The assessments undertaken during the pilot program using the 2002 Methodology identified numerous shortcomings in national AML-CFT regimes. This box lists specific types of shortcomings that led to ratings of “materially noncompliant” or “noncompliant” in a fairly high percentage of countries assessed. The shortcomings identified were encountered across a wide range of countries and appeared with varying frequency. Some shortcomings are concentrated in a few countries where compliance is generally weak. Others represent exceptions in regimes where compliance is otherwise strong.
The list below provides an indication of some of the types of deficiencies that needed to be corrected to achieve compliance with the earlier FATF standard; it does not cover topics such as the financial intelligence function and enhanced due diligence that were not yet included in the FATF standard at the time of the pilot program.
Main Weaknesses Identified in AML-CFT
• Poor assistance provided to other countries’ investigations into financing terrorism
• Poor attention given to transactions with higher risk countries
• Poor detection and analysis of unusual large or otherwise suspicious transactions
• No criminalization of the financing of terrorism and of terrorist organizations
• Inadequate systems to report suspicious transactions linked to terrorism
• Inadequate AML programs in supervised banks, financial institutions, or intermediaries and inadequate authority to cooperate with judicial and law enforcement
• Inadequate guidelines for detecting suspicious transactions
• Inadequate measures to freeze and confiscate terrorist assets
• No obligation to take reasonable measures to obtain information about customer identity
• Lack of procedures for mutual assistance (for the production of records, the search of persons, and the seizure and obtaining of evidence for moneylaundering investigations and prosecution) in criminal matters
• Inadequate internal policies, procedures, controls, audit, and training programs
Source: IMF and World Bank (2004, annex II).