The Financial Action Task Force (FATF) has issued a statement on its website concerning its efforts to combat de-risking.

FATF states that de-risking will remain a priority for FATF. It continues to monitor closely developments related to de-risking, including the fact gathering and analytical work conducted by other bodies including the Financial Stability Board and the Committee on Payments and Market Infrastructure.

FATF also mentions that analytical work undertaken by itself and other bodies show that de-risking is being driven by many different factors. FATF states that this is a serious concern to the extent that de-risking may drive financial transactions underground which creates financial exclusion and reduces transparency, thereby increasing money laundering and terrorist financing risks.

FATF states that it is acting quickly to clarify regulatory expectations in four areas that are particularly relevant to de-risking to ensure that anti-money laundering and counter financing of terrorism (AML / CFT) measures are being implemented effectively and in line with its risk based approach. In particular, the FATF is:

  • developing guidance to clarify how to properly identify and manage risk in the context of correspondent banking and remittances. The guidance will address the issues highlighted by the FATF in its June 2015 statement on de-risking;
  • developing guidance to help money remitters identify and manage their risks, and to help banks evaluate and manage the risks of providing financial services to money remitters. The guidance will also help governments supervise these activities;
  • developing best practices on appropriate customer due diligence to facilitate financial inclusion in a manner that strikes an appropriate balance with AML / CFT objectives; and
  • revising the relevant standard to help governments properly identify those non-profit organisations which are most vulnerable to terrorist financing abuse, and address those risks in a proportionate way.

FATF aims to complete its work on these four projects in 2016.

View FATF takes action to tackle de-risking, 26 October 2015