Outcomes of the Joint Plenary meeting of the FATF and GAFISUD, Mexico City, 22-24 June 2011

Under the Mexican Presidency, the first joint FATF-GAFISUD Plenary meeting was held in Mexico City on 22-24 June 2011. The meeting was co-chaired by the FATF and GAFISUD Presidents.

FATF Decisions

The FATF took important new steps to protect the international financial system from abuse by:

• Producing two public documents as part of its ongoing work to identify jurisdictions that may pose a risk to the international financial system:
• FATF Public Statement on jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies.
• Improving Global AML/CFT Compliance: on-going process - Jurisdictions with strategic AML/CFT deficiencies for which they have developed an action plan with the FATF

• Issuing a statement on the progress made by Argentina in addressing deficiencies identified in its mutual evaluation of October 2010.

• Adopting the mutual evaluation reports of the State of Kuwait and the Sultanate of Oman.

• Publishing a detailed examination of Organised Maritime Piracy and Related Kidnapping for Ransom, Trafficking in Human Beings and Smuggling of Migrants and Money Laundering and Corruption.

• Publishing Guidance on Financial Inclusion.

• Continuing its work on revision of the FATF Recommendations and preparation for the fourth round of mutual evaluations.

AML/CFT improvements in Greece

The FATF welcomes Greece’s significant progress in improving its AML/CFT regime and notes that Greece has met its commitments in its Action Plan regarding the strategic AML/CFT deficiencies that the FATF had identified in February 2010. Greece is therefore no longer subject to monitoring under the FATF’s ongoing global AML/CFT compliance process. Greece will continue to work with the FATF to further strengthen its AML/CFT regime.

Statement on the progress made by Argentina

The FATF heard Argentina´s report on progress made since its first follow-up report presented in February 2011 and recognised the important legislative efforts aimed at improving the criminalisation of money laundering. Based on the initial analysis of the recent legal amendments, the FATF expressed some specific concerns that there are still shortcomings in the criminalisation of money laundering, and further clarification is required. Substantial progress to improve the criminalisation of terrorist financing has not yet taken place, and there are a large number of other AML/CFT deficiencies remaining. The FATF remains seriously concerned about the risks that such deficiencies may pose, as identified in “Improving Global AML/CFT Compliance: on-going process”, and will continue to review progress, in the context of measures that the FATF has agreed to follow under its enhanced follow-up procedures for members insufficiently in compliance with the FATF Recommendations.

The FATF expects more substantial progress by Argentina by October 2011. In particular, the FATF expects Argentina to fully address the FATF´s concerns regarding the criminalisation of money laundering in accordance with international standards, present to the FATF a draft law criminalising terrorist financing in accordance with international standards, and inform about the progress in addressing the other AML/CFT deficiencies. As part of this discussion, the FATF reaffirmed the responsibility of all members to observe a high level of compliance with the FATF Recommendations in an expedited manner.

Mutual Evaluation of the State of Kuwait and the Sultanate of Oman

The FATF discussed and adopted two mutual evaluation reports assessing the compliance of two Gulf Cooperation Council members, the State of Kuwait and the Sultanate of Oman against the international standards for combating money laundering and terrorist financing – the 40+9 Recommendations.

Summaries of these mutual evaluations will soon be available on the FATF website, and the full reports will be released in the coming weeks.

There is currently no evidence of significant money laundering and no major terrorist activity has been recorded in the State of Kuwait. However, Kuwait’s financial sector is growing rapidly and thus may create a potential environment for such activities. The assessment team for this evaluation, composed of staff of the International Monetary Fund (IMF), concluded that the Kuwaiti AML/CFT framework had some deficiencies: terrorist financing is currently not criminalised, the money laundering offence does not cover all serious predicate offences, the Kuwaiti financial intelligence unit (KFIU) has not been established as an independent agency carrying out all core functions set out by the FATF standards, and there are shortcomings in the AML/CFT supervisory framework for some financial institutions and designated non-financial businesses and professions (DNFBPs).

The evaluation of the AML/CFT regime of the Sultanate of Oman was conducted jointly by the FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF). The level of compliance with the FATF Recommendations for the AML/CFT regime of Oman is comparatively high for the region, and the legal framework is generally sound. However, the Omani AML/CFT Law was only recently updated, and executive regulations must still be issued. In addition, the overall effectiveness is generally lacking, parts of the terrorist financing legal framework need to be improved and the number of money laundering cases needs to be significantly raised.

