Overview of global regulatory developments in the financial sector

3rd Caribbean Conference on the International Financial Services Sector – Overview of Global Regulatory Developments Calvin Wilson Executive Director Caribbean Financial Action Task Force.

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CARIBBEAN FINANCIAL ACTION TASK FORCE A GROWING SUCCESS STORY

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The CFATF has a membership consisting of twenty seven (27) countries Established in 1992, and is the first of eight FATF Style Regional Bodies in keeping with the desire of the Financial Action Task Force (FATF) to spread the AML/CFT message to all corners of the globe.

ASSISTED WITH THE ESTABLISHMENT OF ESAAMLG AND GAFISUD ASSOCIATE MEMBER OF THE FATF

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THE MUTUAL EVALUATION PROGRAMME The Mutual Evaluation Programme is the core work of the CFATF, in terms of monitoring and encouraging the highest levels of compliance with the FATF Recommendations.

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Through this monitoring mechanism the wider membership is kept informed as to what is happening on the ground in each Members Country.

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For the individual member the Mutual Evaluation Programme presents a valuable opportunity for an objective assessment by a team of AML/CFT Experts of the national AML/CFT architecture as it exists at the time of the visit.

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The Third Round has been brought to a close with a less than satisfactory forty (40) percent average level of compliance

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In some jurisdictions, Centres of Excellence, the Culture of Compliance is Strong and the levels of compliance are high and can be emulated by others.

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments

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CFATF International Cooperation Review Group ICRG) In order to expedite the pace of reform in all CFATF Members, the CFATF in May 2010 established the CFATF International Cooperation Review Group ICRG) which mirrors the FATF ICRG process, in reviewing and publicly identifying those CFATF members that are dilatory or non-responsive in implementing the terms of an Agreed Action Plan.

Eleven out of twenty seven Members had met the FATF ICRG criteria for review to be reviewed at a later stage ST. LUCIA, ST. KITTS AND NEVIS, TURKS AND CAICOS ISLANDS STERLING EXAMPLES OF MAKING GOOD PROGRESS WITH REFORM EFFORTS CFATF PUBLIC STATEMENTS IN MAY 2013 BELIZE, DOMINICA, GUYANA NOVEMBER 2013 COUNTRIES IN THE REGION AND AROUND THE WORLD ARE ASKED TO CONSIDER IMPLEMENTING COUNTER MEASURES BASED ON THE IDENTIFIED AML/CFT DEFICIENCIES IN THE NATIONAL SYSTEMS BELIZE AND GUYANA

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CFATF International Cooperation Review Group ICRG) (cont’d) FATF President Giancarlo Del Bufalo November 2011,CFATF MINISTERIAL MEETING, ISLA MARGARITA, VENEZUELA I HAVE TAKEN NOTE WITH GREAT INTEREST OF THE CFATF PROCESS WHICH I SINCERELY SUPPORT. I FEEL THAT ADDRESSING RISKS IS IN THE INTERESTS OF BOTH FATF AND CFATF COUNTRIES AND WE NEED YOUR REGIONAL EXPERTISE TO IDENTIFY AND ADDRESS SUCH RISKS. I ALSO SUPPORT THE CFATF ICRG MANDATE TO ASSIST COUNTRIES TO ENSURE THAT THEY ADDRESS THEIR SHORTCOMINGS BEFORE THE FATF REGIONAL REVIEW GROUP REVIEWS THE SITUATION

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • CFATF International Cooperation Review Group ICRG) (cont’d) • • • • • • •

THERE ARE NO CFATF MEMBER COUNTRIES IN THE FATF COMPLIANCE DOCUMENT OR THE PUBLIC STATEMENT

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • MOVING TO THE FOURTH ROUND OF ASSESSMENTS • COMMENCING JANUARY 2015

