1. Obligations and decisions for countries
   ML/TF risks
   5. Assessing ML/TF risk - Countries*Where appropriate, AML/CFT risk assessments at a supra-national level should be taken into account when considering whether this obligation is satisfied. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. take appropriate steps to identify and assess the money laundering and terrorist financing risks for the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions., on an ongoing basis and in order to: (i) inform potential changes to the country’s AML/CFT regime, including changes to laws, regulations and other measures; (ii) assist in the allocation and prioritisation of AML/CFT resources by competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.; and (iii) make information available for AML/CFT risk assessments conducted by financial institutions and DNFBPs. Countries should keep the assessments up-to-date, and should have mechanisms to provide appropriate information on the results to all relevant competent authorities and self-regulatory bodies (SRBs), financial institutions and DNFBPs.
   6. Higher risk - Where countries identify higher risks, they should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. ensure that their AML/CFT regime addresses these higher risks, and, without prejudice to any other measures taken by countries to mitigate these higher risks, either prescribe that financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      and DNFBPs take enhanced measures to manage and mitigate the risks, or ensure that this information is incorporated into risk assessments carried out by financial institutions and DNFBPs, in order to manage and mitigate risks appropriately. Where the FATF Recommendations identify higher risk activities for which enhanced or specific measures are required, all such measures must be applied, although the extent of such measures may vary according to the specific level of risk.

   7. Lower risk Countries may decide to allow simplified measures for some of the FATF Recommendations requiring financial institutions or DNFBPs to take certain actions, provided that a lower risk has been identified, and this is consistent with the country’s assessment of its money laundering and terrorist financing risks, as referred to in paragraph 3.

      Independent of any decision to specify certain lower risk categories in line with the previous paragraph, countries may also allow financial institutions and DNFBPs to apply simplified customer due diligence (CDD) measures, provided that the requirements set out in section B below (“Obligations and decisions for financial institutions and DNFBPs”), and in paragraph 7 below, are met.

   8. Exemptions Countries may decide not to apply some of the FATF Recommendations requiring financial institutions or DNFBPs to take certain actions, provided:
      1. there is a proven low risk of money laundering and terrorist financing; this occurs in strictly limited and justified circumstances; and it relates to a particular type of financial institution or activity, or DNFBP; or
      2. a financial activity (other than the transferring of money or value) is carried out by a natural or legal person on an occasional or very limited basis (having regard to quantitative and absolute criteria), such that there is low risk of money laundering and terrorist financing.

      While the information gathered may vary according to the level of risk, the requirements of Recommendation 11 to retain information should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. apply to whatever information is gathered.

   9. Supervision and monitoring of risk - Supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions (“financial supervisors” 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions. (or SRBs for relevant DNFBPs sectors) should ensure that financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      and DNFBPs are effectively implementing the obligations set out below. When carrying out this function, supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions (“financial supervisors” 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions. and SRBs should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must., as and when required in accordance with the Interpretive Notes to Recommendations 26 and 28, review the money laundering and terrorist financing risk profiles and risk assessments prepared by financial institutions and DNFBPs, and take the result of this review into consideration.
   PF risk
   10. Assessing PF risk – Countries*Where appropriate, PF risk assessments at a supra-national level should be taken into account when considering whether this obligation is satisfied. should take appropriate steps to identify and assess the proliferation financing risks for the country, on an ongoing basis and in order to: (i) inform potential changes to the country’s CPF regime, including changes to laws, regulations and other measures; (ii) assist in the allocation and prioritisation of CPF resources by competent authorities; and (iii) make information available for PF risk assessments conducted by financial institutions and DNFBPs. Countries should keep the assessments up-to-date, and should have mechanisms to provide appropriate information on the results to all relevant competent authorities and SRBs, financial institutions and DNFBPs.
   11. Mitigating PF risk - Countries should take appropriate steps to manage and mitigate the proliferation financing risks that they identify. Countries should develop an understanding of the means of potential breaches, evasion and non-implementation of targeted financial sanctions present in their countries that can be shared within and across competent authorities and with the private sector. Countries should ensure that financial institutions and DNFBPs take steps to identify circumstances, which may present higher risks and ensure that their CPF regime addresses these risks. Countries should ensure full implementation of Recommendation 7 in any risk scenario. Where there are higher risks, countries should require financial institutions and DNFBPs to take commensurate measures to manage and mitigate these risks. Correspondingly, where the risks are lower, they should ensure that the measures applied are commensurate with the level of risk, while still ensuring full implementation of the targeted financial sanctions as required by Recommendation 7.
2. Obligations and decisions for financial institutions and DNFBPs
   ML/TF risks
   12. Assessing MF/TF risks - Financial institutions and DNFBPs should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be required to take appropriate steps to identify and assess their money laundering and terrorist financing risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels). They should document those assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. and SRBs. The nature and extent of any assessment of money laundering and terrorist financing risks should be appropriate to the nature and size of the business. Financial institutions and DNFBPs should always understand their money laundering and terrorist financing risks, but competent authorities or SRBs may determine that individual documented risk assessments are not required, if the specific risks inherent to the sector are clearly identified and understood.
   13. Risk management and mitigation - Financial institutions and DNFBPs should be required to have policies, controls and procedures that enable them to manage and mitigate effectively the risks that have been identified (either by the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. or by the financial institution or DNFBP). They should be required to monitor the implementation of those controls and to enhance them, if necessary. The policies, controls and procedures should be approved by senior management, and the measures taken to manage and mitigate the risks (whether higher or lower) should be consistent with national requirements and with guidance from competent authorities and SRBs.
