FATF vows tougher rulings of non-bank remittances

FATF vows tougher rulings of non-bank remittances

Agence France-Presse, Singapore

Two major global finance watchdogs pledged on Friday to
toughen regulations on underground cash remittances and wire
transfers in a bid to choke funding for terrorist groups and
fight money laundering.

The Financial Action Task Force (FATF) and its regional
counterpart, the Asia Pacific Group, highlighted after meeting
here that there had been evidence of non-bank remittance channels
being used to fund terror activities in Asia and other parts of
the world.

However, they admitted it was difficult to monitor the money
flows because these took place outside the banking system.

"One of the topics that we have actually talked about is the
alternative remittance systems and regulation," FATF executive
secretary Alain Damais told reporters after the three-day meeting
ended.

"And that is going to be one of the issues that we have
decided to make some further work on. We will especially focus on
an implementation package."

The Paris-based FATF is the anti-money laundering watchdog of
the Organization for Economic Cooperation and Development (OECD),
the developed economies grouping. It promotes policies and
creates regulations to combat money laundering and terrorist
financing.

Thirty nations, including the United States, Australia and
Britain, as well as the European Commission and the Gulf Co-
operation Council are FATF members, and have to adhere to the
organization's regulations.

Rick McDonell, head of the Asia Pacific Group's secretariat,
said their organization and the FATF had agreed to work more
closely to strengthen the fight against illegal money flows.

Regulating alternative remittance systems, in which funds are
carried by couriers across borders or sent through unregistered
dealers "is a particularly big challenge," McDonell told
reporters.

"One of the challenges for us in the Asia-Pacific region has
been to identify who these dealers are because they are often not
identifiable and not regulated by the government."

Another challenge is that the costs of using alternative
remittance systems are cheaper compared to banks, making them
more attractive.

However, he said that Pakistan had shown that this segment can
be regulated by identifying the dealers, putting them under
supervision and handing out sanctions when laws are violated.

The two groups said they had no data of how much money passes
through the non-banking system but McDonell said a one-time study
done by the Asia Pacific Group in 2003 covering only a six-month
period showed US$8.0 billion passing through the non-bank
remittance links.

The FATF and Asia Pacific Group also agreed to continue trying
to convince governments worldwide to adopt a standard that
monetary wire transfers must identify both the sender and the
receiver of the funds.

McDonell said the majority of the countries in the Asia
Pacific had yet to implement this standard although they had
committed to do so.

"In the Asia Pacific, we need ... much more practical
cooperation, learning the tools, improving enforcement
mechanisms, making the border patrol people, immigration and
customs much more aware of their responsibilities," he said.