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.
The MER demonstrated that, whilst the Isle of Man had a strong technical framework, more work needed to be carried out to make it effective in practice. In particular there were a number of important recommendations made concerning financial intelligence, financial investigation and prosecution and recovering the proceeds of crime.
In order to monitor progress in improving its AML/CFT regime, the Isle of Man was placed into an ‘enhanced follow-up’ process with MONEYVAL. 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. The Isle of Man is now reporting back to MONEYVAL on an annual basis to confirm the improvements that have been delivered in relation to the recommendations made within the MER.
The Isle of Man government, regulatory and law enforcement authorities have undertaken a considerable amount of work to address the issues identified in the MER. This includes significant investment in the Financial Crime Unit, the Economic Crime Unit (which conducts investigations) and the introduction of a dedicated Asset Recovery Unit, specifically to identify restraint and confiscate the proceeds of crime.
In 2017 the Isle of Man Government published a Financial Crime Strategy (2017-2020), which identified actions arising out of the National Risk Assessment 2015 and the MER. In the foreword, the Chief Minister, Howard Quayle MHK stated that:
'The Island has led the way amongst small jurisdictions in engaging with international initiatives against financial crime and in co-operating with other countries. As a centre dedicated to attracting quality business we have an economic as well as a moral rationale for protecting our financial systems and reputation against abuse by criminals.'
And furthermore that:
'Addressing these points is a matter of national priority for my Government and I am pleased that significant progress has already been made. I trust that the production of this overarching Financial Crime Strategy is further evidence of the Isle of Man’s firm commitment to a ‘zero tolerance’ approach to financial crime.'
The Fifth Round Mutual Evaluation Report of the Isle of Man is available here.
The Financial Crime Strategy 2017-2020 is available here.