Forwarding the work of the Financial Action Task Force

Marshall Billinglsea, president of the Financial Action Task Force profiles the next generation of challenges the world must address, from funding terrorism to state-sponsored cyberattacks

Terrorism has many manifestations. From organised groups (such as al-Qaida) to semi-organisational groups (such as the so-called Islamic State) and lone wolf extremists, terrorists continue to conduct bloody attacks on innocent civilians around the world, at devastating human and economic cost. No country is immune from this ever-evolving threat.

Disrupting the financing behind terrorist organisations and their activities – ranging from procurement of weapons and supplies to logistical support for travel and safe houses – remains one of the most effective methods for preventing terror attacks. Every country should make it a priority to close the loopholes that terrorists exploit to raise, move and use funds.

Moreover, since criminals look for these loopholes to launder, disguise and move the proceeds of their crimes, efforts against terrorist financing have broader significance for the global effort to combat money laundering and corruption.

Since its creation in 1989, the Financial Action Task Force has evolved from an effort to stem the financial flows of drug trafficking into a body whose role is recognised by the United Nations Security Council, and whose members provided it a permanent mandate to combat illicit finance. The FATF and its members have spurred significant progress worldwide.

Through FATF-style regional bodies, our standards are now endorsed by more than 200 countries and enforced through peer reviews (known as mutual evaluations). In this respect, financial institutions are a close partner; by tracking FATF evaluations and our public identification process closely, global and regional banks give added impetus to governments to meet and exceed FATF standards.

FATF’s success in driving compliance with its standards has enabled it to pivot to focus on effectiveness. Countries realise that now they will be assessed not just on whether they possess the capability to enforce anti-money laundering standards, but also on their capacity and demonstrated political will to do so. Countries around the globe have repeatedly proven that they are now better able to detect illicit flows, and identify both complicit actors and those that turn a blind eye. A spate of recent high-profile money laundering prosecutions does not so much indicate an expanding money laundering problem, but rather that governments are better at monitoring, supervising and enforcing (including in collaboration with one another).

The FATF’s success relies on its members taking robust and effective action and cooperation in pursuing the financial flows associated with criminals and terrorists. Countries must also have sound legal, regulatory and operational frameworks and effective national security policies to identify illicit sources of funds and those who are behind these transactions. Only when each country has done its part will the global financial system be afforded the protection it demands. That is why the peer review process is critical: every state must meet its obligations, and has the right to expect the same of all others.

But with all we have accomplished over the past 30 years, our mission is far from complete. Threats to the financial system are evolving, with organised criminal groups pioneering new tradecraft and state sponsors launching unprecedented cyberattacks against banks, money exchangers and virtual asset service providers. Indeed, despite our best efforts, the threat posed by proliferators of weapons of mass destruction and terror financing networks has grown. Likewise, the financial landscape is ever changing, both in terms of technological advances and the political will to appropriately address illicit finance. Some countries have progressed in capability and commitment; others, on occasion, have regressed. This all requires the FATF’s constant vigilance as well as new standards, guidance and methodologies so that the FATF network stays abreast of new business models, products and financial innovations.

The FATF’s continued success relies on every member’s unwavering high-level political commitment to combat illicit finance at the national level, and to provide the FATF with the support it needs to do so collectively. FATF ministers – almost all G20 members – clearly signalled this commitment by agreeing to meet every two years to discuss the FATF’s progress. This increased engagement will ensure that each country prioritises the necessary action, including new or amended legislation and the necessary resources, both nationally, and internationally.

The G20 members, as supporters of the FATF, should lead by example to fully and effectively implement the FATF standards, and to levy the expectation on all other countries to do likewise.