Cognizant of the danger of organised crime at the global level, the international community developed a strategy of combating the most dangerous forms of crime, such as trafficking in narcotics, firearms, human beings, etc., all of these activities being inextricably linked to money laundering. To enhance the efficiency of combating money laundering and terrorism financing in member states, the United Nations and European Union adopted the following documents:
- 1999 International Convention for the Suppression of the Financing of Terrorism (Terrorist Financing Convention)
- Convention Against Transnational Organised Crime
- Convention Against Corruption
- Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention)
- UN Security Council Resolution 1540 Against the Proliferation of Weapons of Mass Destruction and Their Means of Delivery
The Council of Europe’s MONEYVAL (Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism) was founded in 1997 to ensure, through the process of mutual evaluation, that its member states have in place effective systems to counter money laundering and terrorism financing and comply with relevant international standards in the field. MONEYVAL evaluation procedures involve the collection of information through a questionnaire, which is followed by an on-site country visit by a team of evaluators elected by the MONEYVAL Secretariat. The visit leads to drafting of the report on harmonisation of the country’s legislation and practice with international standards. After several rounds of consultation, the final version of the report is adopted at a plenary meeting held minimum two times a year. Each report consists of the analysis and assessment of the situation, and recommendations to improve the anti-money laundering and combating the financing of terrorism (AML/CFT) system in the country. MONEYVAL, within the Council of Europe, possesses mechanisms of coercing member states to implement its recommendations and apply other measures at the government level. These mechanisms include the requirement of regular reporting to MONEYVAL on the progress achieved, as well dispatching a high-level diplomatic mission to the member state or the state’s exclusion from membership of the Council of Europe. The reports adopted by MONEYVAL are public and are used in estimates of financial stability and safety of investing in some countries. The International Monetary Fund and World Bank receive MONEYVAL’s reports to prepare their own analyses and reports.
FATF (Financial Action Task Force) is an inter-governmental body, established in Paris in 1989, whose purpose is the development and promotion of policies to combat money laundering and terrorism financing, as well as to monitor the implementation of AML/CFT measures in member countries. In pursuing its activities, FATF cooperates with other international bodies involved in AML/CFT activities, such as MONEYVAL.
In 2012, FATF amended and published 40 anti-money laundering recommendations which pertain to setting up an efficient AML system, including the legal system and law enforcement, the financial system and its regulations, as well as international cooperation. These recommendations are updated on a regular basis.
The Basel Committee on Banking Supervision has as its primary goal the improvement of understanding of key supervisory challenges and enhancement of the quality of banking supervision worldwide. The Committee has promoted 29 Core Principles for Effective Banking Supervision, including:
- Principle 15 – Risk management process. The supervisor determines that banks have a comprehensive risk management process to identify, measure, evaluate, monitor, report and control or mitigate all material risks on a timely basis;
- Principle 29 – Abuse of financial services. The supervisor determines that banks have adequate policies and processes, including strict customer due diligence rules to promote high ethical and professional standards in the financial sector and prevent the bank from being used, intentionally or unintentionally, for criminal activities.
The Basel Committee adopted the document Customer due diligence for banks, covering the adoption of the “Know Your Customer” rule in banks.
The European Union adopted the fifth Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorism financing on 30 May 2018, to be incorporated in member states’ national legislation by 10 January 2020. The Directive takes into account the latest amendments to FATF Recommendations from 2012. The main amendments concern further improvements to the implementation of the risk-based approach through strengthening of supervision, introduction of new categories of obliged entities, the rules for identifying a beneficial owner and greater transparency of registers of beneficial owners, accepting the electronic document as a reliable and credible data source etc.
The European Union also implements the Regulation 2015/847 on information accompanying transfers of funds, which is also based on standards set by the FATF recommendations.