Press Release No. 04/70

Press Release: IMF, World Bank Enhance Efforts at Combating Money Laundering, Terrorist Financing

April 2, 2004

The International Monetary Fund and the World Bank have agreed to adopt a more comprehensive and integrated approach to conducting assessments of compliance with international standards for fighting money laundering and terrorist financing in member countries, and to step up the delivery of technical assistance to those countries whose financial systems are most at risk.

The decision, endorsed by the Boards of the two institutions, builds on the recently completed 12-month joint pilot program of assessments of the international standards conducted in cooperation with international partners that are engaged in combating money laundering and financing of terrorism. Since the pilot began in the summer of 2002, 41 countries have been assessed for compliance with the international standards including 33 assessments conducted by Bank and Fund experts. These assessments were conducted in all regions of the world and included both industrialized and developing countries.

A review of the 12-month pilot program shows that the work of the IMF and World Bank has significantly raised awareness of the importance of international cooperation to counter money laundering and terrorist financing. Most jurisdictions are now in the process of developing and implementing action plans to correct shortcomings identified during the assessments. The Bank and Fund collaborated with many partner organizations in responding to requests for technical assistance, including the UN Office of Drug Control, the Commonwealth Secretariat, FIRST (a multi-donor trust fund for implementation of financial codes and standards in developing countries), bilateral donors such as the Japanese, Dutch and Italian governments.

During the past year, the Bank and Fund responded to requests from more than 100 countries to help them build institutional capacity to fight money laundering and terrorist financing. Technical assistance has focused on how to help countries bring their laws and regulatory systems up to international standards, build institutional capacity for financial sector institutions, improve coordination among government agencies, and enhance cooperation with regional and international partners. The assistance has been provided through country-specific programs benefiting 63 countries, as well as 32 regional programs reaching more than 130 countries. In addition, the Bank has provided assistance to countries through lending projects. Bank and Fund staff also held eight training workshops for the FATF-style regional bodies (FSRBs) on how to conduct assessments and published several handbooks on how to build more effective systems for combating money laundering and terrorist financing.

Going forward, the Bank and Fund each plan to carry out 10 money laundering and terrorist financing assessments per year as part of the joint Bank/Fund Financial Sector Assessment Program (FSAP) or for the Fund also as part of its initiative for offshore financial centers (OFC). The FSAP and OFC programs include assessments of other international financial sector standards, such as the Basel Committee standards for banking supervision.

The Financial Action Task Force (FATF), an inter-governmental body of 33 member nations based at the Organization for Economic Cooperation and Development (OECD), is responsible for the development of the international standards for anti-money laundering and combating the financing of terrorism (AML/CFT) and the common methodology for assessment of the AML/CFT standards. The FATF worked in conjunction with the Bank and Fund and FSRBs on revisions to the standards and the methodology which now have been endorsed by the Fund and Bank. There is agreement that the Fund, the Bank and the FATF will all use the common methodology in their forthcoming AML/CFT assessments and mutual evaluations. Similarly, the FSRBs are expected to agree to use the common methodology in their mutual evaluations. Through this common approach to assessments and close coordination of assessment schedules, there will be greater efficiency in the use of staffing resources.

In its review of the pilot program, Bank and Fund staff found that while many jurisdictions were doing a good job in taking steps to counter money laundering, some were lagging in the implementation of measures to deter terrorist financing. Most higher-income countries have in place well developed rules and safeguards, but often exhibited specific gaps related to measures to combat terrorist financing. In middle-income countries, frameworks are often in place but much more needs to be done to put them into practice. Low-income countries need assistance in strengthening many aspects of their financial sectors and have been slower in focusing on money laundering and terrorist financing concerns.

In the years ahead, Bank and Fund staff will work with member countries to strengthen their regimes for AML/CFT. The two institutions will also partner with other international organizations to speed up technical assistance for drafting laws and regulations, building institutional capacity in financial sector and other governmental agencies, and working with local authorities to develop better systems of national and international cooperation.

Twelve-Month Pilot Program of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Assessments, Joint Report on the Review of the Pilot Program

Twelve-Month Pilot Program of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Assessments, Joint Report on the Methodology for Assessing Compliance with the FATF 40 Recommendations and the FATF 8 Special Recommendations Supplementary Information