FATF Plenary February 2024: Insights and Initiatives

The recent Financial Action Task Force (FATF) plenary held from February 21-23, 2024, marked the fifth session under the stewardship of T. Raja Kumar during the two-year Singapore Presidency.

With delegates from over 200 member jurisdictions and observer organizations like the International Monetary Fund, the United Nations, and INTERPOL, the FATF Plenary serves as a pivotal platform for discussing and shaping global strategies in combating money laundering and terrorist financing.

Why do we write this article? We want to make you understand the key outcomes of the February 2024 FATF Plenary, shedding light on significant developments in the realm of financial regulation and international cooperation. From revisions to the FATF’s Grey List to strategic initiatives aimed at bolstering global financial integrity, the insights gleaned from this plenary are instrumental in navigating the complex and huge landscape of financial security. 

Stay tuned as we explore the highlights from the recent FATF Plenary and outline the strategic initiatives poised to shape the future of financial regulation and compliance.

What is a FAFT plenary?

First of all, a FATF plenary is the decision-making gathering of the Financial Action Task Force (FATF), which convenes three times annually, typically in February, June, and October. These meetings serve as pivotal moments for setting the direction and policies regarding global efforts to combat money laundering and terrorist financing.

During these plenary sessions, important decisions are made, and the outcomes are published once the meetings conclude. Key matters discussed include mutual evaluation reports, policy issues, and governance matters. Additionally, the FATF holds an annual typologies workshop and conducts out-of-session meetings for various purposes, including consultations with the private sector.

Yep, the significance and the importance of these plenary sessions cannot be overstated. They provide a platform for member jurisdictions, observer organizations, and stakeholders to collaborate, exchange insights, and collectively address challenges in safeguarding the integrity of the international financial system. Through these meetings, the FATF sets standards, evaluates compliance, and coordinates global efforts to combat financial crimes effectively.

Furthermore, the FATF plenaries offer opportunities for engagement and input from various stakeholders, including the private sector. Delegates are encouraged to attend and participate, ensuring that a diverse range of perspectives is considered in the decision-making process.

FATF’s Grey List February 2024: what changed for the last one?

The latest FATF plenary in February 2024 saw the addition of two countries to the Grey List: Kenya and Namibia. While both nations have shown efforts to strengthen their anti-money laundering and counter-terrorist financing (AML/CFT) regimes, they still face significant challenges that necessitated their inclusion on the list. So, this is a sum-up of the updated to the Grey List:

Countries Included on the Grey List

• Kenya: Despite demonstrating progress in implementing recommended actions since September 2022, Kenya found itself added to the Grey List due to ongoing deficiencies in its AML/CFT framework. The FATF highlighted areas where Kenya needs improvement, including supervision enhancement, preventive measures, regulatory authority designation, and better utilization of financial intelligence. Notably, Kenya’s susceptibility to terrorism financing and the risks associated with cryptocurrencies were cited as key concerns.

• Namibia: Similar to Kenya, Namibia has been working towards strengthening its AML/CFT regime with assistance from the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). While the FATF acknowledged Namibia’s progress in certain areas, such as enhancing understanding of money laundering and terrorist financing risks among stakeholders, several deficiencies remained. These included inadequate risk-based supervision, preventive measures, beneficial ownership information filing, and operational capabilities of authorities involved in investigations and prosecutions related to financial crimes.
  

Countries Removed from the Grey List

In a positive turn of events, the FATF announced the removal of four countries from the Grey List following notable progress in their AML/CFT regimes.

• Barbados: Having been added to the Grey List in 2020 due to weak AML/CFT measures, Barbados demonstrated significant improvements, leading to its removal from the list in February 2024. The country’s efforts in preventing legal persons and arrangements from being misused for criminal purposes were particularly commended.

• Gibraltar: Gibraltar also made substantial strides in enhancing its AML/CFT framework, resulting in its removal from the Grey List. Notable improvements included the application of effective sanctions for AML/CFT breaches and pursuing final confiscation judgments proportional to the risk.

• Uganda: Uganda’s inclusion on the Grey List prompted a series of reforms aimed at strengthening its AML/CFT regime. These efforts, which included adopting a national strategy and enhancing mutual legal assistance, led to Uganda’s removal from the list.

• United Arab Emirates (UAE): The UAE showcased significant progress in enhancing its AML/CFT regime, leading to its removal from the Grey List. Key improvements included increased mutual legal assistance requests, a better understanding of money laundering and terrorist financing risks, and enhanced resources for its financial intelligence unit. Despite its removal from increased monitoring, the FATF emphasized the importance of continued collaboration with regional bodies to sustain progress.
  

Strategic initiatives from the FAFT plenary february 2024

The February 2024 plenary of the Financial Action Task Force (FATF) saw the discussion of several strategic initiatives aimed at enhancing global efforts to combat money laundering, terrorist financing, and other illicit financial activities. 

These initiatives address key areas of concern and aim to strengthen the effectiveness of the FATF’s standards and guidelines. These are the most important:

• Increasing Beneficial Ownership Transparency Globally: The FATF updated its guidelines on beneficial ownership and transparency of legal arrangements, building upon revisions to Recommendation 25 adopted in February 2023. The updated guidance aims to assist stakeholders in assessing and mitigating risks associated with money laundering and terrorist financing. By enhancing beneficial ownership transparency, the FATF aims to identify individuals involved in corrupt activities, sanctions evasion, money laundering, and tax evasion.

• Leveraging Digital Transformation: The FATF highlighted the need for countries to fully implement the revised Recommendation 15, which addresses virtual assets and virtual asset service providers (VASPs). A roadmap was agreed upon in February 2023 to strengthen the implementation of FATF standards in this area. The FATF conducted a stocktake of current implementation levels globally and will publish an overview of steps taken by member jurisdictions to regulate and supervise VASPs. This initiative aims to address the challenges posed by the borderless nature of virtual asset activity and combat illicit finance effectively.

• Payment Transparency: Proposed amendments to Recommendation 16 aim to improve the transparency and traceability of cross-border transactions, keeping pace with the rapid development of cross-border payment systems. These revisions aim to make cross-border payments quicker, cheaper, transparent, and inclusive while ensuring compliance with anti-money laundering and counter-terrorist financing measures. The FATF emphasized the importance of remaining technology-neutral in these revisions, which will undergo public consultation.

• Protecting Non-Profit Organizations (NPOs) from Abuse for Terrorist Financing: The FATF revised Recommendation 8 in October 2023 to safeguard NPOs from potential abuse for terrorist financing. Updates clarified the application of the recommendation to NPOs falling within the FATF definition and provided best practices to protect vulnerable NPOs while allowing legitimate activities to continue. Following the plenary, the FATF agreed to update its assessment methodology to further clarify obligations to protect NPOs vulnerable to potential terrorist financing abuse during mutual evaluations.
  

Next FATF plenaries 2024

Looking ahead to the remainder of 2024, the Financial Action Task Force (FATF) has scheduled two more plenary meetings.

And you know what? The decisions taken during these plenary meetings are made available to the public. Interested parties can access the outcomes and resolutions through the FATF’s official website or other relevant channels. This transparency ensures that stakeholders are informed about the latest developments and decisions shaping the global fight against financial crimes.
For those keen on staying updated on the activities and decisions of the FATF, you can visit this page and know all the activities they are organizing. Yes: you can find information on upcoming plenary meetings, access publications and reports, and stay informed about the latest initiatives and developments in the realm of financial regulation and compliance. What are you waiting for?