It has already been reported in FATF Country Evaluation Results – Part 1 that over 70 Countries were assessed based on published FATF Reports and highlights published relating to technical compliance with the FATF 40 Recommendations as well as on effectiveness based on 11 so called “immediate outcomes,” based on a simple scoring model.
Since then new reports have been issued on Finland and China, and updated reports on Italy and Norway that have re rated their technical compliance scores. Notwithstanding these new results the overall scores now based on 75 assessed Countries remain the same being an average of 64% for Technical Compliance and 31% for effectiveness.
According to FATF, “The extent to which a country implements the technical requirements…..of each of the [40] recommendations is important….but this is not sufficient” as “each country must enforce those measures and ensure that the operational law-enforcement and legal components of an AML/CFT System works together effectively …to deliver results.”
- Here are some highlights from the Country reports issued since the Plenary in February, 2019. Norway improved its results for technical compliance after acceptance of a follow up report which re rated positively results against 15 Recommendations, improving Norway’s technical compliance score from 63% to 78%.
- Italy also increased its results for technical compliance after its follow up report was also accepted, improving Italy’s technical compliance score from 72% to 80%, after 8 Recommendations, were positively re rated.
- The scores for Finland for technical compliance are 54% placing it only equal 58th out of 74 and 42% for effectiveness placing it 20th out of 75 Countries. Comparing Finland to other Scandinavian Countries, Finland is 4th out of 5 so far assessed on technical Compliance but 2nd out of 5 on effectiveness. Comparative scores are: Norway (78%/39%); Sweden (76%/52%); Denmark (63%/36%); Finland (54%/42%) & Iceland (51%/18%).
- The scores for China for technical compliance are 53% placing China 60th and 30% for effectiveness placing China 42nd equal in each case (out of 75). China compares unfavourably against other Countries & Territories in the Region with Macau reporting much better results (82%/45%), as well as such as Thailand (58%/36%), but China fares better against Cambodia (52%/15%), Mongolia (50%/6%) & Myanmar (48%/3%). Hong Kong is due to report later this year.
- Of the 40 Recommendations with which Countries are most compliant are R3 (ML Offences) & R9 (secrecy laws) (both have 97% of Countries with positive results, i.e. C or LC), followed by R11 (record keeping at 96%); R 21 (tipping off at 93%); & R20 (SAR Reporting at 90%). The least compliant Recommendation is R8 (Not for Profit Organisations at 4%). Of additional interest are the following: R1 (Assessing Risks and RBA at 67%); R2 (National Co operation & Co ordination at 83%); R10 (CDD at 79%); R12 (PEP at 67%); R13 (Correspondent Banking at 70%); R26 (Supervision of FI’s at 57%); R28 (Supervision of DNFBP at 33%).
- Looking at all the 11 Effectiveness Immediate Outcomes, (IO) a number had much more positive results than some others. For example IO2 (International co operation) scored considerably higher with 40 Countries having positive results. Second in this list was IO9 (TF Investigations and Prosecutions) with 27 Countries having positive results. The list in next best order then goes to IO1 (Understanding AML/CTF Risks), IO6 (FIU); IO8 (Confiscation of Proceeds); IO11 (WMD Proliferation measures); IO10 (TF Measures against NPO’s); IO7 & IO3 (ML Investigations and Prosecutions) & (Supervisory Oversight); IO5 (Measures against Legal Persons and BO’s); and finally IO4 (Measures taken by regulated sectors, i.e. FI’s and DNFBP’s).
