FATF has as one of its main objectives the establishment of guidelines that promote the implementation of effective measures in the fight against money laundering and the financing of terrorism. These guidelines are structured around the 40 Recommendations, which are standards for combating money laundering and terrorist financing that States should use as a reference and try to implement in their territories.
In its Sixth Recommendation, the FATF mandates that States comply with the regime of international sanctions, issued by the United Nations, which target terrorism and its financing. These Resolutions, issued by the United Nations Security Council, require States to freeze the funds of any individual — natural or legal — and to ensure that no asset or fund is made available to those designated by the Security Council.
Chapter VII of the United Nations Charter deals with actions in the event of threats to peace. This chapter is the basis that underpins the legitimacy of the Security Council to issue sanctions.
This Recommendation has an Interpretive Note that expands on what is established by the Recommendation. The primary objective of the Sixth Recommendation is to require countries to ensure the proper implementation of financial sanctions issued through United Nations Security Council Resolutions. This Recommendation does not intend to replace the standards on confiscation and provisional measures established by Recommendation 4, but it can serve as a powerful complementary tool.
States must have agencies, authorities, and procedures in place to identify and initiate proposals for the designation of individuals or entities that are subject to international sanctions under the established financial countermeasure programs.
Furthermore, for the correct implementation of sanctions issued by the Security Council, countries must establish a legal framework and designate the appropriate internal authorities, which will be involved in ensuring compliance with the sanctions programs. This implementation of sanctions programs will involve:
- The requirement to freeze the funds of individuals designated in sanctions programs. This will be enforced on any natural or legal person operating within the country.
- The prohibition of providing funds or other assets, economic resources, financial services, or similar products to designated entities or individuals. This also includes entities that are owned or controlled directly or indirectly by sanctioned individuals.
- States must have mechanisms to communicate the designation of sanctioned individuals. Additionally, clear guidance must be provided.
- It will be required to report frozen assets or actions taken in compliance with the sanctions programs to the competent authorities.
The Interpretive Note also addresses the need to develop and implement processes to request the removal of individuals or entities from the Security Council lists. Additionally, mechanisms must be established to ensure that the assets of individuals or entities with names similar to those of a designated person are not arbitrarily frozen, and that, if frozen, they can be unfrozen without delay.
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