There is always plenty to consider after an FATF plenary meeting, and the most recent one is no exception. At their end of their meeting in Paris on 19 February, the FATF announced two additions to their membership: Malaysia has been granted full membership, while Israel has been welcomed as an observer, which is an essential step on the way to (but no guarantee of) full membership. Given that many institutions use FATF membership as a shorthand indicator of governmental commitment to high standards of AML, and given that the number of member countries of the FATF had stalled for many years until this announcement, this is a significant development.
Malaysia became an observer at the FATF in October 2014 and underwent a mutual evaluation that was adopted in 2015 and, according to the FATF press release, “since then has worked to develop an action plan for addressing key effectiveness issues identified during the evaluation. Based on the commitment demonstrated by the action plan and the continuing progress in efforts to improve its AML/CFT, the Plenary agreed to grant membership and continue to monitor progress through the enhanced follow-up process”. This reminds us that FATF membership is not a simple in/out status: you can be in, but subject to follow-up, which means that they’re keeping a close eye on you. You’re on probation, in essence.
Israel seems to take observer-ship as its due: the Israeli press widely reported a comment from Carmel Shama Hacohen, Israel’s envoy to the OECD, UNESCO and the Council of Europe, that “with its experience and knowledge, Israel has much to contribute to this group”. The same reports also claim confidently that Israel expects to attain full membership in October 2018; I cannot find any confirmation of this on the FATF website, so presumably the Israeli delegation was vouchsafed this assurance on the QT. We shall see.
The inclusion of Malaysia shows how political (and often farcical) this list is, at a time when there is a huge amount of money (between $8bn and $11bn depending on which paper you read) missing or unaccounted for in the state development fund, and the Prime Minister accepted a $680 million gift from the Saudi Royal Family, before reluctantly returning all but $60 million of it (a trifling personal gift!).
It seems to me, David, that the FATF membership list is written in expectation, rather than as a reward – they hope that Malaysia will get it right, and offer them FATF membership as an encouragement. I may be wrong, but when I read their mutual assessments, it is always “legislation is planned for…” and “arrangements have been put in place to…”. I can’t remember off the top of my head – has anyone ever been drummed out of the FATF, or does the membership only ever increase?
Best wishes from Susan