FATF Issues New Guidance on Mitigating Proliferation Financing Risk

Richard Marley
June 30, 2021
3 minutes read
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The new guidance puts a spotlight on the need for effective onboarding processes, ongoing monitoring, employee training, risk management, sanction screening, and a robust compliance structure.

The global regulatory authority, Financial Action Task Force (FATF), has published new guidance for the mitigation of proliferation financing risks. The guidance has been published to enable the private and public sectors to effectively implement the new requirements for the identification and assessment of the risk.

The FATF’s Recommendation 1 and its Interpretive Note was revised in October 2020 for the introduction of new requirements, particularly for North Korea and Iran. In March, a consultation on the draft version was issued.

The guidance was finalized at the fourth FATF Plenary under the German Presidency of Dr Marcus Pleyer between 21-25 June.

It is crucial for authorities to work together to stop the spread of weapons of mass destruction. The FATF has issued guidance to help countries, financial institutions and the non-financial sector assess and reduce the risks of proliferation financing➡️https://t.co/queWjbtNOh pic.twitter.com/2Dk14H3bp7

— FATF (@FATFNews) June 29, 2021

Instructions included in the guidance are related to how countries, financial institutions, Designated Non-Financial Businesses and Professions (DNFBP) and VASPs (Virtual Asset Service Providers) can take proper risk assessment measures for their proliferation risk, and how they can mitigate this once identified.

An updated list of indicators is included in the guidance for detection of the potential breach, non-implementation, or evasion of proliferation financing targeted financial sanctions.

Here’s a list of the measures that have been highlighted in the FATF’s guidance:

Need for robust customer onboarding measures
Ongoing monitoring of customers
Employee training
Effective risk assessment
Proper sanction screening systems
Regular and flexible screening procedures
Strong compliance structure

The guidance also lays down a warning against combined efforts of businesses and individuals to outwit targeted financial sanctions through the use of shell companies, dummy accounts, fraudulent intermediaries, and middlemen. Advice has been provided for supervisors and self-regulatory bodies to ensure proliferation risks are being properly identified and assessed.

The guidance is available here.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

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ASIC Expands its Team to Enhance Cryptocurrency Regulations
Australia’s financial regulator has enhanced the size of its crypto team. The crypto regulatory measures include their application for financial services licenses and show that specific crypto platforms have particular liquidity in reserve.

After shifting popular blockchain from a proof-of-work (PoW) to a proof-of-stake (PoS) system, ASIC, Australia’s financial regulator, has increased the size of its crypto team.

U.S. Security and Exchange Commission Chairman Gary Gensler stated that PoS-based tokens might be classified as securities.

The decision of ASIC to keep PoS tokens for example Ethereum, Cardano and Solana under its remit will further clarify the situation and enable crypto regulations to be more effective. To cope with the latest regulatory reforms, the crypto exchange must either delist the tokens or start complying with robust crypto laws.

Such moves may force a few crypto firms to manage their operating models. Even the largest stablecoin of the crypto market, Tether, has been caught in a controversy created over the failure of holding enough dollar reserves to back the stablecoin.

The crypto regulatory measures include their application for financial services licenses and show that these platforms have particular liquidity in reserve.

The final decision by the regulator has not been issued yet. Greg Yanco, the executive director for marketers, said that ASIC won’t be a “cheerleader for crypto assets.”

SEC Newgate carried out research the last November. It showed that 44% of Australian retail investors reported holding crypto. Out of these investors, only 20% viewed crypto as high-risk.

The chairperson of ASIC responded and said that the regulators were “concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted. There is a strong case for regulating crypto-assets to better protect investors.”

According to Yanco, until the last year, cryptocurrency was not such a high priority. Still, due to the decline of cryptocurrency in the previous few years and investors wiped out around the globe, ASIC expanded its team. It made crypto one of its “core strategic projects.”

Suggested Read: Regulatory Authorities to File a New Bill to Secure the Citizens from Cyber Criminal Activities

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How Forensic Document Verification is Carried Out?

Forensic document verification involves incorporation of scientific rules in examining the authenticity of records. There are experts in this field who carry out all the operations using specialized methods. Nowadays, the use of forensics is rising, especially in courts where no document is accepted without authentication. By using several techniques like handwriting identification, ultraviolet light sources, microscopes, photography, and infrared imaging in the laboratories, a document is verified. All the major jurisdictions have formed dedicated institutions which overlook the process of document verification. The American Board of Forensic Document Examiners (ABFDE) is the primary authoritative body responsible for monitoring forensic operations in the US, and any person carrying out these activities anywhere in the country must be a member of this board.

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Canada

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Australia

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Shufti Pro’s state-of-the-art identity verification services can help online businesses implement a robust solution against document fraud. Combating financial crimes through efficient record authentication will secure the identities of users and ensure compliance with global regulatory standards. Powered by thousands of AI algorithms Shufti Pro’s KYC solution uses advanced techniques like OCR and forensic document examination to verify documents in real-time. It generates output in less than a second with 98.67% accuracy.

Want to know more about forensic forgery analysis of documents for digital businesses?

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FATF Issues New Guidance on Mitigating Proliferation Financing Risk

Forensic Document Verification – A New Standard

How Forensic Document Verification is Carried Out?

High-Profile Crime Cases of Document Fraud

Gang Arrested for Printing Fake Documents in Greece

Criminal Network Busted for Distributing Fake Documents

Regulatory Authorities Monitoring Document Fraud

Canada

Australia

Document Forgery Forensic Authentication – Ensuring KYC Compliance

What Shufti Pro Offers?

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Let’s prove your customer’s

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