Letter to the Financial Action Task Force
The letter calls on the FATF to require full and proper registration of the true beneficial ownership of companies, as well as registration of details of settlors, beneficiaries and trustees of trusts and similar legal entities. It also calls on the FATF to implement a new methodology for evaluating the effectiveness of government enforcement of anti-money laundering legislation, and for civil society involvement in the current FATF review of its existing recommendations.
Here is the full text of the letter:
To: Member delegations to the FATF, FATF observers
Copied to: FATF Secretariat,Ministers of Finance of FATF member countries
11 June 2010
We are writing to you on the eve of the June plenary meeting of the Financial Action Task Force (FATF).
The Task Force on Financial Integrity and Economic Development is a consortium of research and advocacy organizations and governments working towards mechanisms that will curb the global flows of illicit capital, because of the damage done to developing countries. Its wider membership includes governments, economists and other academics, as well as development, human rights and faith-based organisations.
We wish to raise three points in advance of your meeting.
Firstly, we understand that following the G20’s request regarding corruption last September, and the presentation of a report on the subject by an informal working group to the February FATF plenary, the FATF has agreed to raise the profile of anti-corruption work within its ongoing initiatives and work. We also understand that in response to the same G20 request, the FATF will give more priority to its ongoing work on customer due diligence, beneficial ownership and transparency. This is all very welcome.
Clearly, the current review of the FATF’s Recommendations offers an excellent opportunity to tackle these issues, particularly the requirements for transparency of beneficial ownership information as set out in Recommendations 33 and 34. The G20’s request was not specific about what progress on ‘beneficial ownership’ and ‘transparency’ will look like, and we understand that debate is still ongoing within the FATF about what to do with Recommendations 33 and 34. However, our growing coalition of civil society organisations from all regions has a very clear vision of what is needed, which is this: in order to prevent misuse of corporate vehicles and legal arrangements, the only meaningful option is public registries of beneficial ownership of companies, as well as settlors, trustees and beneficiaries of trusts, with those who set them up subject to the anti-money laundering (AML) regime of customer due diligence requirements.
Secondly, the FATF has done a very effective job in many jurisdictions in ensuring that anti-money laundering laws are on the books, and a significant proportion of the third round of evaluations has been devoted to this process. Now that many countries are starting to have AML laws in place, the focus turns to ensuring effective enforcement of those laws. We welcome the process of listing those jurisdictions that are failing to meet the FATF’s standards, that was reinitiated in February. Nuhu Ribadu, the former Nigerian anti-corruption chief, frequently talks about how Nigeria’s place on the previous non-compliant list was essential in galvanising his then government to put in place a more effective AML regime. However, the listing process is based on the existing evaluation reports, which were produced according to an assessment methodology that, while it includes some elements to measure enforcement, is still heavily weighted towards measuring whether laws are in place. We would welcome the development, for the fourth round of mutual evaluations, of a new ‘methodology for assessing enforcement’ to measure whether governments are fully implementing such legislation.
Finally, we note that between May and August 2002, during the period when the FATF Recommendations were last being reviewed, there was a consultation process open to all interested parties. The work of the FATF, and indeed of the Task Force on Financial Integrity and Economic Development, is driven by a recognition of the fundamental importance of transparency and accountability. We look forward to the opportunity to contribute to the review process this time.
If you have any questions please respond to Robert Palmer at Global Witness. He can be reached at firstname.lastname@example.org, +44 (0) 20 7492 5860, or by post at Global Witness, Buchanan House, 30 Holborn, London, EC1N 2HS, United Kingdom.
Task Force on Financial Integrity and Economic Development Coordinating Committee members:
Gavin Hayman, Campaigns Director, Global Witness
Raymond Baker, Director, Global Financial Integrity
John Christensen, Director, Tax Justice Network
Richard Murphy, Tax Research LLP
Alex Cobham, Chief Policy Adviser, Christian Aid
Francois Valerian, Head of Private Sector Programmes, Transparency International
Marta Ruiz, Senior Policy and Advocacy Officer, Eurodad
Jack Blum, Chair, Tax Justice Network, USA
Gweneth Barry, Head of Policy, CAFOD
Milton Ponson, President, Rainbow Warriors Core Foundation, Aruba
Clotaire Rodonne Siribi, NGO GAPAFOT and Social Watch Central African Republic
Isabel Thomas Dobson, Moderator, Synod of Victoria and Tasmania, Uniting Church in Australia
Stephanie Fried, Executive Director, `Ulu Foundation, Hawai`i
Acción Ciudadana y Lucha contra la Corrupción Asociación Civil por la Igualdad y la Justicia (ACIJ), Argentina
Friends of the Earth, United States