   14. Higher risk - Where higher risks are identified financial institutions and DNFBPs should be required to take enhanced measures to manage and mitigate the risks.
   15. Lower risk - Where lower risks are identified, countries may allow financial institutions and DNFBPs to take simplified measures to manage and mitigate those risks.
   16. When assessing risk, financial institutions and DNFBPs should consider all the relevant risk factors before determining what is the level of overall risk and the appropriate level of mitigation to be applied. Financial institutions and DNFBPs may differentiate the extent of measures, depending on the type and level of risk for the various risk factors (e.g. in a particular situation, they could apply normal CDD for customer acceptance measures, but enhanced CDD for ongoing monitoring, or vice versa).
   PF risk
   17. Assessing PF risk - Financial institutions and DNFBPs should be required to take appropriate steps, to identify and assess their proliferation financing risks. This may be done within the framework of their existing targeted financial sanctions and/or compliance programmes. They should document those assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to competent authorities and SRBs. The nature and extent of any assessment of proliferation financing risks should be appropriate to the nature and size of the business. Financial institutions and DNFBPs should always understand their proliferation financing risks, but competent authorities or SRBs may determine that individual documented risk assessments are not required, if the specific risks inherent to the sector are clearly identified and understood.
   18. Mitigating PF risk - Financial institutions and DNFBPs should have policies, controls and procedures to manage and mitigate effectively the risks that have been identified. This may be done within the framework of their existing targeted financial sanctions and/or compliance programmes. They should be required to monitor the implementation of those controls and to enhance them, if necessary. The policies, controls and procedures should be approved by senior management, and the measures taken to manage and mitigate the risks (whether higher or lower) should be consistent with national requirements and with guidance from competent authorities and SRBs. Countries should ensure full implementation of Recommendation 7 in any risk scenario. Where there are higher risks, countries should require financial institutions and DNFBPs to take commensurate measures to manage and mitigate the risks (i.e. introducing enhanced controls aimed at detecting possible breaches, non-implementation or evasion of targeted financial sanctions under Recommendation 7). Correspondingly, where the risks are lower, they should ensure that those measures are commensurate with the level of risk, while still ensuring full implementation of the targeted financial sanctions as required by Recommendation 7.

Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. establish mechanisms that will enable their competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. to effectively manage and, when necessary, dispose of, property Property means assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets. that is frozen or seized The term seize means to prohibit the transfer, conversion, disposition or movement of property on the basis of an action initiated by a competent authority or a court under a freezing mechanism. However, unlike a freezing action, a seizure is effected by a mechanism that allows the competent authority or court to take control of specified property. The seized property remains the property of the natural or legal person(s) that holds an interest in the specified property at the time of the seizure, although the competent authority or court will often take over possession, administration or management of the seized property., or has been confiscated. These mechanisms should be applicable both in the context of domestic proceedings, and pursuant to requests by foreign countries.

1. Objectives
   1. Recommendation 5 was developed with the objective of ensuring that countries have the legal capacity to prosecute and apply criminal sanctions to persons that finance terrorism. Given the close connection between international terrorism and, inter alia, money laundering, another objective of Recommendation 5 is to emphasise this link by obligating countries to include terrorist financing offences as predicate offences for money laundering.
2. Characteristics of the terrorist financing offence
   2. Terrorist financing offences should extend to any person who wilfully provides or collects funds or other assets by any means, directly or indirectly, with the unlawful intention that they should be used, or in the knowledge that they are to be used, in full or in part: (a) to carry out a terrorist act(s); (b) by a terrorist organisation; or (c) by an individual terrorist.
   3. Terrorist financing includes financing the travel of individuals who travel to a State other than their States of residence or nationality for the purpose of the perpetration, planning, or preparation of, or participation in, terrorist acts or the providing or receiving of terrorist training.
   4. Criminalising terrorist financing solely on the basis of aiding and abetting, attempt, or conspiracy is not sufficient to comply with this Recommendation.
   5. Terrorist financing offences should extend to any funds or other assets, whether from a legitimate or illegitimate source.
   6. Terrorist financing offences should not require that the funds or other assets: (a) were actually used to carry out or attempt a terrorist act(s); or (b) be linked to a specific terrorist act(s).
   7. Countries should ensure that the intent and knowledge required to prove the offence of terrorist financing may be inferred from objective factual circumstances.
   8. Effective, proportionate and dissuasive criminal sanctions should apply to natural persons convicted of terrorist financing.
   9. Criminal liability and sanctions, and, where that is not possible (due to fundamental principles of domestic law), civil or administrative liability and sanctions, should apply to legal persons. This should not preclude parallel criminal, civil or administrative proceedings with respect to legal persons in countries in which more than one form of liability is available. Such measures should be without prejudice to the criminal liability of natural persons. All sanctions should be effective, proportionate and dissuasive.
   10. It should also be an offence to attempt to commit the offence of terrorist financing.
   11. It should also be an offence to engage in any of the following types of conduct:
       1. Participating as an accomplice in an offence, as set forth in paragraphs 2 or 9 of this Interpretive Note;
       2. Organising or directing others to commit an offence, as set forth in paragraphs 2 or 9 of this Interpretive Note;
       3. Contributing to the commission of one or more offence(s), as set forth in paragraphs 2 or 9 of this Interpretive Note, by a group of persons acting with a common purpose. Such contribution shall be intentional and shall either: (i) be made with the aim of furthering the criminal activity or criminal purpose of the group, where such activity or purpose involves the commission of a terrorist financing offence; or (ii) be made in the knowledge of the intention of the group to commit a terrorist financing offence.
