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The Commissioner for Narcotics, Mrs. Clarie Lo, returned from Berlin after attending the FATF Plenary meeting and related meetings held from June 16 to June 20, 2003. This was the last Plenary meeting of the FATF under the presidency of Germany. Sweden will take up the presidency of the fifteenth round of the FATF on July 1 2003.
Prior to attending the FATF Plenary meeting, Mrs. Lo visited Washington, D.C. to brief senior officials at the US Department of Justice, Department of Treasury, Department of State, Department of Homeland Security, as well as the World Bank and IMF on the success and progress of Hong Kong's anti-money laundering and counter terrorist financing initiatives. While in Washington, D.C., Mrs. Lo also addressed the US National Press Club on the topic of "Money Laundering and the Fight Against Terrorism - Hong Kong's Perspective".
The main priority of the FATF over the past twelve months has been to complete the revision of the Forty Recommendations - the international anti-money laundering standard. The revision makes significant changes, which when combined with the Eight Special Recommendations on Terrorist Financing, create a comprehensive, consistent and substantially strengthened international framework for combating money laundering and terrorist financing.
The major changes that have been adopted by FATF members at the Plenary meeting include:
* specifying a list of crimes that must underpin the money laundering offence;
* the expansion of the customer due diligence process of financial institutions;
* enhanced measures for higher risk customers and transactions, including correspondent banking and politically exposed persons;
* the extension of anti-money laundering measures to designated non-financial businesses and professions (casinos, real estate agents, dealers of precious metals/stones, accountants, lawyers, notaries and independent legal professions, trust and company service providers);
* the inclusion of key institutional measures, notably regarding international cooperation;
* the improvement of transparency requirements through adequate and timely information on the beneficial ownership of legal persons such as companies, or arrangements such as trusts;
* the extension of many anti-money laundering requirements to cover terrorist financing; and
* the prohibition of shell banks.
The revised Recommendations set out the new standard, which FATF members will immediately start working to implement. The FATF encourages other jurisdictions and countries to do likewise.
Mrs. Lo pledged Hong Kong's support to the revised Recommendations. She pointed out that in the case of Hong Kong the work ahead would include, among others, consulting the relevant trade and professions on the implementation of the revised Recommendations and proposing the requisite legislative proposals to provide for the necessary legal framework for their implementation.
The Plenary meeting also admitted the Russian Federation and South Africa as full members of FATF, following a positive outcome to the first mutual evaluations that assessed their systems for combating money laundering and terrorist financing.
Welcoming the two new members to the FATF, Mrs. Lo noted that Hong Kong had made significant contributions to facilitate their entry into the FATF.
On February 1, 2002, the FATF held a Special Forum on Terrorist Financing at the close of the FATF Plenary meeting in Hong Kong, which was attended by FATF members and members of the FATF-style regional bodies, including the Russian Federation. Representatives of the FATF and the Russian Federation met at the margin of the forum to discuss measures to improve the latter's anti-money laundering regime. In October 2002,the Russian Federation was removed from the FATF's Non-Cooperative Countries or Territories (NCCTs) list.
In the case of South Africa, in May 2002 Hong Kong led an ice-breaking mission to Cape Town which resulted in South Africa being invited to join as an observer of the FATF in June 2002.
After the Plenary meeting, the FATF also announced the removal of St. Vincent and the Grenadines from the list of NCCTs. In line with past practice, the FATF will continue to monitor closely the implementation of the anti-money laundering system in this jurisdiction.
The current list of NCCTs is as follows: Cooks Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines and Ukraine. Accordingly, the FATF calls on its members to update their advisories requesting that their financial institutions give special attention to businesses and transactions with persons, including companies and financial institutions, in listed countries or territories, to take into account the changes in the list.
During the year, the FATF has also actively pursued its activities to counter terrorist financing. In order to assist countries to implement effective measures to combat the financing of terrorism, further interpretation and guidance have been developed since October 2002 on the Eight Special Recommendations, including with respect to informal money transfer systems (SR VI), wire transfer requirements (SR VII) and non-profit organizations (SR VIII).
There has also been a collaborative effort between the FATF, the United Nations and other international organizations, to encourage all countries to implement the Eight Special Recommendations. Those Recommendations, devised at a Special Plenary meeting of the FATF chaired by Hong Kong in Washington, D.C. in October 2001, have now been endorsed by many non-FATF members and international organizations and bodies, and 130 jurisdictions are participating in the FATF self-assessment exercise. This will enable FATF to assist the IMF, World Bank, UN and other donors, including the recently-created Counter Terrorism Action Group, to priortise their offers of technical assistance with respect to implementing the Eight Special Recommendations on Terrorist Financing.
There was a continuation of the collaborative efforts between FATF and the International Financial Institutions to reinforce global standards in 2002-2003. Having earlier recognised the Forty and the Eight Special Recommendations as the international standards for combating money laundering and terrorist financing, the IMF and World Bank formally added them to the list of standards for which Reports on the Observance of Standards and Codes (ROSCs) are prepared. In October 2002, the IMF, the World Bank and the FATF agreed a common methodology to assess compliance with the FATF Recommendations. This methodology has now been used both for FATF mutual evaluations and IMF/World Bank assessments. To assist the Fund and Bank in their work, experts from FATF members or FATF-style regional bodies have been made available for IMF/World Bank-led assessments.
Led by Mrs. Lo, the Hong Kong delegation to the FATF Berlin Plenary included Mr. Joseph To of the Department of Justice and from the Narcotics Division of the Security Bureau Mr. Ting Lup Wong and Ms. Diana Wong, secondee from Customs & Excise Department.
Further information about the FATF, the revision of the Forty Recommendations, its efforts to combat terrorist financing, the annual report and the present list of non-cooperative countries and territories can be found at http://www.fatf-gafi.org.
The FATF is an independent international body established after the G-7 Submit in 1989 to examine and recommend anti-money laundering standards and transmit the anti-money laundering message worldwide. With the admission of Russian Federation and South Africa, the FATF now has 31 member countries and governments. Two international organizations are also members of the FATF: the European Commission and the Gulf Cooperation Council.
Ends/Saturday, June 21, 2003
Issued at HKT 14:17
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