Christine Lagarde, Managing Director
FATF Plenary Meeting, Valencia
We call on policymakers to intensify the fight against corruption, tax evasion, and the financing of terrorism, and to take steps to support countries at risk of losing vital correspondent banking relationships.", "authors": [ "Christine Lagarde" ], "publishDate": "2017-06-22", "sections": [ { "heading": "Opening remarks and context", "content": "- Speaker: Christine Lagarde, IMF Managing Director.\n- Event: FATF Plenary Meeting, Valencia, June 22, 2017.\n- Core message: Intensify the fight against corruption, tax evasion, and the financing of terrorism, and support countries at risk of losing vital correspondent banking relationships.\n- Partnership: IMF and FATF have forged a close relationship over nearly two decades; AML/CFT work has been part of the Fund’s core work for some 20 years." }, { "heading": "Three policy priorities", "content": "- Fighting corruption and tax evasion\n - Systemic corruption can seriously undermine a country’s ability to deliver sustainable and inclusive growth.\n - Large-scale tax evasion typically means lower government revenue, higher public debt, and less investment in health, education, and other public services; it increases economic inequality and can trigger popular discontent and economic instability.\n - The AML/CFT framework can help break this vicious economic cycle.\n - Case study: Greece\n - Strengthening of the AML framework facilitated the seizure of hundreds of millions of euros in proceeds from tax crimes.\n - Central bank strengthening led to a sharp increase in reporting to the financial intelligence unit (FIU).\n - The FIU froze more than €200 million in assets between 2012 and 2014.\n - The FIU referred more than 400 cases to the prosecutor’s office and more than 2,500 cases to the tax authorities.\n - Transparency example: The Panama Papers underscored the need for greater transparency—an area where the FATF standard is helpful.\n\n- Combating the financing of terrorism\n - Goal: Choke off financial flows—both large and small—that enable terrorists.\n - IMF involvement: 16 years of technical assistance and capacity building in CFT efforts.\n - Example: Sudan\n - In 2014, IMF called on Sudan to strengthen its CFT framework.\n - IMF worked with the government to develop targeted financial sanctions consistent with the FATF standard.\n - IMF is developing practical guidance for members on implementing such sanctions, which should be available by 2019.\n - Role of fintech\n - Fintech is a double-edged sword: it can be used to promote and fund terrorism (including via anonymity in virtual currencies) but can also help identify terrorist financial flows, including very small transactions.\n - Machine learning and other artificial intelligence tools can help identify patterns of activity that would otherwise be difficult to detect.\n - Distributed ledger technology (underpinning virtual currencies and other applications) is less vulnerable to a single point of failure and could prove resilient to cyberattacks because the ledger exists in multiple copies.\n - IMF has published a paper providing a framework for assessing the impact of technological innovation within the financial sector.[1]\n - IMF commends FATF for addressing technology opportunities and risks, including through roundtables with the private sector.\n\n- Maintaining correspondent banking relationships\n - Importance: Correspondent banking relationships keep countries connected to the global financial system and are especially important for small countries in Africa, the Caribbean, Central Asia, and the Pacific.\n - Surveys show high concern among member countries about loss of correspondent banking services.[2]\n - Multi-stakeholder issue: Involves regulators, the financial industry, and affected countries.\n - FATF actions: Clarified regulatory expectations under the FATF standard, including customer due diligence requirements, to reduce indiscriminate withdrawal of correspondent banking.\n - Greater regulatory certainty increases likelihood global banks maintain correspondent banking business, supporting economic and financial stability in affected countries.\n - IMF contributions and examples:\n - Convened local banks, global banks, and other stakeholders to discuss solutions (e.g., a Caribbean workshop focused on improving small banks’ capacity to manage risks with regional development banks and enhancing communication between local and correspondent banks).