   12. Terrorist financing offences should apply, regardless of whether the person alleged to have committed the offence(s) is in the same country or a different country from the one in which the terrorist(s)/terrorist organisation(s) is located or the terrorist act(s) occurred/will occur.

1. OBJECTIVE
   1. Recommendation 6 requires each countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. to implement targeted financial sanctions The term targeted financial sanctions means both asset freezing and prohibitions to prevent funds or other assets from being made available, directly or indirectly, for the benefit of designated persons and entities. to comply with the United Nations Security Council resolutions that require countries to freeze In the context of confiscation and provisional measures (e.g., Recommendations 4, 32 and 38), the term freeze means to prohibit the transfer, conversion, disposition or movement of any property, equipment or other instrumentalities on the basis of, and for the duration of the validity of, an action initiated by a competent authority or a court under a freezing mechanism, or until a forfeiture or confiscation determination is made by a competent authority.
      For the purposes of Recommendations 6 and 7 on the implementation of targeted financial sanctions, the term freeze means to prohibit the transfer, conversion, disposition or movement of any funds or other assets that are owned or controlled by designated persons or entities on the basis of, and for the duration of the validity of, an action initiated by the United Nations Security Council or in accordance with applicable Security Council resolutions by a competent authority or a court.
      In all cases, the frozen property, equipment, instrumentalities, funds or other assets remain the property of the natural or legal person(s) that held an interest in them at the time of the freezing and may continue to be administered by third parties, or through other arrangements established by such natural or legal person(s) prior to the initiation of an action under a freezing mechanism, or in accordance with other national provisions. As part of the implementation of a freeze, countries may decide to take control of the property, equipment, instrumentalities, or funds or other assets as a means to protect against flight. , without delay The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly., the funds The term funds refers to assets of every kind, whether corporeal or incorporeal, tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets. or other assets, and to ensure that no funds and other assets are made available to or for the benefit of: (i) any person*Natural or legal person. or entity designated by the United Nations Security Council (the Security Council) under Chapter VII of the Charter of the United Nations, as required by Security Council resolution 1267 (1999) and its successor resolutions*Recommendation 6 is applicable to all current and future successor resolutions to resolution 1267(1999) and any future UNSCRs which impose targeted financial sanctions in the terrorist financing context. At the time of issuance of this Interpretive Note, (February 2012), the successor resolutions to resolution 1267 (1999) are resolutions: 1333 (2000), 1363 (2001), 1390 (2002), 1452 (2002), 1455 (2003), 1526 (2004), 1617 (2005), 1730 (2006), 1735 (2006), 1822 (2008), 1904 (2009), 1988 (2011), and 1989 (2011). ; or (ii) any person or entity designated by that country pursuant to Security Council resolution 1373 (2001).
   2. It should be stressed that none of the obligations in Recommendation 6 is intended to replace other measures or obligations that may already be in place for dealing with funds or other assets in the context of a criminal, civil or administrative investigation or proceeding, as is required by Recommendation 4 (confiscationThe term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law. and provisional measures)*Based on requirements set, for instance, in the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)(the Vienna Convention) and the United Nations Convention against Transnational Organised Crime (2000) (the Palermo Convention), which contain obligations regarding freezing, seizure and confiscation in the context of combating transnational crime. Additionally, the International Convention for the Suppression of the Financing of Terrorism (1999)(the Terrorist Financing Convention) contains obligations regarding freezing, seizure and confiscation in the context of combating terrorist financing. Those obligations exist separately and apart from the obligations set forth in Recommendation 6 and the United Nations Security Council Resolutions related to terrorist financing. . Measures under Recommendation 6 may complement criminal proceedings against a designated person or entityThe term designated person or entity refers to:
      1) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
      2) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
      3) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
      4) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
      5) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions. , and be adopted by a competent authority or a court, but are not conditional upon the existence of such proceedings. Instead, the focus of Recommendation 6 is on the preventive measures that are necessary and unique in the context of stopping the flow of funds or other assets to terrorist groups; and the use of funds or other assets by terrorist groups. In determining the limits of, or fostering widespread support for, an effective counter-terrorist financing regime, countries must also respect human rights, respect the rule of law, and recognise the rights of innocent third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17..
2. IDENTIFYING AND DESIGNATING PERSONS AND ENTITIES FINANCING OR SUPPORTING TERRORIST ACTIVITIES
   3. For resolution 1267 (1999) and its successor resolutions, designationsThe term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: - United Nations Security Council resolution 1267 (1999) and its successor resolutions; - Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; - Security Council resolution1718 (2006) and its successor resolutions; - Security Council resolution 1737 (2006) and its successor resolutions; and - any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. relating to Al-Qaida are made by the 1267 Committee, and designations pertaining to the Taliban and related threats to Afghanistan are made by the 1988 Committee, with both Committees acting under the authority of Chapter VII of the Charter of the United Nations. For resolution 1373 (2001), designations are made, at the national or supranational level, by a countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. or countries acting on their own motion, or at the request of another country, if the country receiving the request is satisfied, according to applicable legal principles, that a requested designation is supported by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee meets the criteria for designation in resolution 1373 (2001), as set forth in Section E.
