FATF ¦ Outcomes FATF Plenary, 26-28 June 2024

FATF Plenary Sets New Course: Risk-Based ICRG Criteria, Asset Recovery Focus, and Updated Jurisdiction Lists

At its recent Plenary, the Financial Action Task Force (FATF) reached a strategic milestone by approving revised criteria for prioritising countries for review under the International Cooperation Review Group (ICRG) process. The refreshed framework will apply in the next round of evaluations and is designed to sharpen the focus on risk, enhance fairness and transparency, and better account for the capacity constraints of least developed countries. This shift aims to direct attention and resources where the threats to the international financial system are most acute, while ensuring countries with limited capacity are not unduly disadvantaged.

Methodology Updates: Turning Asset Recovery Into Real Outcomes

Members agreed on how countries will be assessed against the recently revised FATF Standards on asset recovery and international cooperation adopted in October 2023. Going forward, jurisdictions will need to demonstrate concrete results: prioritisation of asset recovery, the ability of competent authorities to identify and trace criminal property, the obtaining and enforcement of confiscation orders, and timely, constructive cross-border cooperation. The emphasis is not just on the presence of laws, but on evidence that they are being used effectively to deprive criminals of illicit proceeds.

Adjustments to High-Risk and Monitored Jurisdictions

The FATF updated its statements on high-risk and other monitored jurisdictions. Monaco and Venezuela were added to the list of jurisdictions under increased monitoring after committing to action plans to remediate strategic deficiencies. Conversely, Jamaica and Türkiye exited increased monitoring following substantial progress and completion of their action plans within agreed timeframes. Both countries will continue working with the FATF and relevant regional bodies to further strengthen their regimes.

Persistent Threats: DPRK and the Call for Countermeasures

The FATF reiterated its long-standing concerns about the Democratic People’s Republic of Korea (DPRK), citing continued failures to address severe AML/CFT deficiencies and ongoing illicit activities tied to the proliferation of weapons of mass destruction and its financing. Notably, the FATF highlighted increased DPRK connectivity with the international financial system, elevating proliferation financing risks. The FATF calls for heightened vigilance and renewed implementation and enforcement of countermeasures.

Mutual Evaluations: India and Kuwait

Delegates adopted the joint FATF/APG/EAG mutual evaluation report of India and the joint FATF-MENAFATF assessment of Kuwait, pending quality and consistency reviews prior to publication. India achieved a high level of technical compliance and demonstrated positive outcomes in risk understanding, international cooperation, access to basic and beneficial ownership information, use of financial intelligence, asset deprivation, and counter-proliferation financing. Areas for improvement include stronger supervision and preventive measures in parts of the non-financial sector, reducing delays in money laundering and terrorism financing prosecutions, and risk-based outreach to non-profit organisations.

Kuwait’s framework was assessed as adequate in law and supervision but needing stronger effectiveness. The country should refine risk understanding, intensify terrorism financing investigations and prosecutions, ensure the ability to freeze assets linked to terrorism or WMD financing without delay, prevent misuse of legal persons, and apply targeted, risk-based measures to protect the non-profit sector.

Bastian Schwind-Wagner_Follow "The FATF Plenary tightened its risk focus, refined how countries are prioritised for review, and pushed for tangible results in asset recovery and international cooperation. With new entries and exits from increased monitoring, firm warnings on DPRK, and clear priorities under the Mexican Presidency, the global AML/CFT agenda is set for a more outcome-driven next phase."

Membership and Geopolitical Vigilance

The suspension of the Russian Federation from the FATF remains in force. Consistent with prior statements, the FATF urged all jurisdictions to stay alert to risks arising from the circumvention of measures related to Russia, with the overarching goal of safeguarding the international financial system.

Strategic Initiatives: DNFBP Safeguards, Virtual Assets, and Payment Transparency

The FATF completed a horizontal review of technical compliance among designated non-financial businesses and professions (DNFBPs) — accountants, lawyers, real estate agents, and trust and company service providers — focusing on their exposure to corruption risk and their role as potential gatekeepers. Findings are slated for publication in July 2024.

On virtual assets and virtual asset service providers (VASPs), the FATF agreed to publish the fifth annual implementation update. While the number of jurisdictions rated compliant or largely compliant has risen to 33 in 2024 from 25 in 2023, a substantial 75% (97 of 130) remain only partially compliant or non-compliant. The FATF urged accelerated, full implementation to close gaps that leave VAs and VASPs vulnerable to misuse.

Regarding payment transparency, the FATF is progressing with revisions to its Standards to align with evolving cross-border payment systems and industry changes, notably ISO 20022. Following extensive public consultation, the Plenary called for further engagement with public and private stakeholders before finalising changes, balancing speed, cost, transparency, inclusion, and AML/CFT compliance while maintaining technology neutrality.

Global Network Cooperation and Leadership Priorities

The FATF President convened the Chairs of the FATF-Style Regional Bodies (FSRBs) to review progress under the 2022 Strategic Vision for the Global Network. They agreed on three priorities for the coming year: amplifying FSRBs’ participation in FATF work, preparing for the new mutual evaluation round, and deepening AML/CFT expertise at the regional level.

In a noteworthy governance development, members approved the incoming Mexican Presidency’s priorities for 2024–2026. These focus on promoting

• financial inclusion through proportionate, risk-based implementation;
• ensuring a strong start to the new assessment round;
• strengthening cohesion across the Global Network;
• supporting effective implementation of revised Standards on asset recovery, beneficial ownership, and virtual assets; and
• sustaining efforts to counter terrorism and proliferation financing.

Women in FATF and the Global Network: Building the Pipeline

Under the Singapore Presidency’s “Women in FATF and the Global Network” initiative, delegates recognized progress including a multicultural mentoring programme linking 15 mentor-mentee pairs, and the launch of “Breaking Barriers: Inspiring the Next Generation of Women Leaders”, an e-book showcasing insights from leaders across the FATF and Global Network. These efforts aim to foster an inclusive community and strengthen the talent pipeline in financial crime compliance and supervision.

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