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| ARTICLE V, SECTION 2(b) | ||||
| Technical and Financial Services | ||||
| Technical Services | ||||
| Anti-Money Laundering and Combating the Financing of Terrorism | ||||
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The Acting Chair’s Summing Up—2023 Review of the Fund’s Anti-Money Laundering and Combating the Financing of Terrorism Strategy, Executive Board Meeting 23/87, November 20, 2023 Executive Directors welcomed the opportunity to review the Fund’s AML/CFT Strategy. They stressed that addressing money laundering, terrorist financing, and proliferation financing risks is integral to the Fund’s mandate to support the integrity and stability of the international financial system and member countries’ economies. They welcomed the staff’s stocktaking of the progress that has been made and the lessons learned. They agreed with the overall direction to continue to enhance staff’s understanding of the nature and severity of financial integrity risks, with a greater focus on assessing and mitigating negative macroeconomic impacts, which will help staff further prioritize the depth and scope of its engagements. They emphasized that staff should continue to rely on the multipronged approach and synergies across the Fund’s various workstreams to support individual member countries’ efforts in enhancing the effectiveness of their AML/CFT frameworks. Directors supported the proposed approach on surveillance, where staff will put greater focus on the linkages between financial integrity issues and fiscal, financial sector, and structural priorities. They agreed that staff should continue to cover financial integrity issues under the current principles of engagement and deepen its coverage in an even handed manner, commensurate with the risks faced by members, on a mandatory basis when these issues are macrocritical and on a voluntary basis when requested by the member country. With regard to FSAPs, Directors concurred that the current policy of mandatory coverage of AML/CFT issues with flexibility in scope and depth remains appropriate and supported proposal to put greater emphasis on the nexus between financial integrity and financial stability. Directors also agreed with the proposed approach on Fund-supported programs, where staff will continue to use its own judgment and expertise in designing financial integrity and AML/CFT conditionality in line with program objectives and subject to the principles of criticality, parsimony, and avoiding cross-conditionality. Directors also noted the importance of better understanding political economy constraints. A number of Directors emphasized the need for flexibility and technical support for members with capacity weaknesses. In this context, a few Directors considered that it is preferable to address AML/CFT issues through tailored capacity development support. Directors welcomed the CD activities delivered by staff to member countries and agreed that, in line with the Fund’s CD strategy, staff should continue to provide comprehensive CD support with greater flexibility to respond to the evolving demand from the membership and deepen support for other Fund workstreams. They noted that a better understanding of ML/TF risks will allow staff to continue to further develop the CD program in line with evolving risks such as those related to digital money, laundering of the proceeds of corruption, tax evasion, and environmental crimes. Directors reiterated the need to continue to coordinate with other TA providers to maximize efforts and avoid duplication of efforts. Directors concurred that staff should continue to integrate financial integrity issues in other Fund policies. They also welcomed staff’s proposal to deepen its engagement with a broader range of external stakeholders, including through enhanced collaboration with other international and regional organizations and civil society, and leverage global and regional partnerships to maximize the impact of the Fund’s AML/CFT work program while focusing on its comparative advantage. Directors highlighted the importance of the Fund’s continued engagement in AML/CFT assessments with a focus on quality and consistency. They generally supported or were open to staff’s proposal to increase gradually its assessment-related work, to be able to deliver two Fund-led assessments and participate in one FSRB-led assessment per year from FY 2028 onward, without prejudice to other core workstreams and subject to the reallocation of resources to enable this increase. Some Directors, nonetheless, considered the current pace of assessments to be broadly adequate. Directors looked forward to considering staff’s proposal to increase its assessment work in the context of the medium-term budget process. Directors noted that the next review of the AML/CFT Strategy would be expected to be completed within the next five years. SU/23/152 November 22, 2023 | ||||
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