Introduction
As I continue the series on money laundering and looking back on last week’s column, perhaps the main original contribution so far has been putting forward the thesis that there have been three principal drivers pushing money laundering and related concerns to the level of the massive global threat these now represent. As noted, these three drivers are tax evasion, organized crime and racketeering, and terrorist financing and its proliferation. In actuality though, these three drivers comingle and I have identified them separately only for purposes of analysis and presentation of the thesis.
Thus experience shows that few, if any of the major criminal networks found to be involved in organised money laundering are not motivated simultaneously by more than one driver. Despite this practice, it is still fair to claim that Guyana’s money laundering is firmly located within the second driver; that is organized crime and racketeering, 
while the rest of Caricom is, by and large, situated within the first driver; that is tax evasion, which is directly related to their status as offshore financial centres (OFCs).
As was also previously pointed out, while the G7 Group of Leading Industrial Economies had initially supported, if not encouraged, the proliferation of OFCs in the Caribbean, during the latter half of the 1980s, the group became quickly disenchanted, if not hostile to this development. And, at the G7 Summit in 1989, the group established the Financial Action Task Force (FATF), situated in Paris, France to remedy this situation.
For the remainder of this column, I shall outline the development of FATF, as today it both represents and enforces the regime of international standards for Anti-Money Laundering and Combating the Financing of Terrorism (AML & CFT).
FATF
About a year after the FATF was established (1990) that organisation came out with an action plan, which basically set out forty recommendations to deal with the money laundering situation, as it perceived this. FATF proclaimed the forty recommendations were aimed at preventing the “misuse of financial systems by persons laundering drug money.” Readers should observe here that this stated aim combines the first two drivers of money laundering that I have listed above.
Six years later (1996), FATF revised the forty recommendations. As stated, at the time, the main purposes of the revision were two-fold: 1) to update the recommendations in order to reflect “evolving money laundering trends and techniques,” and 2) to broaden the focus of FATF in order to cater for threats to the international financial system “well beyond drug-money laundering.”
After the horrendous terrorist attacks in the United States on 9/11/2001, the FATF hurriedly expanded its mandate to deal with matters related to the financing of “terrorist organisations.” For this purpose eight special recommendations were announced in 2001, and later in 2004 a ninth special recommendation was added to the eight on terrorist financing.
Subsequently, and seven years after the first revision of the forty recommendations (in 1996), these recommendations were again revised and published in 2003. These recommendations have been since endorsed by more than 180 countries and presently they represent the undoubted international standards to guide regulatory supervision and enforcement of anti-money laundering measures and combating the financing of terrorism.
Over the years several affiliated bodies from different regions around the world have joined FATF. These are described as FATF-style Regional Bodies (FSRBs). Among them is the Caribbean Financial Action Task Force (CFATF), which is introduced below. Other bodies have also attained observer status as Observer Organisations; these include the International Monetary Fund (IMF), World Bank, and United Nations special agencies.
In 2012, following on the FATF’s third round of mutual evaluations of member countries, FATF reviewed and updated their recommendations (mutual evaluations are a central feature of FATF’s operations. They are undertaken in order to ensure each member state participates in the activities of the organisation, thereby ensuring it fulfils its obligations in regard to every member state playing a role in the assessment of the performance of every other member state). This topic will be re-visited later in regard to Guyana’s present situation.
FATF had declared the aims of the 2012 revision as 1) addressing new and emerging money laundering, terrorist financing and proliferation threats; 2) clarifying and strengthening existing obligations; 3) maintaining stability and rigour in the recommendations. For the last item its great concern is risk and the adoption therefore of risk-based methods of assessment and control at the international and national levels. (Of special note, this revision was undertaken with the full participation of FSRBs and Observer Organisations.)
Conclusion
In conclusion a summary of FATF’s main tasks today would include 1) examining money laundering techniques and trends, because this is a fast changing area of criminal endeavour and in order to regulate it the authorities need to be one or more steps ahead of the criminals. (It is for this reason that earlier I had looked at the techniques and trends in Caricom.) 2) Setting international and national standards; 3) effectively implementing the legal, regulatory and operational measures for anti-money laundering and combating the financing of terrorism (AML+ CFT) as well as the proliferation of instruments of terror, mass destruction and related threats to the international financial system; and 4) working collaboratively with international, regional and national stakeholders.
As indicated above the Caribbean Financial Action Task Force, CFATF is an FSRB. It comprises 29 Caribbean member states and is headquartered in Port of Spain, Trinidad and Tobago. (Notably, Cuba is not a Member, but there are initiatives currently underway to secure this.) CFATF has several Observer Organisations, including the Commonwealth Secretariat; European Commission; IMF; World Bank; IDB; and United Nations special agencies dealing with organized crime, drugs, terrorist financing, and proliferation. There are also a number of cooperating and supporting nations. CFATF is presently celebrating its 20th anniversary.
Next week I shall take a closer look at the operations of these regulatory bodies.
