Inland Revenue of the Cook Islands signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
 
The Convention is the most powerful instrument for international tax cooperation. It provides for all forms of administrative assistance in tax matters: exchange of information on OECDrequest, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights.
 
The Convention, together with the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information, which the Cook Islands signed in October 2015, will enable the Cook Islands to fulfil their commitment to begin the first of such exchanges by 2018.
 
The Convention can also be used to swiftly implement the transparency measures of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project such as the automatic exchange of Country-by-Country reports under Action 13 as well as the sharing of rulings under Action 5 of the BEPS Project. The Convention is also a powerful tool in the fight against illicit financial flows.

A free download chapter analyzing FATCA and CRS is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2742383
 
The Convention was developed jointly by the OECD and the Council of Europe in 1988 and amended in 2010 to respond to the call by the G20 to align it to the international standard on exchange of information and to open it to all countries, thus ensuring that developing countries could benefit from the new more transparent environment.
 
The 106 jurisdictions participating in the Convention can be found at: www.oecd.org/ctp/exchange-of-tax-information/Status_of_convention.pdf

November 2, 2016 in GATCA, OECD | Permalink | Comments (0)

Tuesday, November 1, 2016

Efforts to combat terrorist financing

In July 2016, the FATF reported to G20 on its ongoing work to tackle terrorist financing, including the effective implementation of measures to criminalise terrorist financing and freeze terrorists’ assets since the February 2016 meeting. The G20 welcomed this progress and called for swift and effective implementation of FATF standards worldwide as a priority.

The FATF continues to prioritise work to strengthen the understanding of the terrorist financing threats, maintain up-to-date and effective tools to identify and disrupt terrorist financing and ensure that countries are appropriately and effectively implementing these tools. Delegates discussed progress in FATF’s ongoing work on terrorist financing since the June 2016 Plenary and adopted the following outputs: 

Approval of a joint FATF-GABAC-GIABA report on Terrorist Financing in West and Central Africa

In 2013, the FATF and GIABA published a report on terrorist financing in West Africa.  Continuing violence in the West and Central African Region have made this area particularly vulnerable to terrorism and three years after the last study, Boko Haram has developed as one of the deadliest terrorist organisations in the region. FATF, GABAC and GIABA have now updated the 2013 report and expanded it to include Central Africa. The report reveals a number of threats and vulnerabilities that are specific to the region, and highlights the role of cash, including foreign currency. The report looks at the contextual factors and the challenges that the region faces to regulate financial products and sectors. It acknowledges that further work is needed in the area; in particular it highlights the need for countries in the region to work closer together as well as with the broader international community to identify and disrupt terrorist financing.

Update information on, and the understanding of ISIL funding

In-depth knowledge and understanding of ISIL/Da’esh methods to raise, move and use funds, remains an important tool to disrupt their access to funding and deprive them of the ability to finance terrorist attacks. The FATF continues to monitor closely and analyse developments in this regard. FATF discussed changes to the financing of ISIL and its affiliates, allowing FATF and members to take informed actions to disrupt ISIL funding.

Revision of the interpretive note to Recommendation 5 on criminalising terrorist financing.

The FATF has revised the Interpretive Note to Recommendation 5, which focuses on the criminalisation of terrorist financing.  The revision clarifies the scope of the term ‘economic support’ to cover a broad range of economic support, including trade in oil and other natural resources, and other assets which could be used to obtain funds.  These changes reflect recent United Nations Security Council Resolutions, in particular 2199 and 2253, and ensure that important sources of ISIL funding are comprehensively included.  The revised interpretive note refers to ‘funds or other assets’, to ensure that specific forms of support highlighted in UNSCRs are within the scope of the definition.

Approval of the Guidance on criminalising terrorist financing

In 2015, the FATF reviewed the global implementation of key counter-terrorist financing measures in 194 jurisdictions. The review revealed that while most countries had criminalised terrorist financing, some had gaps in their criminal offence, and few had secured convictions or had been able to freeze terrorist assets. 

The FATF developed guidance to assist countries to effectively and comprehensively criminalise terrorist financing, in a manner consistent with national legal systems. In particular, it focuses on how countries can fill gaps in their terrorist financing offence.  The guidance sets out the specific elements that a country must implement to comply with the United Nations International Convention for the Suppression of the Financing of Terrorism (1999) and relevant United Nations Security Council Resolutions, and gives examples of the various approaches that countries have used to implement them in the context of their different legal and operational frameworks.  

Read more

Download the guidance (pdf)

Changes to the Methodology to assess the revised Recommendation 8 on protecting non-profit organisations (NPOs) from terrorist financing abuse, and to assess how effectively countries are implementing these measures.

In June 2016, the FATF revised its Recommendation 8 to ensure that its implementation is in line with the risk-based approach and does not disrupt or discourage legitimate non-profit activities.  The FATF has updated its assessment Methodology for Recommendation 8 and Immediate Outcome 10 to bring it into line with those revisions. Future assessments of members of the FATF and FATF-Style Regional Bodies will be conducted on the basis of this revised Methodology. They will focus on the extent to which measures being applied to NPOs are focused and proportionate, in line with the risk-based approach, such that NPOs are protected from terrorist financing abuse and legitimate charitable activities are not disrupted or discouraged.

 Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide (LexisNexis Matthew Bender updated quarterly) is an eBook designed to provide the compliance officer, BSA counsel, and government agent with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide. – See more at: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod-us-ebook-01701-epub#sthash.Bts3dMm7.dpuf

November 1, 2016 | Permalink | Comments (0)