   4. Countries need to have the authority, and effective procedures or mechanisms, to identify and initiate proposals for designations The term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: - United Nations Security Council resolution 1267 (1999) and its successor resolutions; - Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; - Security Council resolution1718 (2006) and its successor resolutions; - Security Council resolution 1737 (2006) and its successor resolutions; and - any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. of persons and entities targeted by resolution 1267 (1999) and its successor resolutions, consistent with the obligations set out in those Security Council resolutions*The relevant Security Council resolutions do not require countries to identify persons or entities and submit these to the relevant United Nations Committees, but to have the authority and effective procedures and mechanisms in place to be able to do so.. Such authority and procedures or mechanisms are essential to propose persons and entities to the Security Council for designation in accordance with Security Council list-based programmes, pursuant to those Security Council resolutions. Countries also need to have the authority and effective procedures or mechanisms to identify and initiate designations of persons and entities pursuant to S/RES/1373 (2001), consistent with the obligations set out in that Security Council resolution. Such authority and procedures or mechanisms are essential to identify persons and entities who meet the criteria identified in resolution 1373 (2001), described in Section E/ A country’s regime to implement resolution 1267 (1999) and its successor resolutions, and resolution 1373 (2001), should include the following necessary elements:
      1. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. identify a competent authority or a court as having responsibility for:
         1. proposing to the 1267 Committee, for designation as appropriate, persons or entities that meet the specific criteria for designation, as set forth in Security Council resolution 1989 (2011) (on Al-Qaida) and related resolutions, if that authority decides to do so and believes that it has sufficient evidence to support the designation criteria;
         2. proposing to the 1988 Committee, for designation as appropriate, persons or entities that meet the specific criteria for designation, as set forth in Security Council resolution 1988 (2011) (on the Taliban and those associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan) and related resolutions, if that authority decides to do so and believes that it has sufficient evidence to support the designation criteria; and
         3. designating persons or entities that meet the specific criteria for designation, as set forth in resolution 1373 (2001), as put forward either on the country’s own motion or, after examining and giving effect to, if appropriate, the request of another country, if the country receiving the request is satisfied, according to applicable legal principles, that a requested designation is supported by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee meets the criteria for designation in resolution 1373 (2001), as set forth in Section E.
      2. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. have a mechanism(s) for identifying targets for designation, based on the designation criteria set out in resolution 1988 (2011) and resolution 1989 (2011) and related resolutions, and resolution 1373 (2001) (see Section E for the specific designation criteria of relevant Security Council resolutions). This includes having authority and effective procedures or mechanisms to examine and give effect to, if appropriate, the actions initiated under the freezing mechanisms of other countries pursuant to resolution 1373 (2001). To ensure that effective cooperation is developed among countries, countries should ensure that, when receiving a request, they make a prompt determination whether they are satisfied, according to applicable (supra) national principles, that the request is supported by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee meets the criteria for designation in resolution 1373 (2011), as set forth in Section E.
      3. The competent authority(ies) should have appropriate legal authorities and procedures or mechanisms to collect or solicit as much information as possible from all relevant sources to identify persons and entities that, based on reasonable grounds, or a reasonable basis to suspect or believe, meet the criteria for designation in the relevant Security Council resolutions.
      4. When deciding whether or not to make a (proposal for) designation, countries should apply an evidentiary standard of proof of “reasonable grounds” or “reasonable basis”/ For designations under resolutions 1373 (2001), the competent authority of each countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. will apply the legal standard of its own legal system regarding the kind and quantum of evidence for the determination that “reasonable grounds” or “reasonable basis” exist for a decision to designate a person or entity, and thus initiate an action under a freezing mechanism. This is the case irrespective of whether the proposed designation The term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. is being put forward on the relevant country’s own motion or at the request of another country. Such (proposals for) designations should not be conditional upon the existence of a criminal proceeding.
      5. When proposing names to the 1267 Committee for inclusion on the Al-Qaida Sanctions List, pursuant to resolution 1267 (1999) and its successor resolutions, countries should:
         1. follow the procedures and standard forms for listing, as adopted by the 1267 Committee;
         2. provide as much relevant information as possible on the proposed name, in particular, sufficient identifying information to allow for the accurateis used to describe information that has been verified for accuracy. and positive identification of individuals, groups, undertakings, and entities, and to the extent possible, the information required by Interpol to issue a Special Notice;
         3. provide a statement of case which contains as much detail as possible on the basis for the listing, including: specific information supporting a determination that the person or entity meets the relevant criteria for designation (see Section E for the specific designation criteria of relevant Security Council resolutions); the nature of the information; supporting information or documents that can be provided; and details of any connection between the proposed designee and any currently designated person or entityThe term designated person or entity refers to:
            1) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
            2) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
            3) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
            4) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
            5) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions. . This statement of case should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be releasable, upon request, except for the parts a Member State identifies as being confidential to the 1267 Committee; and
         4. specify whether their status as a designating state may be made known.
      6. When proposing names to the 1988 Committee for inclusion on the Taliban Sanctions List, pursuant to resolution 1988 (2011) and its successor resolutions, countries should:
         1. follow the procedures for listing, as adopted by the 1988 Committee;
         2. provide as much relevant information as possible on the proposed name, in particular, sufficient identifying information to allow for the accurateis used to describe information that has been verified for accuracy. and positive identification of individuals, groups, undertakings, and entities, and to the extent possible, the information required by Interpol to issue a Special Notice; and
         3. provide a statement of case which contains as much detail as possible on the basis for the listing, including: specific information supporting a determination that the person or entity meets the relevant designationThe term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. (see Section E for the specific designation criteria of relevant Security Council resolutions); the nature of the information; supporting information or documents that can be provided; and details of any connection between the proposed designee and any currently designated person or entity. This statement of case should be releasable, upon request, except for the parts a Member State identifies as being confidential to the 1988 Committee.