With the adoption of the mutual evaluation reports of the State of Kuwait and the Sultanate of Oman, the FATF concluded its third round of mutual evaluations that started in 2005 and comprised 35 FATF jurisdictions and five members of the Gulf Cooperation Council.

Organised Maritime Piracy and Related Kidnapping for Ransom

In recent years, there has been a growing concern over organised piracy on the high seas and kidnapping for ransom. These activities present a number of a potential risks to the international financial system and challenges to the law enforcement and regulatory framework worldwide. The FATF has completed a study that provides an overview of this problem and analyses the related money flows to the extent that this is possible. In addition to informing the work of other international bodies dealing with this issue, the report, which will be published shortly, will also serve as a useful source of general information on the subject.

Human Being Trafficking and Smuggling of Migrants

Criminals are increasingly turning to the trafficking of human beings and the smuggling of migrants given the high profitability of these illegal activities. The money generated by such activities finds its way into the financial system. The FATF has carried out a study which describes the money flows related to these two distinct problems and attempts to assess their scale. The report, which will be published shortly, provides a series of red-flag indicators for the various destination / origin countries and different sectors to help financial institutions to better detect related suspicious financial activity.

Money Laundering and Corruption

Corruption continues to be a significant public policy issue throughout the world, and for that reason work related to anti-corruption was identified as an objective under the Mexican Presidency. In the larger framework of its work on corruption, the FATF has prepared a study on the links between corruption and money laundering. The report, which will be published shortly, identifies key vulnerabilities within the current AML/CFT framework and discusses some of the obstacles to the recovery of corruption. In addition to providing the basis for further examination of related issues, the report will serve as the catalyst for future FATF work in developing guidance or best practices on AML/CFT measures relevant to combating corruption. The FATF will continue to work on issues related to the use of AML/CFT tools in the fight against corruption.

Guidance on Financial Inclusion

Financial inclusion is an important policy objective for many countries, and the implementation of AML/CFT measures should not become an impediment to financial inclusion. However, an overly cautious approach to AML/CFT safeguards could have the unintended consequence of excluding legitimate business and consumers from the financial system. In collaboration with the World Bank and the Asia Pacific Group on Money Laundering (APG) and in consideration of the objectives set by the Mexican Presidency, the FATF has completed work on guidance that will help in developing AML/CFT measures that are in line with financial inclusion goals without compromising the overall purpose of combating crime. In providing this guidance, the FATF is contributing to the common objective of the G20 in this area as agreed at the Seoul Summit of November 2010. The FATF will continue to strive to ensure that the objectives of financial inclusion and AML/CFT are complementary. The report will be available on the FATF website shortly.

Revision of the FATF Recommendations and Preparation for the Fourth Round of Mutual Evaluations

The FATF continues its work to revise the FATF Recommendations to ensure that they will continue to provide a comprehensive set of means to combat money laundering and terrorist financing, and to build on the experience of the 3rd round of mutual evaluations. The FATF is committed to a constructive engagement with all stakeholders, and is issuing a second public consultation document (pdf, 438 Kb) on a range of issues where changes to the Standards are being considered. This covers important issues such as:

• Clarifying beneficial ownership requirements (Recommendations 5, 33 and 34)
• Ensuring no inconsistency between AML/CFT and data protection / privacy requirements
• Creating an obligation for group wide compliance programmes for financial groups
• Enhancing international cooperation (Recommendation 40)
• Promoting a risk based approach to supervision
• Strengthening measures in relation to politically exposed persons
• Enhancing the transparency of wire transfers
• Implementing targeted financial sanctions in the context of terrorist financing and proliferation financing
• Strengthening and clarifying the requirements for financial intelligence units and law enforcement authorities

The President of the FATF, Mr. Luis Urrutia, thanked the FATF members for their decisive support to achieve the objectives set at the outset of his tenure and wished the new President, Mr. Giancarlo del Bufalo of Italy, and the new Vice-President, M. Bjorn Skogstag AAMO of Norway, Godspeed.

