FATF and MONEYVAL
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989. The objectives of the FATF are to set standards and promote effective measures for combating money laundering, terrorist financing and other related threats to the international financial system. The FATF is a 'policy-making body’, which aims to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
The FATF has developed a series of Recommendations that are recognised as the international standards for combating money laundering and the financing of terrorism and the proliferation of weapons of mass destruction. They form the basis for a co-ordinated response to these threats and help ensure a level playing field. First issued in 1990, the FATF Recommendations were most recently revised in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application.
The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, promotes appropriate actions globally and works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
The FATF's decision-making body, the FATF Plenary, meets three times per year.
FATF-Style Regional Bodies
Nine FATF-Style Regional Bodies (FSRBs) have also been established for the purpose of disseminating international standards throughout the world. Each FSRB conducts evaluations of the AML/CFT systems of their member states against the FATF standards and makes recommendations for areas of improvement. The regional bodies also study typologies – the most common schemes used by criminals for money laundering and terrorist financing and disseminate best practices to the private sector, regulatory bodies and law enforcement.
The FATF-style regional body for the Isle of Man is MONEYVAL, the Council of Europe Anti-Money Laundering Group based in Strasbourg, France.
The MONEYVAL division making body, the MONEYVAL Plenary, meets two to three times a year.
MONEYVAL and Mutual Evaluation
MONEYVAL assesses its members' compliance in the legal, financial and law enforcement sectors through a peer review process of mutual evaluations, including assessing the effectiveness with which measures to tackle money laundering and the financing of terrorism are implemented in practice. The Committee also makes recommendations to national authorities to improve their systems.
In 2016, a group of MONEYVAL experts carried out an assessment of the Isle of Man. The assessment looked at the technical framework in place (legislation, policies and procedures) and the effectiveness with which these measures were implemented. The findings of that assessment were published in the ‘Fifth Round Mutual Evaluation Report of the Isle of Man’ or Mutual Evaluation Report (MER). The MER was published in December 2016 and provided a comprehensive assessment of the extent to which the Isle of Man had implemented the 40 FATF Recommendations and highlighted areas where further progress was required.
Following the completion of the mutual evaluation, the Isle of Man was placed into an ‘enhanced follow-up’ process with MONEYVAL, in order to monitor progress in improving its AML/CFT regime. This is not unusual after a Fifth Round Evaluation; the majority of countries assessed to date have been placed in this category and all jurisdictions are placed into some form of follow-up process.
Progress made since the publication of the Island’s Fifth Round MER
The Isle of Man Government, regulatory and law enforcement authorities have undertaken a considerable amount of work since the publication of the MER in 2016, in order to address the findings and numerous recommended actions of the in-depth assessment. Actions include, increased investment in an expanded Financial Intelligence Unit, the formation of an Asset Recovery Unit within the Attorney General’s Chambers and the enactment of legislation dealing with money laundering, have been publicised.
In 2020, a review report was published by the Isle of Man Government on the progress, which has been made in relation to tackling money laundering and combatting the financing of terrorism. The review demonstrated that the Isle of Man had made significant progress and highlighted what work has been completed since the MONEYVAL evaluation took place, providing a more detailed analysis of actions taken against each of the recommendations made in the MER.
The Isle of Man is now positively marked in 39 out of the 40 FATF Recommendations, which puts the Island amongst a select group of leading nations in the world for technical compliance in anti-money laundering measures. Following the conclusion of the 61st MONEYVAL Plenary Council meeting in April 2021, it was confirmed that the Isle of Man is no longer required to report to MONEYVAL on an annual basis. The Isle of Man will remain in the ‘enhanced follow-up’ process until an on-site review takes place; however will only be required to report to MONEYVAL every three years.
Chief Minister Howard Quayle MHK said:
'I welcome the decision by the MONEYVAL Plenary. It is a significant milestone for the Isle of Man and reflects the Island’s commitment to playing a leading role in the global fight to tackle financial crime. The Island is grateful for the very positive engagement that has taken place with the MONEYVAL Secretariat throughout this process.
'The Isle of Man is dedicated to attracting quality, legitimate business and seeks at all times to prevent the misuse of its finance sector by criminals. The Isle of Man therefore attaches great importance to the maintenance of high standards of financial regulation and supervision. We do not welcome those seeking to launder the proceeds of crime and where there is evidence of any wrongdoing in this respect then we will take the appropriate action necessary. We are proud of our progress to date and commit with renewed determination to do our part as responsible members of the international community.'