      7. When requesting another countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. to give effect to the actions initiated under the freezing mechanisms that have been implemented pursuant to resolution 1373 (2001), the initiating country should provide as much detail as possible on: the proposed name, in particular, sufficient identifying information to allow for the accurate and positive identification of persons and entities; and specific information supporting a determination that the person or entity meets the relevant criteria for designation (see Section E for the specific designation criteria of relevant Security Council resolutions).
      8. Countries should have procedures to be able to operate ex parte The term ex parte means proceeding without prior notification and participation of the affected party. against a person or entity who has been identified and whose (proposal for) designation is being considered.
3. FREEZING AND PROHIBITING DEALING IN FUNDS OR OTHER ASSETS OF DESIGNATED PERSONS AND ENTITIES
   5. There is an obligation for countries to implement targeted financial sanctions without delay The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly. against persons and entities designated by the 1267 Committee and 1988 Committee (in the case of resolution 1267 (1999) and its successor resolutions), when acting under the authority of Chapter VII of the Charter of the United Nations. For resolution 1373 (2001), the obligation for countries to take freezing action and prohibit the dealing in funds or other assets of designated persons and entities, without delay, is triggered by a designationThe term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. at the (supra-)national level, as put forward either on the country’s own motion or at the request of another country, if the country receiving the request is satisfied, according to applicable legal principles, that a requested designation is supported by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee meets the criteria for designation in resolution 1373 (2001), as set forth in Section E.
   6. Countries should establish the necessary legal authority and identify domestic competent authorities responsible for implementing and enforcing targeted financial sanctions, in accordance with the following standards and procedures:
      1. Countries*In the case of the European Union (EU), which is a supra-national jurisdiction under Recommendation 6, the EU law applies as follows. The assets of designated persons and entities are frozen by the EU regulations and their amendments. EU member states may have to take additional measures to implement the freeze, and all natural and legal persons within the EU have to respect the freeze and not make funds available to designated persons and entities.. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. require all natural and legal persons within the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. to freeze, without delay The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly. and without prior notice, the funds or other assets of designated persons and entities. This obligation should extend to: all funds or other assets that are owned or controlled by the designated person or entity The term designated person or entity refers to:
         1) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
         2) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
         3) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
         4) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
         5) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions. , and not just those that can be tied to a particular terrorist act A terrorist act includes:
         1) an act which constitutes an offence within the scope of, and as defined in one of the following treaties: (i) Convention for the Suppression of Unlawful Seizure of Aircraft (1970); (ii) Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971); (iii) Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973); (iv) International Convention against the Taking of Hostages (1979); (v) Convention on the Physical Protection of Nuclear Material (1980); (vi) Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988); (vii) Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation ( 2005); (viii) Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (2005); (ix) International Convention for the Suppression of Terrorist Bombings (1997); and (x) International Convention for the Suppression of the Financing of Terrorism (1999).
         2) any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a Government or an international organisation to do or to abstain from doing any act. , plot or threat; those funds or other assets that are wholly or jointly owned or controlled, directly or indirectly, by designated persons or entities; and the funds or other assets derived or generated from funds or other assets owned or controlled directly or indirectly by designated persons or entities, as well as funds or other assets of persons and entities acting on behalf of, or at the direction of, designated persons or entities.
      2. Countries should prohibit their nationals, or any persons and entities within their jurisdiction, from making any funds or other assets, economic resources, or financial or other related services, available, directly or indirectly, wholly or jointly, for the benefit of designated persons and entities; entities owned or controlled, directly or indirectly, by designated persons or entities; and persons and entities acting on behalf of, or at the direction of, designated persons or entities, unless licensed, authorised or otherwise notified in accordance with the relevant Security Council resolutions (see Section E below).
      3. Countries should have mechanisms for communicating designations to the financial sector and the DNFBPs immediately upon taking such action, and providing clear guidance, particularly to financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
         1) Acceptance of deposits and other repayable funds from the public.
         2) Lending.
         3) Financial leasing.
         4) Money or value transfer services.
         5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
         6) Financial guarantees and commitments.
         7) Trading in:
         a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
         b) foreign exchange;
         c) exchange, interest rate and index instruments;
         d) transferable securities;
         8) Participation in securities issues and the provision of financial services related to such issues.
         9) Individual and collective portfolio management.
         11) Otherwise investing, administering or managing funds or money on behalf of other persons.
         12) Underwriting and placement of life insurance and other investment related insurance.
         13) Money and currency changing.
         and other persons or entities, including DNFBPs, that may be holding targeted funds or other assets, on their obligations in taking action under freezing mechanisms.
      4. Countries should require financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
         1) Acceptance of deposits and other repayable funds from the public.
         2) Lending.
         3) Financial leasing.
         4) Money or value transfer services.
         5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
         6) Financial guarantees and commitments.
         7) Trading in:
         a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
         b) foreign exchange;
         c) exchange, interest rate and index instruments;
         d) transferable securities;
         8) Participation in securities issues and the provision of financial services related to such issues.
         9) Individual and collective portfolio management.
         11) Otherwise investing, administering or managing funds or money on behalf of other persons.
         12) Underwriting and placement of life insurance and other investment related insurance.
         13) Money and currency changing.
         and DNFBPs*Security Council resolutions apply to all natural and legal persons within the country. . to report to competent authorities any assets frozen or actions taken in compliance with the prohibition requirements of the relevant Security Council resolutions, including attempted transactions, and ensure that such information is effectively utilised by the competent authorities.
