Anti-Money Laundering Group Suspends Russia, Publishes AML Standards, Guidance

The Financial Action Task Force (FATF), an intergovernmental body that establishes international standards for anti-money laundering, suspended Russia from its ranks, citing the Russian Federation’s "actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system.”

The FATF also issued long-awaited guidance for members to implement its Recommendation 24, requiring countries to ensure that competent authorities have access to adequate, accurate and up-to-date information on the true owners of companies.

The FATF issued a public statement on February 24 at the conclusion of its plenary meeting announcing its suspension of the Russian Federation’s membership from FATF.

The statement notes that “the Russian Federation’s actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system.”

The FATF further urged “all jurisdictions to remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s war against Ukraine.” The FATF also reiterated “…that all jurisdictions should be alert to possible emerging risks from the circumvention of measures taken in order to protect the international financial system and take the necessary measures to mitigate these risks.”

The FATF also updated its lists of jurisdictions with strategic AML/CFT/CPF deficiencies, removing Cambodia and Morocco from its list of Jurisdictions under Increased Monitoring and adding South Africa and Nigeria to the list.

The FATF’s list of High-Risk Jurisdictions Subject to a Call for Action remains the same, with Iran and the Democratic People’s Republic of Korea (DPRK) still subject to FATF’s countermeasures. Burma remains on the list of High-Risk Jurisdictions Subject to a Call for Action and is still subject to enhanced due diligence, not countermeasures.

Reccomendation 24 Guidance

In March 2022, the FATF agreed on tougher global beneficial ownership standards in its Recommendation 24. The FATF has now updated the guidance that will help countries implement the revised Recommendation 24.

The guidance will help countries identify, design and implement appropriate measures in line with the revised Recommendation 24 to ensure that beneficial ownership information is held by a public authority or body functioning as a beneficial ownership registry, or an alternative mechanism that enables efficient access to the information.  

The guidance will also help countries assess and mitigate the money laundering and terrorist financing risks associated with foreign companies to which their countries are exposed.

The guidance explains types and sources of relevant information, and mechanism and sources to obtain such information.  This includes the multi-pronged approach, which consists of combining information from, among others, companies themselves, public authorities in a registry, or alternative mechanism if it ensures rapid and efficient access to beneficial ownership information.  FATF’s mutual evaluations demonstrated that countries using a multi-pronged approach were more effective in preventing the misuse of legal persons for criminal purposes and ensuring transparency of beneficial ownership than countries using a single approach.

FATF Guidance on Beneficial Ownership of Legal Persons]

The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction[FATF Recomendations].