Key takeaways from FATF’s most recent Private Sector Bulletin

The Financial Action Task Force (FATF) regularly publishes a short update of the FATF’s key decisions and of developments which are particularly relevant to the private sector - the so-called Private Sector Bulletin.

The highlights from the FATF’s most recent Private Sector Bulletin of July 2020 are the following:

Outline of FATF’s objectives during the German Presidency (2020-2022)

During the June Virtual Plenary, the FATF’s new President, Marcus Pleyer, presented his objectives for the first two-year Plenary period (July 2020-June 2022). Specifically, in addition to its core work in preventing money laundering and terrorist financing, the FAFT will focus on the following areas:

• Digital Transformation of anti-money laundering and counter terrorist financing (AML/CFT)
• Financing of ethnically or racially motivated terrorism
• Money laundering and migrant smuggling
• Environmental crime
• Illicit arms trafficking

The FATF will also complete ongoing initiatives, including its work on confiscation and asset recovery, on beneficial ownership, on proliferation financing and on guidance for the real estate sector.

Summary ofachievements under the Chinese Presidency

Under the Chinese Presidency, among other things the FATF’s work included the following milestones:

• providing guidance for a risk-based approach to AML/CTF regarding Virtual Assets and Virtual Asset Service Providers (VASPs), completing a 12-month review of the relevant revised FATF Standards and publishing a report to the G20 on so-called stablecoins;
• publishing a landmark paper on the use of Digital ID;
• publishing a best practices paper on beneficial ownership;
• publishing a report on money laundering and the illegal wildlife trade; and
• taking steps in response to the COVID-19 pandemic.

Updated FATF Recommendations: Countering proliferation financing

In the course of the summer, the FATF held a public consultation on its proposal for amendments to its Recommendationsregarding combating proliferation financing. On 23 October 2020, the FATF published its updated Recommendations 1 and 2 and their Interpretive Notes. In addition to the existing requirements under Recommendation 7, the new obligations require financial institutions to identify and assess the risks of potential breach, non-implementation or evasion of targeted financial sanctions relating to proliferation financing in their dealings with their customers, and take appropriate mitigating action, which is commensurate with the level of risks identified. The aim is to ensure that institutions are aware of the risks affecting their business and that resources are allocated appropriately based on the level of risk.