FATF Accuses U.S., China, and Australia of Enabling Financial Crime in Shocking Report

On Monday, the Financial Action Task Force (FATF) stunned the anti-money laundering (AML) community by effectively accusing the United States, China, and Australia of enabling financial crime. This allegation was made in a new report from the Paris-based organization, which examined ‘gatekeepers to the financial system.’ These gatekeepers were defined as “non-financial professionals [who] can facilitate, unwittingly or wittingly, high-level corruption.”

The report focused on four main categories of gatekeepers:

- Real estate professionals

- Lawyers and other legal professionals

- Accountants

- Trust and company service providers

FATF mandates that jurisdictions apply AML/CFT measures to these gatekeepers. Examples of these measures include the ability to impose fines and penalties for AML failings and ensuring regulatory agencies have the power to “take action against gatekeepers who knowingly facilitate corruption and resulting money laundering activities.”

The latest ‘horizontal review’ from FATF evaluated the percentage of compliance with FATF recommendations in these areas across various countries. Overall, the report found that countries complied with 74% of FATF AML/CFT recommendations for these gatekeepers. However, the results varied widely.

The compliance scores for the 35 countries assessed were as follows:

100%

- Portugal, Luxembourg

99% – 90%

- Malaysia, Türkiye, Singapore, Iceland, United Kingdom, Saudi Arabia, South Africa, Norway, Denmark, Spain, Italy, Finland, Sweden, Hong Kong, Austria

89% – 80%

- Greece, Germany, Belgium, Ireland, France

79% – 65%

- Japan, New Zealand, Netherlands, Indonesia, Switzerland, Canada

Mexico, Brazil, and Israel scored 48%, 42%, and 27% respectively, with South Korea at just 5%.

Only three countries were found to have implemented 0% of FATF recommendations on gatekeepers: the U.S., China, and Australia. For all three, the findings were the same: They “do not have requirements to cover any of the gatekeeper sectors.”

FATF stated that gatekeeper professions in these three countries are not required to implement any of the preventive AML measures “that have been required by the FATF Standards since 2003.” The report further criticized that “The United States’ supervisors have none of the powers and tools to implement supervisory programmes on these gatekeeper sectors,” a criticism that was also directed at China and Australia.

FATF outlined four key focus areas for these three countries:

1. Have all gatekeeper sectors subject to all AML/CFT obligations, including customer due diligence (CDD) and other measures.

2. Designate a competent authority (a ‘supervisor’) responsible for monitoring compliance for all gatekeeper sectors.

3. Ensure that supervisors have all the necessary powers and tools to ensure compliance.

4. Perform supervision of gatekeeper sectors on a “risk-sensitive basis.”

By fLEXI tEAM