Download Presentation on Developing an AML/CFT Strategy in the Context of

Developing an AML/CFT Strategy
in the Context of International
Standards
Heba Shams (World Bank) & Nadim
Kyriakos –Saad (IMF)
World Bank
The Scope of Discussion

What is an AML/CFT strategy?
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How does a country develop a national
AML/CFT strategy?
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What is the impact of international standards on
domestic strategy making?
Two Central Questions

Does every country need an AML/CFT
framework?
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In a new global context there is a need for a new
type of governance.
Is there a scope for a domestic strategy in the
context of international standards?
INTERNATIONAL INSTRUMENTS
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UN Convention Against Illicit Traffic in Narcotics
Drugs and Psychotropic Substances (1988) (Vienna
Convention)
International Convention on the Suppression of the
Financing of Terrorism (1999) (SFT Convention)
UN Convention Against Transnational Organized
Crime (2000) (Palermo Convention)
UN Convention Against Corruption (2003) (Merida
Convention)
INTERNATIONAL STANDARDS

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FATF Forty Recommendations on Money Laundering
(2003)
FATF Special Recommendations on Terrorist
Financing (2001) (including Special Recommendation
XI on requirements for cash couriers)
KEY ASPECTS OF A LEGAL FRAMEWORK
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Money laundering as a criminal offence (applicable to a
wide range of predicate offences)
Financing of terrorism as a criminal offence
Regulatory and supervisory requirements for financial
institutions
Provisions requiring financial institutions and designated
non-financial businesses and professions to undertake
customer due diligence, maintain records, report
suspicious transactions, and maintain internal procedures
and controls
KEY ASPECTS OF A LEGAL FRAMEWORK

Provisions for the establishment and operation
of a national financial intelligence unit for
receiving (and, as permitted, requesting),
analyzing and disseminating suspicious
transaction reports and related information
regarding potential money laundering or
terrorist financing
KEY ASPECTS OF A LEGAL FRAMEWORK
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Provisions requiring financial institutions to include
accurate and meaningful originator information on fund
transfers and related messages (such information to
remain with the fund transfers and related messages
through the payment chain)
Provisions requiring persons providing a service for
transmission of funds or value, including transmission
through an informal funds or value transfer system, to be
licensed or registered and subject to relevant AML/CFT
requirements
KEY ASPECTS OF A LEGAL FRAMEWORK
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Provisions for strengthening the transparency of legal
persons and arrangements such that the beneficial
ownership and control of these legal persons and
arrangements can be determined
Provisions for preventing the use of non-profit
organizations for the financing of terrorism
KEY ASPECTS OF A LEGAL FRAMEWORK
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Provisions for detecting cross-border transportation of currency
and bearer negotiable instruments and enabling the authorities to
stop or restrain currency or bearer instruments that are suspected
to be related to money laundering or financing of terrorism, or that
are falsely declared or disclosed
Law enforcement measures for freezing, seizing and confiscating
proceeds and instrumentalities of crime and terrorist property
Provisions for strengthening international cooperation in mutual
legal assistance and extradition
Effective, proportionate and dissuasive sanctions against breaches
Strategy 101


Strategy is a process of drawing a map between
the present and the future as we see it.
A good strategy should:
have clear objectives.
 be based on thorough understanding of the
problem.
 be based on good analysis of the policy and
implementation options and constraints.
 Have mechanisms of feedback and amendments.

How to Develop a Strategy: A
Frameowrk
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Analytical work.
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Forming a strategy team.
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Understanding the problem.
How it is currently being handled and the gaps.
The institutional and political context.
Sponsorship.
Stakeholders
Defining the ultimate goals and objectives of the
intervention.
Developing the policy and implementation design.

For a good source on strategy in government see Strategy Survival Guidebook (Prime Minister’s
Strategy Unit, UK Government).
AML/CFT Strategy: The Analytical
Work
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Understanding the problem
The limitations of existing solutions.
Institutional analysis.
The relevance of comparative experience.
International constraints and opportunities.
Existing tools for analysing the ML and TF
problems and the response.
AML/CFT Strategy: Forming a
Team

Identifying a champion.
The multidisciplinary nature of the team.

Issues of institutional and sectoral culture.

Serving the ownership objective.
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AML/CFT Strategy: Defining Goals
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What is the vision behind AML/CFT?
Multiple Objectives.
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Preventing the abuse of the financial sector.
Preventing the abuse of other businesses and professions.
Facilitating international co-operation.
Enhancing access to information for law enforcement
purposes
The persistent expansion of AML/CFT and its
implications for strategy making.
AML/CFT Strategy: Policy and
Implementation Design
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Policy options in AML/CFT
The scope for policy choice in the context of
the international standards.
Different policy instruments:
Laws and Regulations.
 Economic instruments.
 Awareness raising.
 Creating incentives for self-regulation.
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Policy Costs and Trade-Offs
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Cost of compliance.
Access to finance.
Restrictions on legitimate business transactions.
Trade and services liberalisation.
Procedural protection and safeguards.
Strategy and Inter-Agency
Coordination
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Why is inter-agency coordination an issue?
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The role of strategy development in addressing
the inter-agency problem.
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Stakeholders ownership and political
commitment to AML/CFT
Conclusion
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Developing an AML/CFT strategy is a process
that can contribute to resolving some of the
main obstacles to the successful implementation
of AML/CFT regimes.
International standards do not substitute for the
informed development of a domestic
AML/CFT strategy.