      5. Countries should adopt effective measures which protect the rights of bona fide third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17. acting in good faith when implementing the obligations under Recommendation 6.
4. DE-LISTING, UNFREEZING AND PROVIDING ACCESS TO FROZEN FUNDS OR OTHER ASSETS
   7. Countries should develop and implement publicly known procedures to submit de-listing requests to the Security Council in the case of persons and entities designated pursuant to resolution 1267(1999) and its successor resolutions that, in the view of the country, do not or no longer meet the criteria for designation The term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. . In the event that the 1267 Committee or 1988 Committee has de-listed a person or entity, the obligation to freeze In the context of confiscation and provisional measures (e.g., Recommendations 4, 32 and 38), the term freeze means to prohibit the transfer, conversion, disposition or movement of any property, equipment or other instrumentalities on the basis of, and for the duration of the validity of, an action initiated by a competent authority or a court under a freezing mechanism, or until a forfeiture or confiscation determination is made by a competent authority.
      For the purposes of Recommendations 6 and 7 on the implementation of targeted financial sanctions, the term freeze means to prohibit the transfer, conversion, disposition or movement of any funds or other assets that are owned or controlled by designated persons or entities on the basis of, and for the duration of the validity of, an action initiated by the United Nations Security Council or in accordance with applicable Security Council resolutions by a competent authority or a court.
      In all cases, the frozen property, equipment, instrumentalities, funds or other assets remain the property of the natural or legal person(s) that held an interest in them at the time of the freezing and may continue to be administered by third parties, or through other arrangements established by such natural or legal person(s) prior to the initiation of an action under a freezing mechanism, or in accordance with other national provisions. As part of the implementation of a freeze, countries may decide to take control of the property, equipment, instrumentalities, or funds or other assets as a means to protect against flight. no longer exists. In the case of de-listing requests related to Al-Qaida, such procedures and criteria should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be in accordance with procedures adopted by the 1267 Committee under Security Council resolutions 1730 (2006), 1735 (2006), 1822 (2008), 1904 (2009), 1989 (2011), and any successor resolutions. In the case of de-listing requests related to the Taliban and related threats to the peace, security and stability of Afghanistan, such procedures and criteria should be in accordance with procedures adopted by the 1988 Committee under Security Council resolutions 1730 (2006), 1735 (2006), 1822 (2008), 1904 (2009), 1988 (2011), and any successor resolutions.
   8. For persons and entities designated pursuant to resolution 1373 (2001), countries should have appropriate legal authorities and procedures or mechanisms to delist and unfreeze the funds or other assetsThe term funds or other assets means any assets, including, but not limited to, financial assets, economic resources, property of every kind, whether tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such funds or other assets, including, but not limited to, bank credits, travellers cheques, bank cheques, money orders, shares, securities, bonds, drafts, or letters of credit, and any interest, dividends or other income on or value accruing from or generated by such funds or other assets. of persons and entities that no longer meet the criteria for designation. Countries should also have procedures in place to allow, upon request, review of the designation decision before a court or other independent competent authority.
   9. For persons or entities with the same or similar name as designated persons or entities, who are inadvertently affected by a freezing mechanism (i.e. a false positive), countries should develop and implement publicly known procedures to unfreeze the funds or other assets of such persons or entities in a timely manner, upon verification that the person or entity involved is not a designated person or entityThe term designated person or entity refers to:
      1) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
      2) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
      3) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
      4) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
      5) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions. .
   10. Where countries have determined that the funds or other assetsThe term funds or other assets means any assets, including, but not limited to, financial assets, economic resources, property of every kind, whether tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such funds or other assets, including, but not limited to, bank credits, travellers cheques, bank cheques, money orders, shares, securities, bonds, drafts, or letters of credit, and any interest, dividends or other income on or value accruing from or generated by such funds or other assets. of persons and entities designated by the Security Council, or one of its relevant sanctions committees, are necessary for basic expenses, for the payment of certain types of fees, expenses and service charges, or for extraordinary expenses, countries should authorise access to such funds or other assets in accordance with the procedures set out in Security Council resolution 1452 (2002) and any successor resolutions. On the same grounds, countries should authorise access to funds or other assets, if freezing measures are applied to persons and entities designated by a (supra-)national country pursuant to resolution 1373 (2001) and as set out in resolution 1963 (2010).
   11. Countries should provide for a mechanism through which a designated person or entity can challenge their designation The term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. , with a view to having it reviewed by a competent authority or a court. With respect to designations on the Al-Qaida Sanctions List, countries should inform designated persons and entities of the availability of the United Nations Office of the Ombudsperson, pursuant to resolution 1904 (2009), to accept de-listing petitions.
   12. Countries should have mechanisms for communicating de-listings and unfreezings to the financial sector and the DNFBPs immediately upon taking such action, and providing adequate guidance, particularly to financial institutions and other persons or entities, including DNFBPs, that may be holding targeted funds or other assets, on their obligations to respect a de-listing or unfreezing action.
5. UNITED NATIONS DESIGNATION CRITERIA
   13. The criteria for designationThe term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. as specified in the relevant United Nations Security Council resolutions are:
       1. Security Council resolutions 1267 (1999), 1989 (2011) and their successor resolutions*Recommendation 6 is applicable to all current and future successor resolutions to resolution 1267(1999). At the time of issuance of this Interpretive Note, (February 2012) , the successor resolutions to resolution 1267 (1999) are: resolutions 1333 (2000), 1367 (2001), 1390 (2002), 1455 (2003), 1526 (2004), 1617 (2005), 1735 (2006), 1822 (2008), 1904 (2009), 1988 (2011), and 1989 (2011).:
          1. any person or entity participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf of, or in support of; supplying, selling or transferring arms and related materiel to; recruiting for; or otherwise supporting acts or activities of Al-Qaida, or any cell, affiliate, splinter group or derivative thereof*OP2 of resolution 1617 (2005) further defines the criteria for being “associated with” Al-Qaida or Usama bin Laden.; or
          2. any undertaking owned or controlled, directly or indirectly, by any person or entity designated under subsection 13(a)(i), or by persons acting on their behalf or at their direction.
