The anti-money laundering (AML) regulatory landscape remains ever-changing and continues to evolve at a fast pace. In this article, we discuss the FATF’s role and significance in AML regulation and the importance of adequate AML compliance controls.
Please also refer to our earlier article, which discusses the implementation of effective strategies to improve AML compliance.
Part 1: What is the FATF?
The Financial Action Task Force (FATF) a globally-recognised authority tackling money laundering, terrorist and proliferation financing by setting international standards and promoting policies that aim to combat financial crime. Alongside its research into how money is laundered and how terrorism is funded, the FATF issues recommendations on risk mitigation and its assessment of whether countries are taking effective action.
On an ongoing basis, the FATF reviews jurisdictions and identifies those that are considered to have strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing. These are then added to the FATF’s list of jurisdictions that require increased monitoring (otherwise known as the “grey list”). Such review is what has led to the addition of Monaco and Venezuela to the FATF’s grey list, and to the removal of Jamaica and Turkey from the list as of 28 June 2024.
Part 2: What is money laundering?
Money laundering is the process of disguising the origins of illegally obtained money, making it appear legitimate.
Part 3: What is the grey list and what are the implications of being added to it?
As briefly mentioned above, when FATF puts a jurisdiction on the “grey list”, this means that the jurisdiction is subjected to increased monitoring by the FATF due to “strategic deficiencies identified in [their] regimes aimed at countering money laundering, terrorist financing and proliferation financing.”
Once put on the grey list, the jurisdictions are asked to report (albeit on a voluntary basis) on their progress in improving their policies on tackling money laundering, terrorist financing and proliferation financing. Although this reporting is voluntary, jurisdictions usually strive to be removed from the grey list, not least because it is widely relied upon as a reputable guide to navigating AML compliance rules and regulations.
Part 4: Why are there concerns about Kuwait?
Cases involving money laundering and bribery in Kuwait have been described as rampant. This is despite government efforts to combat and dismantle the associated criminal networks.
However, the government has also been praised for its ongoing efforts to tackle money laundering, bribery and other financial crime offences. Steps include increasing transparency and accountability.
Part 5: Why is AML compliance important?
The above updates illustrate that robust AML compliance structures are highly important in the efforts to combat illegal financial activities, protect your business’s reputation and contribute to a secure financial environment. It requires adhering to laws and regulations designed to detect and prevent money laundering and the financing of terrorism. Failure to comply with AML regulations can result in severe consequences, including criminal liability, large fines and significant reputational damage.
Companies need to maintain awareness of the fluctuating regulatory landscape, including staying abreast of all updates and changes to guidance and regulations at both the international and national levels. These changes can be far-reaching and affect not only the specific compliance measures in place, but also the methods in which these measures are – and should continue to be – implemented at the company’s organisational level.
Please refer to our earlier article, which discusses the implementation of effective strategies to improve AML compliance.
How Gherson can assist
Gherson’s regulatory, white-collar and investigations team are highly experienced in providing assistance, advice and guidance on how you can successfully navigate and adhere to legal requirements regarding corporate compliance. This includes providing a comprehensive and unparalleled range of regulatory and compliance services to prospective customers.
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The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
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