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OECD's Financial Action Task Force (FATF) to investigate 50 territories under money-laundering initiative

Jeremy Hetherigton-Gore, Tax-news.com, London

16 February 2000

The OECD's 26-nation Financial Action Task Force this week published a report on the progress of its investigation into money-laundering. The report contains the conclusions of a meeting earlier this month.

The FATF has designated 25 criteria under which it will judge whether a country is up to scratch in terms of its defences against money-laundering. These include failure to criminalise money-laundering, excessive financial secrecy provisions, insufficient supervision and inadequate legislation.

The members of the FATF were asked to nominate countries (whether inside or outside the OECD) which should be investigated, and the list being studied includes 50 countries and territories. The countries concerned will be informed about the investigation, and will be invited to comment on the report that is produced.

The investigations will be carried out by four regional committees. If a country is found to be in breach of the criteria, the FATF and other world bodies such as the Basle Committee, the World Bank and the IMF would attempt to persuade the miscreants to reform themselves; and if that fails, sanctions will be applied through world bodies and financial institutions.

If the work of the FATF and the world's financial great and good is limited to rooting out money-laundering, who could complain? But the history of the initiative is tainted with suspicion that it is motivated partly by a generalised anti-tax-haven agenda along the lines of the OECD's Unfair Tax Competition programme (see related article ), with the Finance Ministers of the OECD states only too happy to deliver a blow to their free-wheeling offshore competitors, whether fair or not. It will be important that the FATF and the OECD, whose links are only partly visible, conduct their programme with the maximum amount of openness consistent with an effective result.

See the text of the press release at http://www.oecd.org/fatf/Press%20Releases/Current/NCCTpress-e.html

and the report itself at
http://www.oecd.org/fatf/pdf/NCCT-en.pdf.

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