IMF Admits Failing in Anti-Money Laundering Role

Stephen Harris

27 September 2005

The International Monetary Fund has admitted that it is lagging in its task to cajole countries to apply the Financial Action Task Force's revised anti-money laundering recommendations that it released in 2003, and the FATF Special Recommendation IX concerning measures to deter cross-border movements of currency and monetary instruments. In a review of its anti-money laundering/combating the financing of terrorism (AML/CFT) program, the IMF also announced that it was to focus more on tackling the challenges faced by countries implementing standards and regimes. The review of the Fund and the World Bank's respective work programs was prompted by a call by their boards in March 2004 to make AML/CFT a regular part of the work of both institutions. The review revealed that the revision of the FATF standard in 2003 significantly raised the bar for countries' legal, regulatory, and institutional frameworks. Comparing assessments performed before and after the revision, the review shows that all countries are facing difficulties in achieving compliance with the revised standard. There is thus a need to focus on practical considerations, vulnerabilities, priorities, and sequencing in putting in place AML/CFT regimes. In the future the IMF and the World Bank will continue their intensive work on AML/CFT focusing on assessments of members' AML/CFT regimes, technical assistance delivery, and broader regulatory and economic policy issues. Since March 2004 the two organisations have completed fieldwork for 12 assessments and the FATF/FSRBs for 13 assessments. Overall compliance with FATF recommendations in the revised standard was found to be lower across all the assessed countries compared to an earlier standard produced in 1996. Compliance with the CFT special recommendations is particularly weak.