## Working Together to Fight Money Laundering & Terrorist Financing _IMF News, June 22, 2017_ ## Source details **Canonical URL:** [Working Together to Fight Money Laundering & Terrorist Financing](https://www.imf.org/en/news/articles/2017/06/21/sp062217-working-together-to-fight-money-laundering-terrorist-financing) ## Other formats - [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) ## Bibliographic details - Authors: Christine Lagarde - Published: June 22, 2017 --- ### Opening remarks and context - 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. ### Three policy priorities - Fighting corruption and tax evasion - Systemic corruption can seriously undermine a country’s ability to deliver sustainable and inclusive growth. - 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. - The AML/CFT framework can help break this vicious economic cycle. - Case study: Greece - Strengthening of the AML framework facilitated the seizure of hundreds of millions of euros in proceeds from tax crimes. - Central bank strengthening led to a sharp increase in reporting to the financial intelligence unit (FIU). - The FIU froze more than €200 million in assets between 2012 and 2014. - The FIU referred more than 400 cases to the prosecutor’s office and more than 2,500 cases to the tax authorities. - Transparency example: The Panama Papers underscored the need for greater transparency—an area where the FATF standard is helpful. - Combating the financing of terrorism - Goal: Choke off financial flows—both large and small—that enable terrorists. - IMF involvement: 16 years of technical assistance and capacity building in CFT efforts. - Example: Sudan - In 2014, IMF called on Sudan to strengthen its CFT framework. - IMF worked with the government to develop targeted financial sanctions consistent with the FATF standard. - IMF is developing practical guidance for members on implementing such sanctions, which should be available by 2019. - Role of fintech - 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. - Machine learning and other artificial intelligence tools can help identify patterns of activity that would otherwise be difficult to detect. - 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. - IMF has published a paper providing a framework for assessing the impact of technological innovation within the financial sector.[1] - IMF commends FATF for addressing technology opportunities and risks, including through roundtables with the private sector. - Maintaining correspondent banking relationships - 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. - Surveys show high concern among member countries about loss of correspondent banking services.[2] - Multi-stakeholder issue: Involves regulators, the financial industry, and affected countries. - FATF actions: Clarified regulatory expectations under the FATF standard, including customer due diligence requirements, to reduce indiscriminate withdrawal of correspondent banking. - Greater regulatory certainty increases likelihood global banks maintain correspondent banking business, supporting economic and financial stability in affected countries. - IMF contributions and examples: - 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). - Helped smaller member countries build capacity: worked with Costa Rica, Peru, and Uruguay to create national AML/CFT strategies. - Helped Ukraine, Mongolia and Qatar strengthen governance and capacity of their FIUs. - Provided technical assistance on AML/CFT to 120 countries. - IMF assistance was instrumental for Myanmar, Nepal, and Sudan to exit FATF monitoring and reconnect to the global financial system. - Policy papers referenced: IMF Policy Paper: “Recent Trends in Correspondent Banking Relationships: Further Considerations”, April 2017.[3] ### Analytical work and tools - 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. ### Conclusion and call to action - 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. *IMF press release: Working Together to Fight Money Laundering & Terrorist Financing — Christine Lagarde, FATF Plenary Meeting, Valencia, June 22, 2017.* --- ## References - [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) _Source: https://www.imf.org/en/news/articles/2017/06/21/sp062217-working-together-to-fight-money-laundering-terrorist-financing_