In the fight against corruption

It’s a pleasure to be able to speak to your anti-corruption conference today. Thanks to Global Ties US Alabama for suggesting me as a speaker. I spent 30 years as a U.S. government employee, 26 years with the Government Accountability Office, the congressional watchdog agency, and four years with the Financial Crimes Enforcement Network or FinCEN, the US Financial Intelligence Unit (FIU). FIUs play a crucial role in the fight against money laundering, terrorist financing and other financial crimes such as corruption. I am going to provide you with a brief overview of the Financial Action Task Force and FIUs. Much of this information has been taken from the organizations’ own web sites.

Financial Action Task Force

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a “policy-making body” that works 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 standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. They form the basis for a coordinated response to these threats to the integrity of the financial system and help ensure a level playing field. First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003, and most recently 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, and promotes the adoption and implementation of appropriate measures globally. In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

The FATF currently comprises 34 member jurisdictions and two regional organizations. FATF has eight associate members, which are FATF-Style Regional Bodies (FSRBs). Many international organizations have observer status with the FATF. They organizations have, among other functions, a specific anti-money laundering mission or function. Kazakhstan is part of the Eurasia Group.

FATF and Anti-Corruption

The FATF attaches a great importance to the fight against corruption—FATF believes corruption has the potential to bring catastrophic harm to economic development, the fight against organized crime, and respect for the law and effective governance.

The G20 called upon the FATF to address the problem of corruption in the framework of its work on combating money laundering and terrorist financing. In FATF’s view, corruption and money laundering are intrinsically linked. Corruption offenses, such as bribery or theft of public funds, are generally committed for the purpose of obtaining private gain. Money laundering is the process of concealing illicit gains that were generated from criminal activity.

The FATF Recommendations were designed to combat money laundering and terrorist financing, but when effectively implemented they can also help combat corruption, by:

· safeguarding the integrity of the public sector

· protecting designated private sector institutions from abuse

· increasing transparency of the financial system

· facilitating the detection, investigation and prosecution of corruption and money laundering, and the recovery of stolen assets.

The 2011 FATF publication Laundering the Proceeds of Corruption discussed the interrelationship between corruption and money laundering. It identified the most common methods used to launder the proceeds of corruption, and highlighted the vulnerabilities leading to an increased risk of corruption-related money laundering. The publication also identified areas in which future work could be done, including gaining an understanding of the correlation between certain risk factors and corruption.

The report Specific Risk Factors in the Laundering of Proceeds of Corruption was published in June 2012. It was written to assist reporting institutions to better analyze and better understand specific risk factors that may assist them in identifying situations posing a heightened risk of corruption-related money laundering risk. This report has been translated into Russian and is available through the Eurasia Group (EAG), the FATF-style regional body for your region.

The 2012 FATF Recommendations require a reporting entity to have “appropriate” risk management systems in place to determine whether the customer or the beneficial owner is a foreign politically exposed person (PEP), and take “reasonable measures” to determine whether a customer or beneficial owner is a domestic PEP or an individual entrusted with a prominent function by an international organization. To gauge whether a system is “appropriate,” or whether “reasonable measures” have been taken, requires an assessment of risk. Understanding risk is important after identifying domestic PEPs or relevant individuals from international organizations, in order to assess what level of enhanced due diligence is necessary.

In FATF’s view, combating corruption-related money laundering must be more than simply ensuring that PEPs receive an appropriate level of scrutiny. It is a rare case (although not unheard of) for a PEP to enter a financial institution and deposit (or transfer) significant amounts of suspicious money. Such action would likely create unacceptable risks to the PEP of detection by reporting institutions.

As Laundering the Proceeds of Corruption noted, corrupt PEPs will take great pains to disguise the identity and the source of the funds in order to place corrupt money in the financial system without suspicion. Therefore, an effective anti-money laundering (AML) scheme requires an assessment of corruption-related risk and protecting against the laundering of corruption proceeds across the spectrum of customers and business relationships, regardless of whether a FATF-defined PEP is involved.

Although anti-money laundering/countering the financing of terrorism (AML/CFT) and anti-corruption efforts are mutually reinforcing, in FATF’s view, they are not always brought together effectively. This is an issue of great importance to the international community, including the G20. The FATF held three experts meetings, jointly with the G20 Anti-Corruption Working Group (ACWG), to provide an international platform for the exchange of views between AML/CFT and anti-corruption experts: February 2011, October 2012, and October 2013. Participating experts at these meetings agreed that there was a need for further tools to enhance the understanding of the FATF Recommendations and how they can be used in anti-corruption efforts.