• The Revised FATF Recommendations 2012 •

NATIONAL RISK ASSESSMENT – Countries are required to identify the money laundering and terrorist financing risks – Designate an authority or mechanism to co-ordinate actions to assess risks – Keep the Risk Assessment up to date – Mechanism to provide information on the results of the risk assessment to all relevant competent authorities, self regulatory bodies (SRBs), Financial institutions and DNFBPs – Apply the Risk Based Approach to allocating resources and implementing measures to mitigate ML/TF risks

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments THE AML/CFT METHODOLOGY • Main Changes in the new Methodology • • • • •

Two Components- Technical Compliance and Effectiveness Different Requirements Scoping Exercise ahead of the Mutual Evaluation Mission Importance of the National Risk Assessment Ratings

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • Main Changes in the new Methodology • Technical Compliance Assessment 1.

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The specific requirements of each of the FATF and Recommendations/Interpretative Notes The relevant legal and institutional framework of the country The powers and procedures of competent authorities

These are the fundamental building blocks of an AML/CFT system RATINGS- Compliant, Largely Compliant, Partially Compliant, NonCompliant and Not Applicable ( in exceptional cases due to the particular structural, legal or institutional features of a country)

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • Main Changes in the new Methodology • Effectiveness Assessment – Adequacy of implementation of the FATF Recommendations.

– Identifies the extent to which a country achieves a defined set of outcomes ELEVEN IMMEDIATE OUTCOMES which are central to a robust AML/CFT system.

• The focus is on the extent to which the legal and institutional framework is producing the expected results.

• RATINGS- High Level of Effectiveness, Substantial Level of Effectiveness, moderate Level of Effectiveness and Low Level of Effectiveness

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • SCOPING EXERCISE • Assessors/Assessed Country to undertake a scoping exercise prior to the Mutual Evaluation Mission to consider the nature of the risks in the country, identify the higher risks issues which should be examined in more detail during the on site visit and reflected in the final Mutual Evaluation Report.

• Areas of lower/low risks need not be examined in great detail as those of a high risk

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments Technical Compliance Assessment & Effectiveness Compliance Integrated Analysis • The level of the country’s compliance with the FATF Recommendations • The country’s success in sustaining a strong AML/FT system This is the approach to be used by • Examiners on Mutual Evaluation Missions • Countries for Self Assessment Exercises

• Fifth Year Re Assessment On site Visits

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments VISION 2022 PLATFORM •

The CFATF Secretariat has begun the collaborative process with its partners within the global AML/CFT network to construct the Vision 2022 Platform and to chart the course for the successful achievement by all CFATF Members of at least seventy five (75) % percent compliance with the Financial Action Task Force (FATF) Recommendations.

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The CFATF Vision 2022 platform will maintain an easily accessible central database of the FATF Recommendations and Interpretative Notes, the AML/CFT Methodology, legislation, regulations, guidance notes and all documentation relevant to the assessment process, including the comments and amendments by each Expert on each Mutual Evaluation Report.

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments VISION 2022 PLATFORM •

The platform will allow CFATF Members and other countries in the global AML/CFT community, to begin the preparatory stages for the on-site visits way in advance of the arrival of the Teams of Assessors and will expedite the consultative mechanism between those CFATF Members being assessed, the Assessment Teams and the CFATF Secretariat.

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It will also give early but different levels of access for review and guidance of these efforts, to AML/CFT Experts from the CFATF membership, the FATF Secretariat and FATF Members, Secretariats and Members of other FATF Style Regional Bodies, as well as Experts from EGMONT, International Monetary Fund, World Bank and relevant agencies of the United Nations such as the Counter Terrorism Executive Directorate.

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VISION 2022 PLATFORM The Vision 2022 platform will allow Experts from the global AML/CFT community to work simultaneously in one document so as to draft, finalize and present high quality Mutual Evaluation Reports for discussion in Plenary. The potential savings in terms of human and financial resources as well as enhanced productivity and effectiveness will be enormous. The Plenary discussions of Mutual Evaluation Reports will be shorter and will be focused on the strengths and weaknesses of the overall AML/CFT architecture.