Luis Urrutia Corral

FATF President

IMF warns Kuwait on money laundering risk

Kuwait needs to tighten its anti-money laundering rules or risk its growing financial sector being exploited by criminals, the IMF has warned.

Smuggling to and from neighbouring Iraq, fraud and corruption are among the main money laundering crimes identified by authorities to date, the organisation, based in Washington, said in a report.

At present, there is no evidence of significant money laundering in the country, it said.

But the IMF said criminal risks increased as the financial sector expanded, fuelled by increasing oil revenue and higher government spending, and would increase further if plans to create an international financial centre were realised.

"These developments have the potential of creating a suitable environment for money launderers seeking to exploit the Kuwaiti financial sector to exercise their illegitimate activities," it said.

Kuwait trailed other GCC states in Transparency International's Corruption Perceptions Index last year, ranking 54th out of 180 countries. In 2003, it was 35th on the index.

The country has been battling against corruption in government and industry in recent years. Members of parliament last month discussed allegations that two MPs had received frequent cash payments into their bank accounts from unknown sources. Siemens uncovered evidence of corruption at its business in Kuwait, the German conglomerate said in June.

A major problem in Kuwait, the IMF noted, was insufficient anti-money laundering rules. A law introduced in 2002 did not criminalise the financing of terrorism and did not put in place a means of enforcing UN Security Council resolutions, it said.

A new draft anti-money laundering law has yet to be agreed on, despite being sent before the national assembly in 2007. In addition, preventative measures safeguarding financial firms from money laundering were not comprehensive, the IMF said.

Kuwait's finance sector, one of the pillars of the country's non-oil economy, is recovering from heavy losses linked to the global downturn. Gulf Bank required a government bailout and the investment industry underwent a hefty shake-up after several investment companies started to default on financial obligations.

tarnold@thenational.ae

Source: The National

FBI agents in town help fight cross-border crime

By Marie Magleby, Special to Gulf News

Published: May 31, 2008, 23:44

Abu Dhabi: Gary Price and Ernest Herbert carry FBI badges, but their job descriptions are significantly different here than in the US.

"I have no law enforcement authority here," Special Agent Price said.

Instead, the duo are go-betweens for local and US law enforcement. He said, "We work closely with UAE government officials to share information that protects the two countries."

They also offer training at the request of local authorities. The training involves many aspects of law enforcement, including ways to combat white-collar crime, violent crime, forensics and counter-terrorism.

In addition, the agents coordinate the Middle East Law Enforcement Training Centre in Dubai, which offers week-long courses for law enforcement personnel from around the Gulf.

Local authorities choose the topics and dates, and FBI specialists come from the US to teach the courses. Since its establishment in 2001, the centre, co-sponsored by the FBI and Dubai police, has conducted about 40 courses dealing with money laundering, computer crimes, intellectual property rights, kidnapping, auto theft, homicide, financial institution fraud, terrorist financing, hostage negotiations and more.

The globalisation of crime, especially financial and internet crime, places the agents in a pivotal position. "The UAE is an important crossroads for business and, as a result, also for crime," Price said of the potential for fraud or abuse in the banking system. With the help of local officials, they routinely seek to investigate bank records and track financial transactions linked to the US.

When internet crime is traced back to the US, the agents are also able to help. Just months ago, a prominent UAE citizen received a cyber threat from a location in the US.

Local law enforcement officials contacted Price and Herbert, who enlisted agents in the US to conduct an investigation. The man was arrested, charged and is now facing imprisonment.

About working with local authorities, Price said: "I truly enjoy working with the Emiratis. They are professional and very gracious." There are, however, obstacles. According to Price, a federal law that regulates "international judicial cooperation" is often misinterpreted to be a roadblock to investigations. "There is not a timely, quick way for law enforcement response because of the bureaucratic process," he said.

Law enforcement mechanisms do not always translate across cultures and borders, Herbert said in a similar vein. "Things are run differently here than in the US, so we have to do things differently."

When FBI agents are on international assignment, they assume the title of Legal Attaché in their respective embassies. Price and Herbert are successors to three other agents since the Abu Dhabi office opened in December 2003. They cover both the UAE and Oman. In the region, the FBI also has agents posted in Afghanistan, Egypt, Iraq, Israel, Jordan, Kuwait, Lebanon, Pakistan, Saudi Arabia and Yemen.