\n - Helped smaller member countries build capacity: worked with Costa Rica, Peru, and Uruguay to create national AML/CFT strategies.\n - Helped Ukraine, Mongolia and Qatar strengthen governance and capacity of their FIUs.\n - Provided technical assistance on AML/CFT to 120 countries.\n - IMF assistance was instrumental for Myanmar, Nepal, and Sudan to exit FATF monitoring and reconnect to the global financial system.\n - Policy papers referenced: IMF Policy Paper: “Recent Trends in Correspondent Banking Relationships: Further Considerations”, April 2017.[3]" }, { "heading": "Analytical work and tools", "content": "- IMF’s activities span analysis and policy advice, assessing the health and integrity of financial sectors, providing financial assistance when needed, and helping countries build institutions and increase operational effectiveness.\n- Recent IMF Staff Discussion Note: “Fintech and Financial Services: Initial Considerations”, June 2017.[1]\n- Support for the revised FATF standard: IMF supports the risk-based approach and the emphasis on effectiveness under the revised FATF standard and looks forward to targeted follow-up assessments focusing on countries’ main risks." }, { "heading": "Conclusion and call to action", "content": "- Key challenges: Corruption, tax evasion, the financing of terrorism, and financial exclusion require direct, coordinated action.\n- Final admonition: “Level with events” — tell the unvarnished truth and address these issues head-on.\n- Collective objective: By standing together and being candid about risks, countries can promote financial integrity and inclusive growth for the benefit of all.\n\nIMF press release: Working Together to Fight Money Laundering & Terrorist Financing — Christine Lagarde, FATF Plenary Meeting, Valencia, June 22, 2017.\n\n---\n\n\n References\n\n- Christine Lagarde\n- PRESS CENTER\n- Policy Paper\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/06/21/sp062217-working-together-to-fight-money-laundering-terrorist-financing" } ], "bullets": [ "[Markdown version](/en/news/articles/2017/06/21/sp062217-working-together-to-fight-money-laundering-terrorist-financing/index.md)", "[Structured JSON version](/en/news/articles/2017/06/21/sp062217-working-together-to-fight-money-laundering-terrorist-financing/index.json)", "[Bundle manifest](/en/news/articles/2017/06/21/sp062217-working-together-to-fight-money-laundering-terrorist-financing/bundle-manifest.json)", "Authors: Christine Lagarde", "Published: June 22, 2017", "Speaker: Christine Lagarde, IMF Managing Director.", "Event: FATF Plenary Meeting, Valencia, June 22, 2017.", "Core message: Intensify the fight against corruption, tax evasion, and the financing of terrorism, and support countries at risk of losing vital correspondent banking relationships.", "Partnership: IMF and FATF have forged a close relationship over nearly two decades; AML/CFT work has been part of the Fund’s core work for some 20 years.", "Fighting corruption and tax evasion", "Combating the financing of terrorism", "Maintaining correspondent banking relationships", "IMF’s activities span analysis and policy advice, assessing the health and integrity of financial sectors, providing financial assistance when needed, and helping countries build institutions and increase operational effectiveness.", "Recent IMF Staff Discussion Note: “Fintech and Financial Services: Initial Considerations”, June 2017.[1]", "Support for the revised FATF standard: IMF supports the risk-based approach and the emphasis on effectiveness under the revised FATF standard and looks forward to targeted follow-up assessments focusing on countries’ main risks.", "Key challenges: Corruption, tax evasion, the financing of terrorism, and financial exclusion require direct, coordinated action.", "Final admonition: “Level with events” — tell the unvarnished truth and address these issues head-on.", "Collective objective: By standing together and being candid about risks, countries can promote financial integrity and inclusive growth for the benefit of all.", "[Christine Lagarde](http://www.imf.org/external/np/omd/bios/cl.htm)", "[PRESS CENTER](http://presscenter.imf.org/)", "[Policy Paper](http://www.imf.org/en/publications/policy-papers/issues/2017/04/21/recent-trends-in-correspondent-banking-relationships-further-considerations)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": 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