       2. Security Council resolutions 1267 (1999), 1988 (2011) and their successor resolutions:
          1. any person or entity participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf of, or in support of; supplying, selling or transferring arms and related materiel to; recruiting for; or otherwise supporting acts or activities of those designated and other individuals, groups, undertakings and entities associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan; or
          2. any undertaking owned or controlled, directly or indirectly, by any person or entity designated under subsection 13(b)(i) of this subparagraph, or by persons acting on their behalf or at their direction.
       3. Security Council resolution 1373 (2001):
          1. any person or entity who commits or attempts to commit terrorist acts A terrorist act includes:
             1) an act which constitutes an offence within the scope of, and as defined in one of the following treaties: (i) Convention for the Suppression of Unlawful Seizure of Aircraft (1970); (ii) Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971); (iii) Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973); (iv) International Convention against the Taking of Hostages (1979); (v) Convention on the Physical Protection of Nuclear Material (1980); (vi) Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988); (vii) Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation ( 2005); (viii) Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (2005); (ix) International Convention for the Suppression of Terrorist Bombings (1997); and (x) International Convention for the Suppression of the Financing of Terrorism (1999).
             2) any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a Government or an international organisation to do or to abstain from doing any act. , or who participates in or facilitates the commission of terrorist acts;
          2. any entity owned or controlled, directly or indirectly, by any person or entity designated under subsection 13(c) (i) of this subparagraph; or
          3. any person or entity acting on behalf of, or at the direction of, any person or entity designated under subsection 13(c) (i) of this subparagraph.

1. OBJECTIVE
   1. Recommendation 7 requires countries to implement targeted financial sanctions*Recommendation 7 is focused on targeted financial sanctions. These include the specific restrictions set out in Security Council resolution 2231 (2015) (see Annex В paragraphs 6(c) and (d)). However, it should bе noted that the relevant United Nations Security Council Resolutions are much broader and prescribe other types of sanctions (such as travel bans) and other types of financial provisions (such as activity-based financial prohibitions, category-based sanctions and vigilance measures). With respect to targeted financial sanctions related to the financing of proliferation of weapons of mass destruction and other types of financial provisions, the FATF has issued non-binding guidance, which jurisdictions are encouraged to consider in their implementation of the relevant UNSCRs. to comply with United Nations Security Council resolutions that require countries to freeze In the context of confiscation and provisional measures (e.g., Recommendations 4, 32 and 38), the term freeze means to prohibit the transfer, conversion, disposition or movement of any property, equipment or other instrumentalities on the basis of, and for the duration of the validity of, an action initiated by a competent authority or a court under a freezing mechanism, or until a forfeiture or confiscation determination is made by a competent authority.
      For the purposes of Recommendations 6 and 7 on the implementation of targeted financial sanctions, the term freeze means to prohibit the transfer, conversion, disposition or movement of any funds or other assets that are owned or controlled by designated persons or entities on the basis of, and for the duration of the validity of, an action initiated by the United Nations Security Council or in accordance with applicable Security Council resolutions by a competent authority or a court.
      In all cases, the frozen property, equipment, instrumentalities, funds or other assets remain the property of the natural or legal person(s) that held an interest in them at the time of the freezing and may continue to be administered by third parties, or through other arrangements established by such natural or legal person(s) prior to the initiation of an action under a freezing mechanism, or in accordance with other national provisions. As part of the implementation of a freeze, countries may decide to take control of the property, equipment, instrumentalities, or funds or other assets as a means to protect against flight. , without delay The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly., the funds or other assets of, and to ensure that no funds The term funds refers to assets of every kind, whether corporeal or incorporeal, tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets. and other assets are made available to, and for the benefit of, any person*Natural or legal person. or entity designated by the United Nations Security Council under Chapter VII of the Charter of the United Nations, pursuant to Security Council resolutions that relate to the prevention and disruption of the financing of proliferation of weapons of mass destruction.*Recommendation 7 is applicable to all current Security Council resolutions applying targeted financial sanctions relating to the financing of proliferation of weapons of mass destruction, any future successor resolutions, and any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. At the time of issuance of this Interpretive Note (June 2017), the Security Council resolutions applying targeted financial sanctions relating to the financing of proliferation of weapons of mass destruction are resolutions 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), 2270 (2016), 2321 (2016) and 2356 (2017). Resolution 2231 (2015), endorsing the Joint Comprehensive Plan of Action, terminated all provisions of resolutions relating to Iran and proliferation financing, including 1737 (2006), 1747 (2007), 1803 (2008) and 1929 (2010), but established specific restrictions including targeted financial sanctions. This lifts sanctions as part of а step bу step approach with reciprocal commitments endorsed bу the Security Council. Implementation day of the JCPOA was on 16 January 2016.
