On 21 to 23 October 2020, the Financial Action Task Force (FATF) held its final quarterly plenary of 2020 as a virtual event. The discussions over three days mostly focussed on Strategic Initiatives reacting to the Covid-19 pandemic and progress made on country specific processes. The FATF also provided an update on their strategic focus on the prevention of financing of proliferation of weapons of mass destruction (WMD).
In terms of strategic initiatives, the FATF encourages countries and jurisdictions to continue to make efforts to implement the FATF Recommendations to a high standard, despite the current challenging climate. It notes that it is paramount for countries and jurisdictions to “fully and effectively implement the FATF Recommendations, using a risk-based approach” to implement preventative or mitigation measures which are commensurate to the nature of money laundering and terrorist financing risks faced in each location. In particular, the FATF urges countries and jurisdictions to pay close attention to types of criminal activity which have been exacerbated by the pandemic, such as the counterfeiting of medical goods, increase in investment fraud and prevalence of cyber-crime scams. It also indicates that countries and jurisdictions should horizon scan for potential new criminal activity coming down the track, such as the potential for exploitation in light of national unemployment statistics and an ongoing shift towards more remote transactions.
In its second quarter plenary held in April 2020, the FATF announced the postponement of assessments and follow-up deadlines in response to the COVID-19 pandemic. However, it is now acknowledged that the pandemic remains an ongoing challenge and there is a need to continue the FATF’s mutual evaluation activity in order to maintain and strengthen global anti-money laundering (AML) and counter terrorist financing (CTF) standards. Therefore, the FATF note that mutual evaluations will continue on a flexible basis by conducting certain aspects of the on-site visit virtually or (if necessary) at a later date where temporary travel restrictions are in place. A similar approach will be taken to identifying and responding to high-risk jurisdictions or jurisdictions with strategic weaknesses in their AML and CTF measures.
Finally, the FATF note that FATF Recommendation 1 (alongside the interpretative note) have now been updated to reflect to WMD proliferation financing. Countries and private sector entities are now required to “identify, assess, manage and mitigate the risks of potential breaches, non-implementation, or evasion of the targeted financial sanctions related to proliferation financing”. This aims to support entities to ensure that they don’t unintentionally support or participate in proliferation financing networks or schemes set up to contravene various regimes. The FATF also intends to publish new guidance in the near future to help countries and the private sector in assessing and mitigating the WMD proliferation financing risks.