The Financial Action Task Force’s final report on Great Britain’s anti-money laundering regime indicates that U.K. officials successfully lobbied other nations to water down and even exclude criticisms found in an earlier draft of the document obtained by ACAMS moneylaundering.com.
In the final report published Friday, FATF assigned the United Kingdom the most favorable ratings of 60 countries evaluated in the past five years under new criteria for gauging how national rules against financial crime work in practice. The group particularly praised U.K. efforts to implement sanctions, seize assets and pursue cases against financial criminals.
Both the final report and the earlier draft reviewed by moneylaundering.com rate the country “high” in four of 11 effectiveness categories, “substantial” in four others and “moderate” in three. “The U.K. has significantly strengthened its AML framework since its last evaluation” [in 2007], FATF claimed in the final report, which does not rate Great Britain “low” in any category.
But a side-by-side comparison of both reports shows U.K. officials succeeded in placing their jurisdiction in a more favorable light before FATF’s publication of the final version Friday.
FATF found in the first draft that the Financial Conduct Authority, or FCA, and HM Revenue and Customs have become more likely to issue penalties in response to AML violations since 2007, but questioned “the dissuasiveness” of those penalties “in light of systemic … failings identified at some large multinational U.K. firms over the last decade.”
That particular criticism does not appear in the final report, nor does FATF’s call for an independent review of whether the U.K. Financial Intelligence Unit’s “distributed” model of collecting and disseminating leads to investigators compares favorably to those of other FIUs.
FATF’s earlier recommendation for the FCA to conduct more regular examinations of a wider array of financial institutions was also omitted from the final report.
“This really risks undermining the credibility of the FATF process if the U.K., the largest financial center in the world, can lobby so effectively to have criticism muted and serious concerns removed altogether,” Susan Hawley, policy director at London-based advocacy group Corruption Watch, told moneylaundering.com.
A source present at FATF’s weeklong summit in Paris last month, when the group approved the final report, said on background that U.K. officials had previously persuaded colleagues to upgrade the United Kingdom’s scores from substantial to high in the areas of counterproliferation financing, counterterrorist financing and protection of nonprofit groups from financial crime.
FATF did not omit all criticism from the final report, however.
The group warned that U.K. officials must strengthen their supervision of lawyers and accountants for AML purposes and substantially increase the resources and capabilities of the U.K. Financial Intelligence Unit.
Great Britain “has pursued a deliberate policy decision to limit the role of the UKFIU in undertaking operational and strategic analysis,” FATF claimed in both reports. “The UKFIU suffers from a lack of resources (human and IT) and analytical capability, which is a serious concern considering similar issues were raised over a decade ago.”
Critics also voiced concerns that the final report’s recommendations for eliminating these deficiencies neither fully address the role of U.K. legal entities in global money-laundering schemes nor account for the legal obstacles that often derail punitive actions against large firms.
U.K. officials appear to have ignored the criticism, instead boasting in a statement Friday that the final report shows Great Britain is “leading the world in the fight against illicit finance.”
The statement makes no reference to the problems FATF found at UKFIU.
Tom Keatinge, director of financial crime and security studies at the Royal United Services Institute in London, said the government’s response to the report should be questioned in light of the importance of financial intelligence in combating money laundering and terrorism.
“Hats off to them, they figured out how to play the game and played it very well,” Keatinge said. “But to put out a press release like that … the problem is no smaller because of those headlines and it would have been wise of the government to acknowledge the challenges it faces.”
|Topics :||Anti-money laundering , Counterterrorist Financing , Know Your Customer , Sanctions|
|Document Date:||December 7, 2018|