FATF’s October 2013 paper The Use of the FATF Recommendations to Combat Corruption aims to provide policy makers and practitioners with guidance and best practices on how AML/CFT measures can be used to combat corruption. The FATF developed this paper with direct input from the anti-corruption experts of the G20 ACWG, and built on existing work by the FATF:

The FATF and G20 ACWG held their most recent joint Experts’ Meeting on Corruption on October 18, 2014. The participants committed to pursuing their continued cooperation and sharing of experiences between AML/CFT and anti-corruption experts to strengthen the fight against corruption. Transparency and beneficial ownership will remain as priority issues on the agenda of the FATF and the G20.

Egmont Group of Financial Intelligence Units

Recognizing the importance of international cooperation in the fight against money laundering and financing of terrorism, a group of Financial Intelligence Units (FIUs) met at the Egmont Arenberg Palace in Brussels, Belgium, and decided to establish an informal network of FIUs for the stimulation of international co-operation. Now known as the Egmont Group of Financial Intelligence Units, Egmont Group FIUs meet regularly to find ways to promote the development of FIUs and to cooperate, especially in the areas of information exchange, training and the sharing of expertise.

The Egmont Group has evolved over the years and was comprised of 139 member FIUs in 2013. The 2012 FATF Recommendations expect that FIUs apply for membership with the Egmont Group, therefore, the Egmont network of FIUs is expected to grow even further in the coming years.

The goal of the Egmont Group is to provide a forum for FIUs around the world to improve cooperation in the fight against money laundering and the financing of terrorism and to foster the implementation of domestic programs in this field. This support includes:

· Expanding and systematizing international cooperation in the reciprocal exchange of information;

· Increasing the effectiveness of FIUs by offering training and promoting personnel exchanges to improve the expertise and capabilities of personnel employed by FIUs;

· Fostering better and secure communication among FIUs through the application of technology, such as the Egmont Secure Web (ESW);

· Fostering increased coordination and support among the operational divisions of member FIUs;

· Promoting the operational autonomy of FIUs; and

· Promoting the establishment of FIUs in conjunction with jurisdictions with an AML/CFT program in place, or in areas with a program in the early stages of development.

In Egmont’s view, countries should establish an FIU that serves as a national center for the receipt and analysis of: (a) suspicious transaction reports; and (b) other information relevant to money laundering, associated predicate offences and financing of terrorism, and for the dissemination of the results of that analysis. The FIU should be able to obtain additional information from reporting entities, and should have access on a timely basis to the financial, administrative and law enforcement information that it requires to undertake its functions properly. A few major considerations shape the creation of the FIUs: anti-money laundering and counter terrorism financing laws, existing law enforcement, and the need for an authority that will receive, asses and share financial information.

Kazakhstan’s FIU

The FIU is called the Committee on Financial Monitoring and is within the Ministry of Finance of the Republic of Kazakhstan. It became a full member of the Egmont Group in 2011 and also a member of the Eurasia Group FSRB. The Committee was founded under the government decree No. 387 of the Republic of Kazakhstan on April 24, 2008. On August 28, 2009 the President of the Republic of Kazakhstan signed Laws Concerning the Counteraction against Laundering of Illegally Acquired Proceeds and Terrorism Financing and Concerning Introduction of Amendments and Additions in Some Acts on Laundering of Illegally Acquired Proceeds and Terrorism Financing. The Law on Combating the Legalization (Laundering) of Criminal Proceeds and Terrorism Financing entered into force on March 9, 2010.

The Committee collects and processes data on transactions involving money and/or other assets subject to financial monitoring. It analyzes the information it receives in the sphere of combating the laundering of criminal proceeds and terrorist financing. It coordinates the activities of state bodies in this field and sends the information within its competence to law enforcement agencies so that they can decide if sufficient grounds exist to warrant action. It is an administrative-type financial intelligence unit.

The committee cooperates bilaterally as beneficiary in programs of technical assistance with such a variety of international organizations involved in the fight against corruption including the International Monetary Fund (IMF), the World Bank (WB), the United Nations Office on Drugs and Crime (UNODC), and the Organization for Safety and Cooperation in Europe (OSCE). According to the Committee, technical assistance is carried out on principles of mutual interest, practicality and efficiency. Programs are implemented through projects, training and consultations.

Conclusion

FATF, the Egmont Group, and each country’s FIU form a critical network in the fight against corruption. These organizations work hand-in-hand with international organizations including the IMF, World Bank, UNODC, OSCE and others. I commend you for holding this conference and giving me the chance to speak to you today. I wish you much success in your very important work. Thank you.

Мукушева Жанар Дулатбековна

Старший помощник прокурора Акмолинской области,

Советник Юстиции

Дата добавления: 2015-08-20