national Cooperation

Cooperation between public and private sector stakeholders is also embedded in relevant FAtF standards and Basel Core Principles. these standards and principles include cooperation on various AML/CFt aspects such as national risk assessments, feedback mechanisms, typologies, legislative drafting, national policy and strategy formulation, training, suspicious transaction reports (stRs), investigations and prosecutions, freezing and confiscation of assets, and targeted financial sanctions. effective cooperation, whether domestic or cross-border, has specific prerequisites that include, among others, a sound legal framework, cooperation instruments, adequate rules and procedures, and clear protocols. these elements can significantly enhance supervisors’ ability to share information, including by lifting secrecy or confidentiality restrictions. they can also support cooperation mechanisms through the use of mutual legal assistance treaties, memoranda of understanding, supervisory colleges, and technological networking platforms, among others. In addition to setting up these mechanisms, it is important to foster a spirit of cooperation and instill a common purpose and trust among supervisors and other authorities. these mechanisms should not exist only in theory. Instead, competent authorities should be encouraged to use these legal and institutional frameworks for cooperation, including through less formal channels. Without this spirit and willingness of cooperation, formal systems and tools are not effective.

In jurisdictions where the prudential supervisor and the AML/CFt supervisor are different, it is necessary to ensure the effectiveness of coordination and cooperation mechanisms between them. the prudential supervisor overseas a broad range of governance, compliance, and risk management issues, some of which are also relevant for AML/CFt purposes, and the findings of prudential supervisors should be shared with AML/CFt supervisors. In this context, the european Banking Authority has published an opinion on how prudential supervisors should take into account ML/tF risks in the supervisory review and evaluation process (eBA 2020b). the opinion states that combating ML/ tF requires certain actions by both AML/CFt and prudential supervisors. For this reason, european Union (eU) law requires prudential supervisors and AML/CFt supervisors to cooperate and exchange information regarding their respective supervisory activities.

NATIONAL COOPERATION

the objective of AML/CFt cooperation is to strengthen national mechanisms to prevent, investigate, and prosecute money laundering, terrorism financing, and associated predicate offenses. At the national level, cooperation refers to the interaction between all public and private AML/CFt stakeholders, including financial and nonfinancial sectors, AML/CFt supervisors, FIUs, agencies that manage official records and registries, tax, law enforcement, prosecutorial and judicial authorities, and immigration, customs, and intelligence agencies. these agencies can also include ancillary parties such as academia (for example, for research), journalists, and social and human development agencies (for example, those involved in financial inclusion and informal sectors).

Interagency cooperation can take place under formal and informal arrangements, depending on legal requirements, conventions, and practice. In some jurisdictions, the duty to cooperate and coordinate on AML/CFt issues is established by law and may be implemented through formal mechanisms, such as a memorandum of understanding or a cooperation agreement. In others, legally established national cooperation and coordination bodies, such as national coordination councils or agencies, already include cooperation in their mandates for participating agencies, including supervisors. often, the conduct of national risk assessments and other national undertakings, such as the formulation of national policies and strategies, is based on these mandates.

Figure 7.1 shows the role of the AML/CFt national coordination function, the parties involved in a jurisdiction’s AML/CFt system, and the interrelationships between them.

FIGURE 7.1 National Coordination Functions and Interrelationships in a Domestic AML/CFT System

Prosecution or judiciary AML/CFT national coordination function

AML/CFT supervision

Law enforcement

Financial intelligence unit (FIU) Reporting entities

Source: World Bank risk-based approach toolkit. Note: AML = anti-money-laundering. CFT = combating the financing of terrorism.

Box 7.1 presents an example of national cooperation by way of a national coordination function (FAtF 2015).

BOX 7.1 AML/CFT Policy Coordination: Singapore

singapore has a high-level anti-money-laundering and combating the financing of terrorism (AML/CFt) steering committee that leads the national effort to develop and implement its AML/CFt framework. the committee comprises the permanent secretary of the Ministry of Home Affairs, permanent secretary of the Ministry of Finance, and managing director of the Monetary Authority of singapore, who are heads of their respective agencies. the committee coordinates a whole-of-government approach to prevent and combat money laundering and terrorism financing (ML/tF) by overseeing the effective implementation of AML/CFt measures by the respective agencies and by identifying and mitigating emerging ML/tF risks (for example, through the national risk assessment exercise). the committee meets three to four times a year, or more often if necessary. It is supported by an interagency committee made up of the key agencies in singapore’s AML/CFt framework.