The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction.
The FATF Recommendations set out a comprehensive international framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of the proliferation of weapons of mass destruction.
The FATF Recommendations 24 and 25 cover transparency and beneficial ownership of legal persons and arrangements. Previously the FATF has noted that the implementation of these particular Recommendations has proved to be challenging.
Consequently, the FATF has now published a guidance paper to assist countries in their implementation of Recommendations 24 and 25 (and also Recommendation 1 as it relates to understanding the money laundering / financing of terrorism risks of legal persons and legal arrangements).
The purpose of the guidance paper is to help policy makers and practitioners in national authorities to identify, design and implement appropriate measures to prevent the misuse of corporate vehicles in line with the FATF Recommendations. The guidance paper also explains the connection between customer due diligence measures and specific transparency measures, and it may be useful to financial institutions and designated non-financial businesses and professions in their implementation of anti-money laundering / countering the financing of terrorism preventative measures.
The guidance paper is structured as follows:
- section 2: overview of how corporate vehicles can be misused and the challenges for countries in implementing measures to prevent such abuse;
- section 3: the definition of beneficial owner;
- section 4: guidance to countries on effective mechanisms to combat the misuse of legal persons and legal arrangements;
- section 5: guidance to countries on implementing measures to enhance the transparency of legal persons;
- section 6: guidance to countries on implementing measures to enhance the transparency of legal arrangements;
- section 7: the relationship between standards on transparency and beneficial ownership and other Recommendations;
- section 8: access to information by competent authorities; and
- section 9: guidance on international cooperation involving beneficial ownership information.
The guidance is non-binding and does not override the purview of national authorities.
View FATF guidance on transparency and beneficial ownership, 27 October 2014