Understanding the Big 6 FATF Recommendations – Part 1_Apr23 (3).pdf

FATF

1. Understanding the “Big 6”
FATF Recommendations –
Part 1
CFATFRESEARCHDESK
MAY 5th, 2023.

2. •Recommendations3,5,6,10,11and20are
viewedasvitalbuildingblocksforafunctional
AML/CFTregime,regardlessofajurisdiction’s
riskandcontext.
•Recommendations3,5,and6correspondto
criminalizingmoneylaundering(ML),terrorist
financing(TF)andtargetedfinancialsanctions
forTFrespectively.
•Recommendations10focusesoncustomerdue-
diligence(CDD),Recommendation11onrecord
keepingmeasures,whileRecommendation20
relatestoreportingofsuspicioustransactions.
•IfacountryisratedNon-compliantorPartially
Compliant(NC/PC)onthree(3)ormoreofthese
bigsix,thenacountrymaybereferredtothe
poolofcountriessubjecttotheInternationalCo-
operationReviewGroupprocess,withthe
potentialforactivemonitoringiftheymeetthe
prioritisationcriteria.¹
What are the “Big 6” FATF
Recommendations?
¹A country may be subject to review by ICRG for example if it is above a 5 billion
USD threshold for M3 (Money supply).

3. •Moneylaunderingshouldbecriminalizedbased
on:
oTheUnitedNationsConventionagainstIllicit
TrafficinNarcoticDrugsandPsychotropic
Substances,1988(theViennaConvention)
oTheUnitedNationsConventionagainst
TransnationalOrganizedCrime,2000(the
PalermoConvention).
•Asadistinctcriminaloffence,thereare
specificrequirementsforML,interalia,
oProportionateanddissuasivecriminal
sanctionsfornaturalandlegalpersons.
oApplicationtoanytypeofpropertythatis
directlyorindirectlytheproceedsofcrime.
oIncludesawiderangeofpredicateoffences
thatcoverallseriousoffences.
oIncludesancillaryoffences,suchas
participationin,associationwithor
conspiracytocommit.
Recommendation 3 –Money
Laundering Offence

4. Recommendation 5 -Terrorist
Financing Offence
•InrespecttoTF,bothRecommendations5(TF
Offence)and6(targetedfinancialsanctionsfor
terrorismfinance),areamongthe“BigSix”
Recommendations.²
•CountriesshouldcriminalizeTFbasedonthe
TerroristFinancingConvention(Article2ofthe
InternationalConventionfortheSuppressionof
theFinancingofTerrorism).
•Asadistinctcriminaloffence,thereare
specificrequirementsforTF,interalia,
oWillfullyprovidingorcollectingfunds/assets
(directlyorindirectly)withtheunlawful
intentionorknowledgethattheywillbeusedin
aterroristactorbyanindividual
terrorist/organization.
²FATF (2022), Report on the State of Effectiveness Compliance with
FATF Standards, FATF, Paris

5. Recommendation 5 -Terrorist
Financing Offence
•TFoffencesshouldextendtoanyfundsor
otherassetsfromlegitimateorillegitimate
sources.
•Proportionate and dissuasive criminal sanctions
should apply to natural persons convicted of
TF.
•Ancillaryoffencessuchasattemptingto
committheTFoffence,participatingasan
accompliceororganiseordirectothersto
commitaTFoffence.

6. •Theintensificationofterroristattacks
worldwideinthe21stCenturypromptedurgent
concertedactiontostrengthenglobalcounter
terroristfinancingregimesbytheFATF.
•ThisRecommendationallowsforTFSaswellas
freezingofterroristassetswithrequirements
thatinclude,interalia,
oIdentifyinganddesignatingpersonsand
entitiesaccordingtothedesignationcriteria
oftherelevantUnitedNationsSecurity
CouncilResolutions(UNSCRs).
oFreezingallassetsandfundsofdesignated
personsandentitieswithoutdelayand
withoutpriornotice.
oProhibitingpersonsandentitiesfrom
providinganyfunds/assets,economic
resources,orfinancialorotherrelated
services,inanyformtoofdesignatedpersons
andentities.
Recommendation 6 -Targeted
Financial Sanctions related to
Terrorism and Terrorist
Financing

7. CFATF Countries 4th Round Ratings for Recs. 3, 5 and 6
MER–Mutual
EvaluationReport
FUR –Follow Up
Report
For R. 3, 12 of the 15 assessed CFATF countries were rated complaint (C) or largely compliant (LC). Ten (10) out
countries were rated C/LC for R. 5 while eight (8) were C/LC for R. 6.

8. Thankyou!

9. PhoneNumber
1868-623-9667
EmailAddress
[email protected]
Website
www.cfatf-gafic.org