The Future of Fighting Financial Crime

It was an honour for the author to speak at the Abu Dhabi Finance Week on a panel focussing on Financial Crime “Global Governance Frameworks – Avoiding Cracks” with: David Lewis, Chady el-khoury, Dr Reem Alshamsi and expertly hosted by Mohamed Shalo. 

Rather than focus on cracks in an assumed existing comprehensive framework I raised the issue of problematic gaps that had long existed and needed tackling. 

The Author suggested something new he hadn’t said in public before after many months of discussions with many colleagues at the Global Coalition to Fight Financial Crime and elsewhere. 

Whilst their is an argument to be made that what is needed now is for their to be a Financial Action Task Force on Financial Crime, Fraud and Money Laundering (Including Terrorism and Proliferation Finance) and not just on ML, with monitoring powers and the ability to apply consequential measures, their is also an argument that the current FATF approach should first evolve and consider 3 important adaptations before this approach is accepted. 

  • First, as FATF standards do not take into consideration sufficiently the financial crime threat posed and the capacity challenges to apply minimum high standards, the Global South, for example is unlikely to support further expansion, without material changes to remedy this fundamental weakness, which unfairly targets many of them.
  • Second, the overriding objective of the FATF to protect the integrity of the international financial system has largely been achieved, and a return to the original mandate of reducing financial crime may be a better way forward. Whilst more is needed from a more fragmented and crowded financial system an objective that focusses more on victim protection, harms reduction and particularly reduction in prioritised financial crime and reducing the benefits to criminals from their financial crime activity would be more appropriate. Even better to tie into the UN 17 Sustainable Development Goals, in particular thos crime related ones in SDG 5, 8,11,14,15 and particularly 16 will positively impact effectiveness in tackling serious crimes in particular: organised crime, arms trafficking, bribery and corruption, terrorism, violent crime, human trafficking, child sexual exploitation, environmental crimes and money laundering. This broader focus, will also have the extra benefit of redirecting activity more broadly than just on finance and DNFPBs, including to others in the public and private sectors that need to do more.
  • Third, any new expanded FATF should become more representative but even more expert in its deliberations, with individual Member States relinquishing some influence and turning some of this over to some appointed experts, subject to term limits and oversight. Many countries have benefited for example by increasing expertise and introducing independence with oversight of central bank activity, where more effective results can be achieved. Establishing expert bodies to assist a relaunched FATF, based on examples like the International Narcotics Control Board, and by taking such a quasi independent body of experts to opine of matters of importance, perhaps on evolving threats, the results from monitoring and highlighting examples of effective outcomes that could be shared as best practices could provide significant additional benefits. A clearer role that is more joined up between FATF and agencies such as the UNODC is also important.

These conclusions have been reached in large part due to research and study carried out to look into the 100 year plus progress on combatting financial crime including from the United Nations and predecessor organisations as well as the novel approach to tackle money laundering differently which spawned the FATF 35 years ago, and the experiences and comparisons since.

For more on the UN’s involvement for over 70 years and its agencies see HERE.

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