During his tenure, former FBI director Louis Freeh pushed to expand the bureau's international presence. It now has offices in 62 countries. This worldwide network of agents is a necessary countermeasure against the growing nexus of international crime. "Just as there are no borders for crime and terrorism, there can be no borders for justice and the rule of law," current director Robert Mueller told the US Senate in March.

Progress

"Twenty years ago, the idea of regularly communicating with our law enforcement counterparts around the world was as foreign as the internet or the mobile phone. Today, advances in technology, travel and communication have broken down walls between countries, continents and individuals," Mueller added. Price and Herbert embody this prog-ress.

Mueller became the dir-ector one week prior to the September 11, 2001 attacks.

The FBI began as a special agent force in 1908 and received its current title in 1935. Since its genesis, the FBI has seen its share of success and failure. Though it has successfully foiled numerous plots, conspiracies and espionage attempts, it has been criticised for shoddy investigation tactics and ignoring intelligence reports that could have prevented past attacks. Regardless, it has survived a century of challenges.

- The writer is a journalist based in Abu Dhabi.

Source: GulfNews

Kuwait: No evidence acquits Asian man in money-laundering charges

The Criminal Court Sunday acquitted an Asian man, identified only as Sabeer M. — who had been sentenced in absentia —for money-laundering citing lack of evidence.

Case papers indicate an employee of the Central Bank of Kuwait investigated the financial status of the man and discovered he worked as a driver for the embassy of a Gulf State in Kuwait for KD 108 monthly salary.

It was also discovered the man maintained two bank accounts — one at the Kuwait Finance House (KFH) and the other at the National Bank of Kuwait (NBK). The man had deposited KD 80,000 at the KFH from January 2005 to September 2006. His deposit at the NBK was KD 160,000.

Police investigations revealed the man was trafficking in international communications. They also found that he had transferred the money out of Kuwait.
This means the man had opened the two accounts only as a ‘transit act’ before transferring it overseas. When police went to arrest the man they discovered he had left the country.

In its verdict, the court said according to Items No 1 and 2 of Law No 35 of 2002, a person can be convicted of money-laundering only if it is clear that the money used in money-laundering was obtained from a crime or in an illegal manner.

The court added according to case papers, there is no evidence to prove the man has committed the crime because no telecommunication equipment had been seized from him.
The session was presided by Judge Abdullah Al-Sane.

http://www.arabtimesonline.com/client/pagesdetails.asp?nid=11469&ccid=22

US workshop in Jordan builds support to battle money laundering

The U.S. government organized a workshop in Jordan to teach officials from the Arab countries how to detect and investigate the smuggling of money.

The U.S. has been working with Jordan and other Arab countries to ensure that banking institutions are subject to appropriate oversight and that they have effective programs in place to prevent money-laundering and terrorist financing.

Participants, including representatives from Jordan, Algeria, Egypt, Kuwait, Lebanon, Mauritania, Morocco, Oman, the Palestinian Authority, Qatar, Tunisia and Yemen, examined anti-money laundering standards used by the Financial Action Task Force, a Paris-based inter-government body set up in 1989 by the Group of Eight industrialized nations.

This week, U.S. federal prosecutors said two NY residents were indicted on charges of trying to smuggle $500,000 (euro323,000) from the U.S. to Jordan.

Authorities said a grand jury in Hartford, Connecticut returned an indictment charging 35-year-old Hassan Abuzaitoun and 33-year-old Mohammad Alazzam with conspiracy to commit money laundering and conspiracy to smuggle bulk cash from the United States. Both are naturalized U.S. citizens from Jordan residing in Yonkers, New York.

Jordanian authorities have often asserted that Jordan was free of money laundering because of its strict monetary regulations and practices.

In 2004, three different groups of families of suicide bombing victims in Israel filed suits in a Brooklyn, N.Y. federal court against Jordan's largest financial institution _ Arab Bank _ alleging that it moved donations from Saudi Arabia to militant Palestinian groups, including Hamas and Islamic Jihad.

The bank denied the allegation. It later decided to close down its New York branch saying it was pursuing its strategy to focus on operations in the Arab world and Europe.

http://www.amlosphere.com/america/legislation/us-workshop-in-jordan-builds-support-to-battle-money-laundering.html