Discussion on FATF Recommendation 10 and Ethics in AML Practices

This discussion post delves into the critical aspects of Anti-Money Laundering (AML) practices, focusing on FATF Recommendation 10 concerning customer due diligence. The post highlights the importance of identifying and verifying customer identities and beneficial owners, referencing Australia's efforts in strengthening its AML/CTF system through AUSTRAC. It contrasts the effectiveness of ethical considerations versus regulatory frameworks in combating money laundering and terrorist financing, arguing for the necessity of mandatory legal requirements, such as criminalizing money laundering and terrorist financing based on international conventions. The post emphasizes the need for governments to provide sufficient power to investigating agencies to trace, seize, and confiscate assets obtained through criminal activities, advocating for regulatory measures to support FATF's objectives in eradicating financial crimes. The discussion includes references to relevant publications and guidelines, providing a comprehensive overview of the topic.

DISCUSSION

Table of Contents
QUESTION 1...................................................................................................................................3
FATF Recommendation 10..........................................................................................................3
QUESTION 2...................................................................................................................................3
Ethics are irrelevant for AML best practise.................................................................................3
REFERENCES.................................................................................................................................5

QUESTION 1
FATF Recommendation 10
Recommendation 10 of FATF is concerned with customer due diligence. Some of the
measures of CDD implies that financial institutions must identify and verify customer's identity
through reliable source and valid documents, appropriate identification of beneficial owner,
obtaining information for creating business relationship etc (Romaniuk and Keatinge, 2018).
Australia is progressing and strengthening its regulatory framework for tackling and
handling money laundering since the Mutual Evaluation on Australia 2015. As a result of which,
FAFT has re-rated the nation on about 7 out of 40 recommendations. The country has developed
supreme quality of financial intelligence to different enforcement associations, customs, tax
authorities. All the competent authorities in the country have access of Australian Transaction
Report and Analysis Centre (AUSTRAC) database (Mutual Evaluations, 2019). This database is
used as integrated analytical instrument which has helped the country in strengthening the
AML/CTF system within the nation. Further, Australian competent bodies has increased their
efforts regarding confiscation, especially after the development of Criminal Assets Confiscation
Taskforce. However, it is not clear regarding the degree of successful confiscation measures. The
reports suggest that total recoveries are comparatively lower in terms of scale and nature of
country's money laundering and terrorist financing risks. The recoveries of illegally obtained
assets have been slightly increased over the years.
QUESTION 2
Ethics are irrelevant for AML best practise
It has been correctly said that mere ethics and principles are not enough for making Anti
money laundering practises effective. This is because ethics are the code of conduct which are
applied by the companies at their desire, meaning of which there is no legal requirement of
following such code of conduct. This limits the applicability of AML and FATF
recommendations uniformly throughout the world. Also, the objective of preventing terrorist
funding and money laundering is also not achieved by just employing ethics. Although, money
laundering is an ethical issue, but this evil practise is increasing at such a pace, that it is hindering
the economic development of the world in general and also it is impacting the society (Guidance,
F.A.T.F., 2017). The underlying motive of money is always criminal and if there is not any
legislation and regulatory framework then it contributes in continuing the criminal actvity.

Instead, there is a necessity of creating and implementing regulatory requirements which
must be made mandatory to be followed by all the nations. For example, nations should make the
money laundering offences criminalized on the basis of Vienna Convention and Palermo
Convention. The countries are required to formulate laws against money laundering regarding all
the serious offences for the purpose of preventing such serious issue. Further, terrorists financing
shall be made criminalize on the grounds of Terrorist Financing Convention by individual
governments of the world (FATF Recommendations, 2019). Also, individual governments must
provide sufficient authorities & power to investigating agencies relating to trace, seize and
confiscating the assets obtained by criminal ways. Regulatory measures have to be taken by
countries for helping FATF in achieving its objective of making the world free of terrorists
financing and money laundering crimes.

REFERENCES
Books and Journals
Guidance, F.A.T.F., 2017. Anti-money laundering and terrorist financing measures and financial
inclusion.
Romaniuk, P. and Keatinge, T., 2018. Protecting charities from terrorists aEuro broken vertical
bar and counterterrorists: FATF and the global effort to prevent terrorist financing through
the non-profit sector. Crime law and social change,69(2), pp.265-282.
Online
Mutual Evaluations.2019. [online]. Available through
<http://www.fatf-gafi.org/faq/mutualevaluations/>
FATF Recommendations.2019. [online]. Available through
<http://www.fatf-gafi.org/publications/fatfrecommendations/?
hf=10&b=0&s=desc(fatf_releasedate)>

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