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#Governance, Risk and Compliance #Financial Crime Prevention

FATF Mutual Evaluation – United States


compliance culture , FATF , Financial

Mutual Evaluations are conducted as a way for the Financial Action Task Force (FATF) to measure how effectively countries are implementing their 40 Recommendations on money laundering (ML) and terrorist financing (TF), and the US’s evaluation was largely positive.

US anti money laundering (AML) and counter financing of terrorism (CFT) frameworks were described as ‘well developed and robust’, and there was an acknowledgement of the improvements made since the FATF’s previous evaluation.

The FATF noted how sanctions issued by the US had international reach and were largely effective, and therefore only ‘minor improvements’ were suggested in this area.

 

FATF Praise

Counter financing of terrorism

This was a particular strong point for the US: they received a ‘High’ Compliance and Effectiveness rating for confiscation, TF investigation and prosecution, and TF preventative measures and financial sanctions.

Asset confiscation

Both at home and abroad the US was able to successfully confiscate assets in complicated and sizeable criminal cases. The FATF recognised that US Federal authorities operated ‘aggressively’ in this area.

Financial Institutions

The FATF highlighted the substantial level of understanding by US financial institutions of ML/TF risks and obligations, and noted the discouraging sanctions that regulators can impose upon them, which ‘seem to have the desired impact on achieving the supervisory objectives’.

US sanctions

The US Specially Designated Nationals and Blocked Persons List (SDN List) is used in both the US and around the world, giving the US sanctions regime ‘a global effect in line with the size, complexity and international reach of the US financial system’.

 

Areas for improvement

DNFBPs

Designated Non-Financial Businesses and Professions (DNFBPs) were described as having a ‘lack of comprehensive AML/CFT supervisory processes’, in what the FATF pointed to as the biggest supervisory gap. AML/CFT processes will ensure gatekeepers have the appropriate tools and systems in place to prevent dirty money entering the US financial system.

Beneficial Ownership

The FATF proposed that the US take steps ‘to ensure that adequate, accurate and current BO information of US legal persons is available to competent authorities in a timely manner’, with Federal-level obtained information being the most effective suggested way of doing so.

Suspicious Activity Reporting

Requirements for SAR reporting should come with guidance advising on their scope, the FATF advised. Such a move would make it clear that ‘the requirement applies below the otherwise applicable thresholds’. It was further recommended that the 60/30 day reporting deadlines should be subject to a focused risk review.

AML visibility

The FATF submitted in their Priority Actions that the visibility of AML measures and statistics at the State level be improved. Data sharing was the recommended way of achieving this, with the end result being a clearer picture of the efficiency of AML efforts.

 

Conclusion

It wasn’t a bad evaluation for the US, overall. But what have other observers had to say about the FATF report? Transparency International found that the report showed that US had ‘more roof than holes on average’, finding the gaps in the US AML/CFT framework concerning.

Austria, Canada and Singapore all underwent Mutual Evaluations by the FATF in 2016. Click here to see our infographic on their strengths and improvements. 


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