“Every year hundreds of billions of dollars are being laundered through fake companies and the money used to facilitate crime. It needs to stop.”

The above is the powerful opening of an article that Mr Xiangmin Liu, President of the Financial Action Task Force (FATF) since 1 July 2019, contributed to the Financial Times on 13 November.

In the opinion piece, Mr Liu highlights how “the FATF has put transparency of ownership at the heart of its recommendations”, reminding readers of the organisation’s reach (more than 200 countries and jurisdictions have committed to implement the FATF’s guidelines to date).

Additionally, Mr Liu writes that “transparency about who really owns and controls companies is essential to prevent them being misused for corrupt practices”, suggesting that a multi-source approach is essential to strengthening countries’ defence mechanism against money laundering and financing of terrorism practices.

“The FATF recommends that countries do not rely on a single method or source of information to ensure that accurate and up-to-date information is available to those that need it.”

The article represents a clear summary of the huge task that remains to effectively combat money laundering and terrorist financing across global financial systems, while also introducing specific best practices for the collection and verification of financial information.

More specifically, Mr Liu closes his article with an appeal for the future: “If high-quality, transparent information is shared, then we can detect the tainted money in the global financial system. The changes need to happen now”.

At Know Your Customer, we believe that greater transparency is the key to ensure success in the fight against dirty money. However, while making relevant financial information available to government agencies is an important first step (especially in historically secretive jurisdictions), that should only be the beginning of the journey.

Opening beneficial ownership information not just to government institutions, but opting for greater transparency with financial institutions and private citizens alike – as it has been increasingly happening across the European Union – will be key to accelerate the effectiveness and reach of anti-money laundering strategies around the world.

 

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