The former top official of the Financial Action Task Force said he left the post this month because of a perceived lack of support from the group’s president and frustration with its scant success in spurring fundamental improvements to nations’ efforts against illicit finance.
In his first public comments on leaving the global anti-money laundering standard setting body after six years, David Lewis told ACAMS moneylaundering.com that there is considerable appetite both inside and outside FATF for steering national AML frameworks towards truly risk-based, intelligence-led decision-making and measurable, real-world results.
But FATF’s own consensus-based approach to decisions makes genuine reform “very difficult” to achieve, said Lewis, who, during his interview with moneylaundering.com, also raised concerns over the group’s informal method of selecting its presidents and the pressure he claims national governments bring to bear on its secretariat behind the scenes.
Embedded within the Organization for Economic Cooperation and Development, or OECD, which employs its officials, the FATF secretariat’s office consists of more than 60 analysts and other staff who develop global AML standards, assess emerging financial-crime threats and oversee the group’s metrics and methods for evaluating national AML regimes.
“If I’d stayed, I very much saw myself doing exactly the same things, giving the same messages with very limited impact for the next three years,” Lewis told moneylaundering.com. “But I want to get these messages across in a way that supports and improves what FATF is doing rather than trashing the work that it does.”
As first reported by moneylaundering.com, Lewis resigned as FATF’s executive secretary in September, and subsequently explained in a confidential letter to representatives of the group’s 37 member jurisdictions and two regional organizations that he had doubts over the independence of the secretariat and his own job security.
Lewis, who has accepted a position as head of the U.S.-headquartered consulting firm Kroll’s international AML advisory practice, said that uncertainty over his future at FATF emerged just as he was about to begin his third three-year term at the secretariat’s helm.
Three years ago, he introduced reforms whereby members would be asked to formally voice their support for—or objections against—renewing the contract of the executive secretary during FATF’s triannual summit.
In previous years, FATF’s president would come to his or her own view on whether to give the executive secretary another term, consult FATF’s steering committee—an advisory panel of officials from a dozen or so members—and then make a recommendation to the OECD’s secretary general.
“I wanted to protect the organization from a scenario where a future FATF president would just agree with a bad executive secretary that their job could be renewed without any real scrutiny,” Lewis told moneylaundering.com.
Marcus Pleyer, deputy director general of the German Finance Ministry, has served as FATF’s president since July 2020. FATF members unanimously approved Lewis’ second term as executive secretary four years ago, and a third term in February of last year.
However, before his third term began, Pleyer told him that he wanted to privately discuss the contract renewal with FATF’s delegates, Lewis said. Pleyer later revealed that he had proposed changing the rules to require readvertising the position, regardless of Lewis’ performance.
“That was probably the straw that broke the camel’s back,” Lewis told moneylaundering.com. “It made me realize how precarious and vulnerable the job was.”
FATF declined to comment.
Lewis also said that during his tenure he “constantly” came under pressure from FATF’s 39 delegations to fill positions within the secretariat with staff from their jurisdictions, rather than with candidates who won their jobs based on open competition merit.
In February 2021, a U.N. panel found that FATF “operates without a legal convention or articles of agreement,” and, despite the fact that nearly 200 countries base their AML regimes on its recommendations, gives more heft to its 39 full members when shaping global standards against illicit finance.
Countries that have agreed to implement FATF’s recommendations “would benefit from a more formal establishment of the governing body, with appropriate rules for universal representation,” the panel recommended.
Lewis told moneylaundering.com that he had some success in making FATF “more representative,” including by formalizing the appointment of co-chairs of the group’s various committees instead of having officials hand down those positions to colleagues who hail from their country.
But the selection of FATF’s next president by the sitting president remains an institutional weakness in the absence of a formal job posting and interviewing process.
“You do get good presidents, but it’s a bit of a lottery,” Lewis said.
FATF began evaluating the effectiveness of national efforts to combat money laundering and terrorist financing in 2013, including by determining how often and how successfully jurisdictions pursue cases against individuals and entities suspected of laundering funds or breaching AML rules.
Lewis gained a reputation as an outspoken executive secretary who often criticized the scarcity of effective action against financial crime throughout the world, and the apparent failure by governments and financial institutions alike to share financial intelligence more frequently to tackle the greatest threats.
FATF began a review in 2019 to consider revising its system and schedule for evaluating national laws, regulations and enforcement against financial crime. The group also floated plans to assess nations with large banking sectors or high exposure to illicit finance more frequently, or conduct more targeted assessments of particularly high-risk sectors.
Lewis “pushed really hard” to make FATF’s review process “more effective, targeted and risk-based,” he said, including by proposing a move away from assessing countries sequentially and instead focusing efforts on producing “targeted and regular reports that are more up to date, relevant and more useful to the outside world.”
But FATF makes decisions by consensus, and no formal rules exist as to how many of the group’s 39 members must object to scuttle a proposal or spare a country from inclusion on its “gray list” of nations with major gaps in their AML regimes.
“The reality is that two to four countries typically block consensus, so it’s very rare that you can get any meaningful change,” Lewis said. “It’s clear to me that we’re not going to see very much change in the next round of evaluations.”
FATF has often been criticized as beholden to political influence and interference, but, according to Lewis, the group in fact suffers from a lack of buy-in at the highest political levels.
“It’s a body of mid-level bureaucrats who are very comfortable dealing with the finest minutiae of technical detail, but aren’t comfortable or able to have big picture discussions, often don’t have a close enough connection with their ministers and are often only in their jobs for one or two years,” Lewis said. “It needs political leadership.”
Those interested in succeeding Lewis were able to apply until Jan. 3. His role is currently held by his former deputy, Vincent Schmoll, who joined the secretariat in 1998 after working for the U.S. financial intelligence unit.
Contact Koos Couvée at firstname.lastname@example.org
|Topics :||Anti-money laundering , Counterterrorist Financing|
|Document Date:||January 19, 2022|