Lifelong learning

One of the benefits of the AML/CFT mutual evaluation regime is its reiterative nature – the fact that countries are visited, given a report with suggestions for improvement, and then revisited.  Between visits, governments submit progress reports to keep the FATF abreast of any changes they are making.  We should not make the mistake of thinking that the aim is perfection, not least because the standard against which the countries are measured are constantly evolving – either the FATF Recommendations themselves, or best international AML practice as expressed in other ways (such as the imminent EU Fourth Money Laundering Directive, or indeed criminal activity.

The latest country to have the results of their AML/CFT evaluation published is Australia, and this report is an excellent example of how the system works best: a country with (in the words of the FATF) “a mature regime for combating money laundering and terrorist financing” is praised for the progress it continues to make, but also warned that “certain key areas remain unaddressed”.  Summarising like a Trojan, what they have done right:

  • the Aussie authorities have a good understanding of their country’s money laundering and terrorist financing risks
  • they gather good financial intelligence and share it efficiently and well – both domestically and internationally
  • they are very good at sanctions.

And what they need to improve:

  • the number of money laundering prosecutions, as they tend to focus on the predicate crime at the expense of money laundering
  • the expansion of the AML/CFT requirements to cover high risk but currently uncovered sectors such as lawyers and estate agents
  • their understanding of the risks of money laundering and terrorist financing through charities.

It sounds like something that a rather earnest schoolteacher might say, but I genuinely believe that continuous learning is the best form of education – both for the country concerned and for the rest of us, who can read about what they have done right and what they still need to improve.

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2 Responses to Lifelong learning

  1. erskinomics says:

    In this instance it seems the best bit of the report is the cover. I wonder if the reviewers live on the same planet as the rest of us. Given that Australian banks are actively cancelling their correspondent banking relationships around the developing world as a result of uncertainties created by AML/CFT rules enforcement (with negative consequences for remittances etc), how can FATF write such waffle on the subject? This is from the report: “Correspondent banking
    5.36. Financial institution representatives did not highlight any major challenges or difficulties in instituting measures for correspondent banking under the AML/CTF Act and AML/CTF Rules. AUSTRAC identified very few breaches of correspondent banking obligations in 2013/14. Based on AUSTRAC’s understanding, financial institutions would adopt a risk-based approach to determine the extent of due diligence that is required with respect to correspondent banking. Interviews with the sector indicate that Australian rules on correspondent banking are being implemented. It should however be noted that the AML/CTF Act correspondent banking requirements are not in line with the FATF Standard; as a result the measures implemented by reporting entities may not meet the FATF standard, even if they meet Australia’s requirements.”

  2. I have yet to read the report in detail, Erskinomics, but will be doing so soon. I’ll now pay particular attention to what they say about correspondent banking. But worth bearing in mind that the report, by the time it is published, is already at least a year out of date – these things take time to write, and often against a changing background.
    Best wishes from Susan

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