CE-FATF-ENG NEWSLETTER (OCTOBER) 2017
FATF EVALUATION IN NIGERIA
The Financial Action Task Force was established in 1989 by the G-7 member countries. It was established in response to concerns on money laundering and recognition of the threat it posed to the international financial system.
The FATF is primarily charged with setting standards and promoting 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.
One of the responsibilities of this intergovernmental body is to conduct mutual evaluations of its members. Mutual evaluation conducted by FATF takes the shape of peer reviews where members from different countries assess other countries’ level of implementation and compliance to the FATF Recommendations and vice versa.
The relevance of a mutual evaluation report lies in its ability to provide an in-depth and unbiased analysis of a country regarding preventing criminal abuse of the financial system. It also ensures that focused recommendations are made to further strengthen the system. This is because the most important goal of mutual evaluations is to make improvements in national systems for combating money laundering and terrorist financing.
The scope of the evaluations will involve two inter-related components for technical compliance and effectiveness. The technical compliance component will assess whether the necessary laws, regulations or other required measures are in force and effect, and whether the supporting anti-money laundering (AML) / countering the financing of terrorism (CFT) institutional framework is in place. The expectation is that during this round of assessments countries should have addressed their shortcomings and achieve better technical compliance ratings than last time.
The effectiveness component will assess whether the AML/CFT systems are working, and the extent to which the country is achieving the defined set outcomes. Effectiveness will make assessments more challenging because judgments will need to be made on how various components of the AML/CFT regime interact. Reports will provide a basis upon which countries can address the issues that are most critical for them.
The purpose of implementing anti-money laundering and counter-terrorist financing (AML/CFT) measures is to protect the financial system from abuse. A country’s efforts in developing sound laws and regulations and implementing and enforcing them should focus on, the high-level objective of an effective AML/CFT framework which can only be achieved if the components of a country’s AML/CFT framework are operating well together and ensure proper sensitization at all levels. The extent to which a country implements the technical requirements of each of the FATF Recommendations remains important; they are after all the building blocks for an effective framework to protect the financial system.
As part of the procedure of becoming a member of the Financial Action Task Force, Nigeria is expected to host a high level delegation of the FATF secretariat on the 20th and 21st November, 2017. During the visit, the delegation is expected to interact with the key players on AML/CFT in the country.
Following the admission of Nigeria into the body, evaluations would begin; it then becomes important that the Nigerian government engages with the non-profit sector in order to allow for an effective evaluation of the country. Through various outreaches the government and non-profit organizations can work together in preparedness for the onsite visit and engender stronger systems.
It is however pertinent to note that, the mutual evaluation report is not the end of the process. It is essential that there is rigorous and long-term follow-up, to make sure countries do make changes, and also to provide the help, support, advice, and sometimes pressure; that will enable them make permanent changes to their national systems.
Published with the support of OSIWA
This newsletter is published as part of the civic engagement on the Financial Action Task Force evaluation on Nigeria project supported by OSIWA. All opinions expressed are that of the authors and does not reflect that of OSIWA or NNNGO or any other organization(s) mentioned.
About CE-FATF-ENG: CE-FATF-ENG stands for civic engagement on the Financial Action Task Force evaluation on Nigeria.
This newsletter is part of the CE-FATF_ENG project implemented by NNNGO with the support of Open Society Initiative for West Africa (OSIWA).
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