FATF releases revised recommendations on global asset recovery

The amendments are the result of a top-level FATF meeting in 2022, during which ministers agreed that efforts to confiscate the proceeds of crime were not keeping up with the volume of criminal assets flowing through the global financial system. FATF therefore made it a strategic priority to improve asset-recovery outcomes. This culminated in the first substantive change to the FATF recommendations related to asset freezing, seizure, confiscation, forfeiture and associated international cooperation since the standards were first developed in 1990.

The new regime requires countries to establish asset recovery as a priority, both at domestic and international level, and to periodically review their confiscation policies and operational frameworks. Countries must also coordinate and share information internally to identify criminal property.

Most significantly, FATF now expects countries to establish a non-conviction-based confiscation regime in their legal systems, where it can be consistent with fundamental principles of domestic law. It says these regimes have proven effective when criminal prosecution is unlikely or impossible and particularly when combatting the laundering of money linked to corruption. It also takes into account legal differences between countries and the protection of property rights of innocent parties.

Extended confiscation of criminal assets is also being made a mandatory part of FATF members' legal systems. Some jurisdictions have already introduced such regimes. FATF is further insisting on stronger tools to temporarily freeze, seize and restrain suspected criminal property when an investigation is at an early stage. This includes the power to suspend or withhold consent to transactions and freeze and seize assets rapidly to prevent the dissipation of criminal proceeds and aid their recovery.

Countries will also be required to recognise each other's preliminary and final court orders concerning assets subject to confiscation, to reflect the reality of transnational money-laundering investigations.

FATF has also released amendments to Recommendation 8, regarding the misuse of non-profit organisations for terrorist financing. It is concerned that some jurisdictions have been applying disproportionately strict measures to non-profit organisations (NPOs), sometimes designating them as money laundering reporting entities or requiring them to conduct customer due-diligence. Instead, it now requires countries to identify NPOs at high-risk of abuse and have in place 'focused, proportionate and risk-based measures' to address the risks.

Sources

• FATF (amended global asset recovery recommendations)
• FATF (study on recovering international proceeds of crime)
• FATF (Recommendation 8 amendment)
• FATF (best practices on NPO abuse for terrorist financing)
• FATF (outcomes of October 2023 plenary meeting)