ESBG response to the FATF consultation on recommendations on money laundering and terrorist financing
12 January 2011
ESBG welcomes the ultimate objectives of the revision of the standards and agrees that the review of the standards has to be conducted in an open and transparent manner, in order to ensure adequate consideration of all the views of the various stakeholder groups.
After careful assessment of the Consultation Paper issued by the FATF, ESBG considers as very positive some of the proposals made by the FATF, namely the future focus on improving mutual evaluation reports, the more flexible approach concerning intra-group reliance, and further clarification regarding the Risk-Based Approach. Nonetheless, ESBG wishes to issue the following specific comments regarding the topics addressed in the Consultation paper, dated October 2010.
ESBG welcomes a clear endorsement of the Risk-Based Approach (RBA), as it is widely recognized as the most efficient approach, allowing financial institutions to undertake a more targeted search for risky transactions and/or customers. ESBG also welcomes that the FATF already notes under no. 17 of the Consultation Paper (CP) that a “one-size-fits-all” approach is not necessary, since the 40 + 9 Recommendations apply to different sectors with their specificities.
With regards to the identification and verification of customers, ESBG proposes that the EU standard is used as a benchmark at international level. European financial institutions widely apply a risk-based approach and the EU threshold of 25% is helpful as it provides a clear and appropriate picture concerning control by a company. Moreover, the proposed amendments by the FATF concerning the identification and verification of customers and beneficial owners of legal persons do not seem to sufficiently clarify the measures financial institutions need to identify the real controlling ownership structure.
ESBG certainly supports the objective of combating fiscal criminality. However ESBG cannot but recommend that such criminal offenses would be best addressed both upstream and downstream of the payment system by policy makers, legislators, and police authorities, notably by taking decisive actions with regards to the usage of cash both as payment instrument and store of value.
Full paper
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