Stepping up the Fight Against Money Laundering and Terrorist Financing
IMF Blog, July 26, 2017
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Bibliographic details
- Authors: Christine Lagarde
- Published: July 26, 2017
Overview
- Money laundering and terrorist financing exploit vulnerabilities in financial systems and can threaten economic and financial stability while funding violent and illegal acts.
- AML/CFT (Anti-money laundering and combating the financing of terrorism) measures are designed to prevent misuse of the financial system through detection, reporting, confiscation of suspicious financial flows, and sanctioning of criminals.
- The IMF has engaged in analysis, policy advice, country assessments against AML/CFT standards, and building institutional and operational capacity for almost two decades.
Three priority areas highlighted
- Intensify the fight against corruption and tax evasion
- Systemic corruption can seriously undermine a country’s ability to deliver sustainable and inclusive growth.
- Large-scale tax evasion reduces investment in health, education, and other public services and increases economic inequality by disproportionately affecting the most vulnerable.
- AML/CFT measures can help break the cycle of corruption and tax evasion; example: strengthening of the AML framework in Greece— with IMF assistance—facilitated the seizure of hundreds of millions of euros in proceeds from tax crimes.
- Promote more effective ways of combating the financing of terrorism
- IMF experience includes working with Sudan to develop a framework for implementation of targeted financial sanctions.
- Governments should increasingly harness financial technology: machine learning and other artificial intelligence tools could help detect patterns of suspicious financial flows, including very small transactions.
- “Distributed ledger” technology could help protect financial systems against cyber-terrorism.
- Note risks: fintech can be misused, including through the anonymity of virtual currencies.
- Ensure small and fragile economies retain access to correspondent-banking services
- Concern that global banks might cut correspondent-banking business indiscriminately to minimize AML/CFT compliance risk, jeopardizing countries in Africa, the Middle East, emerging Europe, Latin America, and the Caribbean.
- New research shows correspondent-banking relationships have been under pressure in many regions between 2011 and 2016.
- FATF clarified regulatory expectations under the AML/CFT standard, which may reduce indiscriminate withdrawal of correspondent-banking relationships.
- Best response: concerted efforts by regulators, the financial industry, and affected countries.
IMF contributions, technical assistance, and country examples
- Technical assistance provided on AML/CFT to 120 countries.
- Assisted countries and outcomes:
- Greece: strengthened AML framework; seizure of hundreds of millions of euros in proceeds from tax crimes.
- Sudan: developed a framework for implementation of targeted financial sanctions.
- Costa Rica, Peru, and Uruguay: helped develop national AML/CFT strategies.
- Ukraine: helped improve AML/CFT supervision.
- Mongolia: supported strengthening governance and capacity of its financial intelligence unit.
- Myanmar, Nepal, and Sudan: IMF assistance was instrumental for these countries to exit FATF monitoring and reconnect to the global financial system.
- Angola and Samoa: helped develop and implement measures to address the withdrawal of correspondent banking relationships.
- IMF convening role:
- Brought together local banks, global banks, and other stakeholders to develop practical solutions in the Caribbean, Middle East and Northern Africa, and the Pacific Islands.
Policy recommendations and needed actions
- Intensify efforts against corruption and large-scale tax evasion to protect fiscal capacity for health, education, and social spending.
- Promote and deploy fintech tools (machine learning, AI, distributed ledger technology) to detect suspicious flows and strengthen defenses, while managing fintech-related risks such as anonymity in virtual currencies.
- Foster coordinated action among regulators, the financial industry, and affected countries to prevent indiscriminate withdrawal of correspondent-banking relationships.
- Continue and expand international cooperation and technical assistance to ensure financial integrity and inclusive growth.
Key facts and figures (preserved)
- Publication date: July 26, 2017.
- IMF technical assistance on AML/CFT provided to 120 countries.
- Correspondent-banking relationships were under pressure in many regions between 2011 and 2016.
- Greece: seizure of hundreds of millions of euros in proceeds from tax crimes (result of strengthened AML framework with IMF help).
- Countries mentioned as beneficiaries of IMF assistance or focus: Sudan, Greece, Angola, Samoa, Costa Rica, Peru, Uruguay, Ukraine, Mongolia, Myanmar, Nepal.
- Quoted line: “Oh what a tangled web we weave, when first we practice to deceive.” — Sir Walter Scott
Stepping up the Fight Against Money Laundering and Terrorist Financing — Christine Lagarde, July 26, 2017
Content in this bundle
- 加强对洗钱和恐怖主义融资的打击; IMF 博客; 2017 年7 月26 日
- Усиление борьбы с отмыванием денег и финансированием терроризма; Кристин Лагард; 26 июля 2017 года
