Pandora Papers would force to modify FATF recommendations

A few days ago, the Financial Action Task Force (GAFI) against money laundering and terrorist financing held its most recent plenary meeting where it was determined that given the lack of effectiveness that exists on the part of the countries to identify the real beneficiaries of the companies, it is necessary to adjust its recommendations in this regard .

This determination was made after the investigation was made known. Pandora Papers, which exposes the way in which people with political and economic power have hidden their fortunes in different jurisdictions around the world.

“Recent revelations in the Pandora Papers underscore once again the importance of ensuring transparency about the true beneficial owner of companies to prevent criminals from hiding their illicit activities and profits behind complex corporate structures,” the FATF highlighted.

In this context, a proposal to amend its recommendation number 24 of 40, related to transparency and final beneficiary of legal persons.

“Countries must do more to ensure that beneficial ownership information is available and up-to-date … These amendments seek to strengthen the recommendation to ensure greater transparency on beneficial ownership of legal persons and take measures to mitigate risks.”

According to the document that contains the modification proposals, what is sought is to reinforce the issue of gathering information from governments on beneficial owners; clarify the guidelines regarding bearer shares; expand the scope of the risk-based approach and ground the rules on access to information from these legal structures.

“We mainly seek opinions from companies and other legal entities, financial institutions, designated non-financial businesses and professions, and non-profit organizations, but we also welcome the contributions of other interested parties,” the FATF said on the proposals, for which the comment until December of this year.

Rules for virtual assets

Another issue that occupied the participants of the FATF plenary meeting was that of virtual assets, since for the organization there are still areas of opportunity to clarify issues that are found in its guide on how to approach the regulation of these instruments. which was published in 2019.

“The virtual asset sector it moves quickly and is technologically dynamic, which means that continuous monitoring and participation between the public and private sectors is necessary, “said the FATF and added that in a few days, it will publish the update of its guide.

Likewise, the organization, of which Mexico is a part, published a final report on the results of a survey regarding the cross border payments, where poorly implemented recommendations in this regard increase the cost of transactions, reduce speed, and limit access.

Another issue that was addressed in the plenary meeting was regarding the unintended consequences of the implementation of the FATF standards, for which the agency will publish the results of a study in this regard, specifically on risk elimination, financial exclusion. and improper treatment of non-profit organizations.

“During the next phase of this project, the FATF will identify and consider potential options to mitigate these unintended consequences,” the agency said.

The FATF, led by the German Marcus pleyer, indicated that progress has been made in combating environmental crimes, and their illicit derivatives. “The FATF standards already require countries to criminalize money laundering for a variety of environmental crimes. The Plenary agreed to add several indicative examples of environmental crimes to the FATF Glossary to clarify to countries the types of crimes that could fall within this category ”.

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