The Financial Action Task Force (FATF) released the revised FATF Recommendations on 16th February 2012. As you are aware, the FATF is the inter-governmental body, established by the G7 in 1989, which sets the global standards for combating money laundering and terrorist financing, and the financing of the proliferation of weapons of mass destruction (WMD).

The FATF spent two years reviewing the previous recommendations. Public consultations were held on October 2010 and June 2011. The key amendments which have been made to the Recommendations are:

1. The Risk-based approach: the FATF now requires jurisdictions to conduct a risk assessment and then determine an appropriate AML/CFT framework according to these risks. Regulated entities will also be required to assess their risks and ensure that their AML/ATF programmes appropriately reflect their assessment.


2. Transparency: the FATF has strengthened the transparency requirements for the ownership and control of legal persons and legal arrangements, and the parties to electronic funds transfers.


3. International cooperation: the FATF has enhanced the scope of international cooperation between government agencies, and between financial groups.


4. Operational Standards: the FATF has expanded the requirements in relation to law enforcement and Financial Intelligence Units (FIUs).


5. New Threats and New Priorities: the FATF has addressed the following new and aggravated threats:
   
   a. A new Recommendation to effectively implement targeted financial sanctions in relation to the proliferation of WMD.
   b. Stricter requirements in relation to PEPs (Politically Exposed Persons):  the requirement to apply enhanced due diligence to foreign PEPs has been expanded, whilst new requirements apply to domestic PEPs, international organisations, and to the family and close associates of PEPs.
   c. The list of predicate offences for ML now includes tax crimes.


6. Terrorist Financing: the FATF has incorporated the requirements of the nine Special Recommendations on terrorist financing within the Forty FATF Recommendations (in order to reflect the fact that terrorist financing remains a threat that has a close connection to AML/CFT measures). However, the structure continues to highlight the priority given to such matters within the FATF framework.

Further information is on the FATF website: www.fatf-gafi.org where the official material is published, including the FATF Recommendations and the associated FATFD Press Release.