The Financial Action Task Force

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About Us

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.  The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.  The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.  They form the basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field.  First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application.

The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.  In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

The FATF’s decision making body, the FATF Plenary, meets three times per year.  

FATF Guidance on the Risk-Based Approach for Dealers in Precious Metals and Stones

This Guidance on the Risk-Based Approach to combating Money Laundering and Terrorist Financing was developed by the FATF in close consultation with representatives of the dealers in precious metals and dealers in precious stones industries. The Guidance supports the development of a common understanding of what the risk-based approach involves, outlines the high-level principles involved in applying the risk-based approach, and indicates good public and private sector practice in the design and implementation of an effective risk-based approach.

The purpose of this Guidance is to:

  • Support the development of a common understanding of what the risk-based approach involves.
  • Outline the high-level principles involved in applying the risk-based approach.
  • Indicate good practice in the design and implementation of an effective risk-based approach.

However, it should be noted that applying a risk-based approach is not mandatory. A properly applied risk-based approach does not necessarily mean a reduced burden, although it should result in a more cost effective use of resources. For some countries, applying a rules-based system might be more appropriate. Countries will need to make their own determinations on whether to apply a risk-based approach, based on their specific ML/FT risks, size and nature of the DNFBP activities, and other relevant information. The issue of timing is also relevant for countries that may have applied anti-money laundering/counter-terrorist financing (AML/CFT) measures to DNFBPs, but where it is uncertain whether the DNFBPs have sufficient experience to implement and apply an effective risk-based approach.

Target audience, status and content of the guidance

This Guidance is written at a high level to recognize the differing practices of dealers in precious metals and dealers in precious stones (hereinafter referred to as “dealers”) in different countries, and the different levels and forms of monitoring that may apply. Each country and its national authorities should aim to establish a partnership with its dealers that will be mutually beneficial to combating money laundering and terrorist financing.

The primary target audience of this guidance is dealers in precious metals and dealers in precious stones themselves, when they conduct activities which fall within the ambit of the FATF Recommendations, as described below. For purposes of this guidance, the term “dealer” encompasses a wide range of persons engaged in these businesses, from those who produce precious metals or precious stones at mining operations, to intermediate buyers and brokers, to precious stone cutters and polishers and precious metal refiners, to jewellery manufacturers who use precious metals and precious stones, to retail sellers to the public, to buyers and sellers in the secondary and scrap markets.

 

FATF Guidance on the RBA for Dealers in Precious Metals and Stones

129. “In other circumstances (i.e.for transactions not involving cash equal to or aboveUSD/EUR 15 000) and where national law doesnot require otherwise, counterparty/customeridentification can, however, be accomplished throughbroader industry practices and associations that already maintain comparable data to which the authorities have ready access, or by reference to government held databases (registered dealer database, VAT related database, etc.). This will reduce transaction burdens, particularly upon small and mid-size dealers who already rely upon such industry resources to maintain security and high standards in their business practices. For example, in the diamond industry, transactions for rough diamonds are conducted within the scope of the Kimberley Process. Trading in rough diamonds and polished diamonds can occur through bourses that are members of the World Federation of Diamond Bourses. Dealers might transparently reference these sources of counterparty/customer identification rather than recreate all identification data in multiple dealer and transaction files.”
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