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To: IBFed Board 5th October 2010

From: IBFed Financial Markets Working Group

Agenda Item 16 – Report of the IBFed Financial Crime Working Group

STATUS Report

For the most part, the different sectors represented in the Working Group (WG) have primarily focused on domestic concerns. For example, in the United States, the passage of major banking legislation has drawn the attention of members of the Working Group. At the same time, international focus has been devoted primarily to capital issues and the Basel Accords. However, there are several items worth noting:

  • Beneficial Ownership – continues to be an issue being addressed by the Financial Action Task Force (FATF). The WG and its members have been actively engaged with discussions about beneficial ownership, including how to define beneficial ownership, the different approaches needed for different forms of ownership (corporations, partnerships, trusts, and so forth), the role of risk-assessment in beneficial ownership, and the need to focus attention on information that will be meaningful
  • Customer Due Diligence – work by FATF continues to update the types of information that will be meaningful in determining the true risk presented by customers, including discussion about the appropriate information at account opening and what triggers should indicate re-analysis of the risk profiles for different customers to better understand their risk profiles
  • Reliance – FATF Recommendation 9 continues to be a topic of review by FATF. The WG continues to monitor these developments, especially as they relate to the preceding two items, since reliance will be a key component to properly analyze beneficial ownership and also will be important to avoid duplication of efforts by different financial institutions as they analyze customer risk profiles
  • Tax Crimes – continue to occupy members’ attention, in part to determine the best means to coordinate efforts between the public and private sectors and to outline the appropriate roles for all affected sectors. The most significant challenge is identifying the proper mechanism that will allow individual financial institutions to determine whether there has been a tax crime, especially when it involves non-domestic tax issues
  • Other items likely to be on the agenda in coming months:
  • Human trafficking, and its relationship to anti-money laundering efforts
  • Prepaid access and appropriate mechanisms to detect and deter use of these devices for money laundering or terrorist financing
  • Efforts at financial inclusion to bring more individuals into mainstream banking, possibly through increased use of prepaid mechanisms, that in turn help provide a document trail of transactions and customers that can assist law enforcement

C:\Documents and Settings\preksin_om\Local Settings\Temporary Internet Files\Content.IE5\H91TLV5X\BBA01-_366654-v1-25th_Meeting_of_the_IBFed_Board_on_4-6th_October_2010_-_Report_of_the_IBFed_Financial_Crime_[1].DOC 23 October 2018