Please click on the headings below to read the news for April 2012.
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20/04/2012 – Mandate of Financial Action Task Force is Renewed Until 2020
In April 2012, the Representatives of State-parties renewed the mandate of the Financial Action Task Force until December 31, 2020 reaffirming their support to effective implementation of revised FATF Recommendations.
Since its inception FATF has adopted number of measures to combat money laundering, resulting in the 40 recommendations designed to identify money laundering techniques and to ensure international co-operation in due diligence and information sharing where money laundering is suspected. In 2001, FATF enacted 8 special recommendations to ensure prevention of terrorist financing through proceeds of money laundering and the 9threcommendation was added in 2005. FATF revised the 40 Recommendations in February 2012 to counter changing money laundering trends and to refine its compliance assessment system.
The new mandate document declares the intention of State-parties to implement the revised recommendations. The challenges to this aim are recognised in form of capacity constraints and financial exclusion in many countries. The representatives specifically recognised the role of FATF style regional bodies (FSRBs) in implementing the recommendations. In future FATF will collaborate with the FSRBs, the International Monetary Fund (IMF) and the World Bank to use procedures for evaluation beyond ensuring mere technical compliance of the standards. Through its evaluation process FATF will understand how resources and sanctions are being applied in practice and will act to improve the implementation where required. Consultation with the private sector and civil society is considered essential for effective implementation of FATF standards.
The mandate emphasised on identifying and monitoring the non co-operative countries. The misuse of legal persons and arrangements is identified as a pressing problem and FATF is called to improve transparency. Additionally, the new mandate also endorsed support for global, national and regional risk assessment initiatives analysing money laundering trends.
It appears that the emphasis is placed on improving the compliance assessment and monitoring procedures which forms an appropriate move in light of the revised recommendations.
Source: “Ministers renew the mandate of the Financial Action Task Force until 2020”, The New Mandate Document
IBA Legal Projects Team
16/04/2012 – The European Commission releases its report on the application of the Third Anti-Money Laundering Directive
In light of a recent revision by the Financial Action Task Force (FATF) of its international standards, a report on the application of Directive 2005/60/EC (Third AMLD) was adopted by the European Commission last week. Although the report concludes that the present regime is fundamentally sound, some amendments are necessary to adapt to the constantly evolving threats of money laundering and terrorist financing (the full report can be accessed here). The Commission is committed to rapidly updating the present framework; moving plans for the issuance of a fourth anti-money laundering Directive forward to Autumn 2012. The Commission will further consider the following issues:
Incorporation of additional risk-based elements to ensure resources are utilised efficiently;
Possible extension of the scope of the rules to cover the gambling sector and tax crimes;
Supplementary provision dealing with politically exposed persons (PEPs);
Improving cooperation between different national Financial Intelligence Units (FIUs).
By virtue of Article 42 of the Third AMLD, the report includes a specific examination of the treatment of lawyers and other independent legal professionals. Concern has been expressed by the legal profession that the reporting requirements may violate the lawyer’s obligation of professional secrecy and the fundamental right to a fair trial and defence. The Commission concludes that the AML obligations do not infringe these rights; citing a recent European Court of Justice case. In addition, the Commission suggests that under-reporting of suspicious transactions by lawyers, in some jurisdictions, remains a concern that needs to be addressed. The definition of what constitutes a ‘transaction’ under Article 2(1)(3)(b) may be given further clarification.
It appears that a fundamental revision of the treatment of lawyers in the new Directive is unnecessary. The Commission may provide additional thought to the under-reporting of suspicious transaction by the legal profession.
IBA Legal Projects Team
 ECJ C305/05, Ordre des barreaux francophones et germanophone et al. v. Conseil des Ministres, Para 33, Judgement of the Court, 26 June 2007.