FATF Plenary Outcomes, Mutual Evaluation of Luxembourg, High-Risk Jurisdictions subject to a Call for Action & Jurisdictions under Increased Monitoring – 23 June 2023

The third Plenary of the FATF was held under the Presidency of T. Raja Kumar of Singapore in Paris. Delegates from over 200 jurisdictions and international organizations participated in the discussions. The importance of a global response to combat money laundering, financing of terrorism, and proliferation was emphasized.
The FATF expressed its condolences to Ukraine for the loss of life and infrastructure caused by the Russian Federation’s ongoing military invasion. The Russian Federation’s actions are contrary to the principles of promoting security, safety, and the integrity of the global financial system. Consequently, the suspension of the Russian Federation’s membership continues. Jurisdictions were reminded to remain vigilant against risks stemming from circumventing measures taken against the Russian Federation. The protection of the international financial system is paramount, and all jurisdictions should take appropriate actions.
The FATF announced the publication of the fourth targeted update on the implementation of Recommendations on virtual assets and VASPs scheduled for 27 June 2023. It was noted that many jurisdictions have not fully complied with these requirements. Additionally, work was advanced on preventing the misuse of NPOs through potential revisions to Recommendation 8 and an updated Best Practices paper. Ongoing projects were discussed, including those related to citizenship and residency schemes, cyber-enabled fraud, and crowdfunding for terrorist financing. The FATF expects to complete these projects in October 2023 and agreed on new projects to enhance money laundering investigations and prosecutions.
The mutual evaluation report of Luxembourg was adopted, affirming the country’s high level of technical compliance and effectiveness in combating money laundering and terrorist financing. However, areas for improvement were identified, such as enhancing the detection, investigation, and prosecution of complex money laundering cases, strengthening risk-based supervision of the non-financial sector, disseminating understanding of terrorist financing risks, and applying proportionate sanctions for non-compliance. The report is expected to be published by September following the completion of the FATF’s quality and consistency review.
The FATF furthermore updated their list of Jurisdictions under Increased Monitoring, the so-called „grey list“. These countries are actively collaborating with the FATF to address significant shortcomings in their systems to combat money laundering, terrorist financing, and proliferation financing. When a jurisdiction is placed under increased monitoring by the FATF, it signifies that the country has committed to promptly implement an Action Plan to rectify the identified strategic deficiencies within agreed-upon timeframes. The latest additions to the grey list are Cameroon, Croatia, and Vietnam.
The FATF also validated its High-Risk Jurisdictions subject to a Call for Action, the so called „black list“. Therein, FATF identifies countries or jurisdictions that exhibit severe strategic deficiencies in countering money laundering, terrorist financing, and proliferation financing. These jurisdictions are issued a call for action to safeguard the integrity of the global financial system. As of 23rd June 2023, there have been no new countries or jurisdictions added to this list of high-risk jurisdictions subject to a call for action. Due to the COVID-19 pandemic, the FATF review process for Iran and DPRK was paused, as these countries are already subject to the FATF’s call for countermeasures. Myanmar was highlighted by FATF in October 2022 as a further jurisdiction where enhanced due diligence measures should be applied that are proportionate to the risks arising, because the country had missed to address its action items after a year beyond the action plan deadline. Hence, the black list remains composed of the DPRK, Iran, and Myanmar.
The FATF discussed preparations for the fifth round of mutual evaluations, including the development of Universal Procedures and assessor training programs. Attention was also given to strategic initiatives, such as the regulation of virtual assets and asset recovery measures. The FATF emphasized its contribution to the fight against corruption and the need to address unintended consequences resulting from the incorrect implementation of its standards, particularly in the case of non-profit organizations.
The outgoing Vice-President of the FATF, Elisa de Anda Madrazo of Mexico, was acknowledged for her service, and Jeremy Weil of Canada was welcomed as her successor. The FATF will continue its efforts to combat money laundering, terrorist financing, and proliferation financing, ensuring global compliance with its standards.