Preventing Money Laundering and Terrorist Financing
4 International Cooperation 4.1 General International meetings of equivalent AML authorities from different countries provide a forum to set international standards and develop best practices, rather like national meetings between AML authorities that serve to set domestic policy and legislation. With the development of the financial industry, and the growth and consolidation of banking groups active in more than one jurisdiction, cooperation between banking supervisors from different jurisdictions is both more frequent and more institutionalized. There are a number of fora which serve to promote such cooperation and sharing of expertise. Some well-established AML/CFT international fora include the Financial Action Task Force (FATF), FATF-Style Regional Bodies (FSRBs),11 the Egmont Group (for FIUs in charge of bank AML/CFT supervision),12 and, for supervisors, the Basel Committee on Banking Supervision. The Basel Committee on Banking Supervision (BCBS) works to strengthen banking supervisory frameworks, to promote the advancement of risk management in the banking industry, and to help improve financial reporting standards. The BCBS produces publications on capital adequacy accounting and auditing; banking problems; cross-border issues; core principles for effective banking supervision, credit risk, and securitization; market risk; operational risk, transparency and disclosure; and, of course, money laundering and terrorist financing. The committee does not possess any formal supranational supervisory authority, and its conclusions do not have legal force. Rather, it formulates broad supervisory standards and guidelines, and recommends statements of best practice, in the expectation that individual authorities will take steps to implement them through detailed arrangements, statutory or otherwise, that are best suited to their own national systems. In this way, the committee encourages convergence toward common approaches and common standards but does not attempt detailed harmonization of member countries’ supervisory techniques.13
4.2 Cooperation among Supervisors The BCBS issued its “Core Principles for Effective Banking Supervision” (BCP) in 1997, and a revised version in 2006.14 An essential element of banking supervision, as principle 24 points out, is that supervisors should supervise a banking group on a consolidated basis, that is, that they should adequately monitor all aspects of the group’s business conducted worldwide. The principle emphasizes that banking risks, including reputational risk, are not limited to national boundaries. It is only possible to obtain the full and complete information required to evaluate the risk run by the supervised institution if the home supervisor, that is the institution
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