Revised FATF Recommendations: more due diligence obligations for financial intermediaries?

Transcription

1 Revised FATF Recommendations: more due diligence obligations for financial intermediaries? Informative event for SwissBanking journalists, Berne, 3 June, 2014 Alexander Karrer, Deputy State Secretary State Secretariat for International Financial Matters

2 Outline I. The Financial Action Task Force 1. Objectives 2. Composition and structure 3. Functions and tasks II. Implementation of the Recommendations in Switzerland 1. National risk evaluation 2. Due diligence obligations: beneficial owners 3. Politically exposed persons 4. Transparency of bearer shares 5. Prior tax offences 6. Other measures III. Continuation of work and conclusion 2

3 I.1 The FATF's objectives Body established in 1989 by the G7 Task force; not an international organisation Mandate adopted by the ministers of finance Operates under a fixed lifespan Current mandate: Objectives Draw up norms (the 40 Recommendations) Promote the effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and the financing of proliferation, as well as other related threats to the integrity of the international financial system Identify national-level vulnerabilities 3

4 I.2 The FATF's composition 36 members, of which 34 are states/jurisdictions and 2 are regional organisations (EC and GCC) 8 regional FATF-style bodies (+1 observing body for Central Africa) Twenty organisations with observer status (most importantly, the World Bank and the IMF) = 190 countries 4

5 I.2 The FATF's structure Steering Group Plenary (President + Vice-President) ICRG PDG ECG RTMG GNCG 5

6 I.3. Functions and tasks Identification and analysis of the threats of money laundering, terrorist financing, and other threats to the integrity of the international financial system Ongoing development of its Recommendations Evaluation and control of its members via the peer review process (mutual evaluation) Identification of and engagement with high-risk- and noncooperative jurisdictions Promotion of full and effective implementation of the FATF's standards by all countries via the global network of regional FATF-style bodies and via international organisations 6

7 II.1 Implementation of the Recommendations in Switzerland: national risk evaluation Introduction of an obligation for countries to evaluate their risks at the national level and to apply a risk-based approach in line with the FATF Recommendations (R. 1) 29 November 2013: the Federal Council set up a permanent inter-departmental working group steered by the Federal Department of Finance 7

8 II.2 Due diligence obligations: beneficial ownership Specification of due diligence obligations of financial intermediaries towards their clients concerning the identification of the beneficial ownership information of legal persons (Interpretive note to R. 10) Message: Systematic identification of the beneficial owner Identification of the beneficial owner of legal persons that are active operationally Complementarity of the measures taken by legal persons and by financial intermediaries to identify the beneficial owners of legal persons 8

9 II.3. Politically exposed persons (PEPs) Expansion of the FATF's rules to include national PEPs and those of international organisations (R. 12) Message: National PEPs "Significance" of the function Activities at federal level Risk assessment thanks to a risk-based approach Risk profile based on the overall evaluation of the client relationship PEPs of inter-governmental organisations "Significance" of the function (e.g. member of management) International organisations (inter-governmental organisations under public international law) Risk assessment thanks to a risk-based approach, as for national PEPs 9

10 II.4 Transparency of bearer shares General objective of R. 24: timely access for the competent authorities to pertinent, suitable and updated information on the actual beneficiaries and on the control of legal persons Special rules on bearer shares (Interpretive note to R. 24) and rules of the Global Forum (Terms of Reference, Criterion A.1.2) Message: four options for a company with non-listed bearer shares: Obligation to report the shareholder to the company (and registration in a "list") Obligation to report the shareholder to a financial intermediary (and registration in a "list") Depositing of bearer shares with a third party in the form of an electronic registration of the intermediary securities Facilitated conversion into registered shares 10

11 II.5 Predicate tax offences R. 3: expansion of the list of designated categories of offences featured in the Glossary in line with the FATF Recommendations to include "criminal tax offences (related to direct and indirect taxes)" Message: Indirect taxation: expansion of Article 14(4) 4, DPS beyond cross-border goods traffic to cover other indirect taxes withheld by the Confederation Direct taxation: regulations in the criminal code preferred over the introduction of a crime in tax legislation concerning direct taxes 11

12 II. 6 Other measures Real estate purchases and payments in cash (R. 22; gaps in the tax liability of certain designated non-financial businesses and professions revealed in 2005; parliamentary interventions) Message: payment in cash for real estate or securities purchases up to a maximum of CHF 100,000. Payment of the part of the price exceeding this amount must be made by a financial intermediary subject to the Swiss Anti-Money Laundering Act (AMLA) System of suspicious communications (R. 20 and R. 29: reinforcement of the effectiveness of the communication system) Message: granting of additional time for the analyses of the Communication Office thanks to deferred freezing of assets Targeted financial sanctions (R. 6) based on the UN Security Council's pertinent resolutions related to combating terrorism & terrorist financing Message: formalisation of existing practice 12

13 III. Continuation of work and conclusion Continuation of work: Spring session of 2014: Council of States Summer session of 2014: National Council Entry into force of the law: first half of 2015? Conclusion: Necessity of the project in view of the evolution of international financial crime. Promotes the Swiss financial centre s integrity and thus its credibility, appeal and stability Ensure the acceptance of the Swiss mechanisms and the maintenance of our financial centre's competitive framework conditions: Consideration of the international room for manoeuvre available and proportionality in the implementation of new international standards: no "Swiss finish" 13