At the end of last year, the FATF published its 2020-2021 annual report. This report covers all the work carried out under the German presidency of the FATF, as well as the future objectives the organization will address.
The report begins by evaluating the work done in relation to the priorities set under the German presidency, which are:
- the impact of COVID-19 on the fight against money laundering and terrorist financing;
- money laundering in environmental crimes;
- digital transformation in the prevention sector;
- combating illicit arms trafficking and terrorist financing, with a focus on terrorism motivated by racism or hatred of certain ethnicities.
Regarding money laundering and environmental crimes, in July 2021 the FATF published a comprehensive report on this topic. This report urged states to consider the risks of this criminal sector. However, awareness of this issue did not stop with the report; it was also discussed and presented in high-level meetings within the G-20 and G-7. This awareness culminated in a conference in the German city of Leipzig, with the participation of public, private, non-profit, and academic sectors.
Another focus of the FATF during these months has been the digital transformation taking place in the prevention sector. This issue has been addressed in three different areas:
- opportunities and challenges of new technologies;
- data aggregation, collaborative analysis, and data protection;
- digital transformation of money laundering and terrorist financing prevention, with a special focus on detecting suspicious activities and analyzing financial intelligence.
As for the first focus, in the summer of 2021 the FATF published a dossier on the opportunities and challenges of new technologies in the sector. It discussed the skills, methods, and innovative processes used to achieve the objectives related to the effective implementation of preventive requirements, as well as new ways of using existing technologies to meet prevention obligations. This discussion, along with others on digital transformation, has led to a series of recommendations to support the use of these technological innovations.
The annual report also highlights the upcoming issues the FATF will address. These are:
- complex structures of beneficial ownership;
- illicit smuggling of migrants;
- recovery of assets derived from criminal activities;
- and the use of the art sector for money laundering and terrorist financing.
The FATF notes that complex structures exist that allow criminals to hide their identities as well as their illicit funds. Although beneficial ownership information has been worked on and implemented since 2003, the intergovernmental body points out that “only one-third of countries have applied the FATF measures in their national laws and regulations.” This results in a lack of transparency in these corporate and associative structures, as well as an increase in the misuse of these entities.
Regarding asset recovery, the FATF indicates that this is an issue to be addressed, as many of the countries evaluated are not effectively confiscating assets derived from organized crime. Therefore, the FATF will continue to work on this issue in the coming months.
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