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The CFATF Secretariat as well as the Secretariats of all AML/CFT Assessment Bodies operating globally will be able to effectively monitor, review and control the participation of all the Experts involved along each step of the process and thereby ensure that schedules and deadlines are observed.

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The Vision 2022 platform will also benefit CFATF’s general operations because the technology will also be applicable to all aspects of the CFATF’s operations and has the potential to significantly increase organizational efficiency and reduce operational costs.

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments In some jurisdictions lack of political will or the configuration of the Parliament retards the passage of key AML/CFT legislation in a timely fashion • DANGERPublic Statement –high risk jurisdiction/countermeasures • High Level Missions to meet with the Political Directorate at the highest levels both in the Government and the Opposition, and Parliament to underscore the need for expeditious enactment of necessary legislation and the allocation of resources as required.

• Honduras, Suriname Sterling Examples where this worked

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments

• CENTRES OF EXCELLENCE • Culture of Compliance is strong, the levels of compliance with the FATF Recommendations are high and can be emulated by other CFATF members. Cayman Islands, Virgin Islands, Guatemala, Anguilla – Share expertise with supervisory regime for DNFBPs – The Bahamas -------Barbados, Jamaica and Guatemala – Framework for implementation of Terrorist Financing Regimes former SR III now in RECs 4-7 – Antigua and Barbuda Trinidad and Tobago, Guatemala, Venezuela

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments REGIONAL TECHNICAL ASSISTANCE AND TRAINING NEEDS The Fourth Round requires a full understanding of the FATF Recommendations by all CFATF stakeholders.

Ongoing and ambitious training programme for the Secretariat staff, the public and private sectors and Examiners.

Our collective goal must be to attain at least seventy five (75) percent compliance. – Robust global review process from the earliest stage.

• CFATF VISION 2022- Information Technology Tool For Mutual Evaluations Unveiling next week at the CFATF Plenary Meeting- Funding

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • REGIONAL TECHNICAL ASSISTANCE AND TRAINING NEEDS • Partnership with the FATF Secretariat, the COSUNs, IMF, World Bank and Inter American Development Bank all our other regional and international friends and allies in a concerted programme of activities over the next year.

• The engagement of Consultants to provide Legislative Drafting support. –Experts/Funding • Standards Training on the FATF RecommendationsExperts/Funding

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • REGIONAL TECHNICAL ASSISTANCE AND TRAINING NEEDS • Pre Assessment Training Workshops on the revised FATF Recommendations, the revised assessment tool the AML/CFT Methodology and the revised Mutual Evaluation Process and Procedures.- Experts/Funding • Regional and National Training Workshops for AML/CFT stakeholders on the conducting of National Risk Assessments –Experts/Funding • Regional Training Seminars for Mutual Evaluation Examiners –Experts/Funding

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments • REGIONAL TECHNICAL ASSISTANCE AND TRAINING NEEDS • Workshops on UNSCR 1373 and FATF Recs 6 and 7-Experts and Funding • Burden Sharing arrangements for Mutual Evaluation Missions –Costs/Expertise-IMF/WB- Assessors • Financial Investigators, Analysts and Supervisors at FIUsFunding • Compliance Conferences for the private sector- Speakers

3rd Caribbean Conference on the International Services-Overview of Global Regulatory Developments “At this meeting, I am able to state without a doubt that CFATF should now be perceived as one of the best in its class” This was the accolade bestowed upon the CFATF by FATF President Vladimir Nechaev at the Opening Ceremony of the CFATF Thirty Eight Plenary Meeting which was held in Freeport, The Bahamas on Wednesday 20th November 2013

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CARIBBEAN FINANCIAL ACTION TASK FORCE

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A GROWING SUCCESS STORY MAINTAINING THE CFATF BRAND

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