   2. It should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be stressed that none of the requirements in Recommendation 7 is intended to replace other measures or obligations that may already be in place for dealing with funds or other assets in the context of a criminal, civil or administrative investigation or proceeding, as is required by international treaties or Security Council resolutions relating to weapons of mass destruction non-proliferation.*Based on requirements set, for instance, in the Nuclear Non-Proliferation Treaty, the Biological and Toxin Weapons Convention, the Chemical Weapons Convention, and Security Council resolution 1540 (2004) and 2235 (2016). Those obligations exist separately and apart from the obligations set forth in Recommendation 7 and its interpretive note. The focus of Recommendation 7 is on preventive measures that are necessary and unique in the context of stopping the flow of funds or other assets to proliferators or proliferation; and the use of funds or other assets by proliferators or proliferation, as required by the United Nations Security Council (the Security Council).
2. DESIGNATIONS
   3. Designations The term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: - United Nations Security Council resolution 1267 (1999) and its successor resolutions; - Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; - Security Council resolution1718 (2006) and its successor resolutions; - Security Council resolution 1737 (2006) and its successor resolutions; and - any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. are made by the Security Council in annexes to the relevant resolutions, or by the Security Council Committees established pursuant to these resolutions. There is no specific obligation upon United Nations Member States to submit proposals for designations to the Security Council or the relevant Security Council Committee(s). However, in practice, the Security Council or the relevant Committee(s) primarily depends upon requests for designation bу Member States. Security Council resolution 1718 (2006) provides that the relevant Committee shall promulgate guidelines as mау bе necessary to facilitate the implementation of the measures imposed bу this resolution and its successor resolutions. Resolution 2231 (2015) provides that the Security Council shall make the necessary practical arrangements to undertake directly tasks related to the implementation of the resolution.
   4. Countries could consider establishing the authority and effective procedures or mechanisms to propose persons and entities to the Security Council for designation in accordance with relevant Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. In this regard, countries could consider the following elements:
      1. identifying a competent authority(ies), either executive or judicial, as having responsibility for:
         1. proposing to the 1718 Sanctions Committee, for designation as appropriate, persons or entities that meet the specific criteria for designation as set forth in resolution 1718 (2006) and its successor resolutions*Recommendation 7 is applicable to all current and future successor resolutions to resolution1718 (2006). At the time of issuance of this Interpretive Note, (June 2017), the successor resolutions to resolution 1718 (2006) are resolution 1874 (2009), resolution 2087 (2013), resolution 2094 (2013), resolution 2270 (2016), resolution 2321 (2016) and resolution 2356 (2017)., if that authority decides to do so and believes that it has sufficient evidence to support the designation criteria (see Section E for the specific designation criteria associated with relevant Security Council resolutions); and
         2. proposing to the Security Council, for designation as appropriate, persons or entities that meet the criteria for designation as set forth in resolution 2231 (2015) and any future successor resolutions, if that authority decides to do so and believes that it has sufficient evidence to support the designation criteria (see Section E for the specific designation criteria associated with relevant Security Council resolutions).
      2. having a mechanism(s) for identifying targets for designationThe term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. , based on the designation criteria set out in resolutions 1718 (2006), 2231 (2015), and their successor resolutions (see Section E for the specific designation criteria of relevant Security Council resolutions). Such procedures should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. ensure the determination, according to applicable (supra-)national principles, whether reasonable grounds or a reasonable basis exists to propose a designation.
      3. having appropriate legal authority, and procedures or mechanisms, to collect or solicit as much information as possible from all relevant sources to identify persons and entities that, based on reasonable grounds, or a reasonable basis to suspect or believe, meet the criteria for designation in the relevant Security Council resolutions.
      4. when deciding whether or not to propose a designation, taking into account the criteria in Section E of this interpretive note. For proposals of designations, the competent authority of each countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. will apply the legal standard of its own legal system, taking into consideration human rights, respect for the rule of law, and in recognition of the rights of innocent third parties.
      5. when proposing names to the 1718 Sanctions Committee, pursuant to resolution 1718 (2006) and its successor resolutions, or to the Security Council, pursuant to resolution 2231 (2015) and any future successor resolutions, providing as much detail as possible on:
         1. the proposed name, in particular, sufficient identifying information to allow for the accurateis used to describe information that has been verified for accuracy. and positive identification of persons and entities; and
         2. specific information supporting a determination that the person or entity meets the relevant criteria for designationThe term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. (see Section E for the specific designation criteria of relevant Security Council resolutions).
      6. having procedures to be able, where necessary, to operate ex parte The term ex parte means proceeding without prior notification and participation of the affected party. against a person or entity who has been identified and whose proposal for designation is being considered.
3. FREEZING AND PROHIBITING DEALING IN FUNDS OR OTHER ASSETS OF DESIGNATED PERSONS AND ENTITIES
   5. There is an obligation for countries to implement targeted financial sanctions without delay The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly. against persons and entities designated:
      1. in the case of resolution 1718 (2006) and its successor resolutions, by the Security Council in annexes to the relevant resolutions, or by the 1718 Sanctions Committee of the Security Council*As noted in resolution 2270 (2016) (ОР32) this also applies to entities of the Government of the Democratic People's Republic of Korea or the Workers’ Party of Korea that countries determine are associated with the DPRK's nuclear or ballistic missile programmes or other activities prohibited bу resolution 1718 (2006) and successor resolutions.; and
      2. in the case of resolution 2231 (2015) and any future successor resolutions by the Security Council,
      when acting under the authority of Chapter VII of the Charter of the United Nations.
   6. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. establish the necessary legal authority and identify competent domestic authorities responsible for implementing and enforcing targeted financial sanctions, in accordance with the following standards and procedures:
      1. Countries*In the case of the European Union (EU), which is considered a supra-national jurisdiction under Recommendation 7 by the FATF, the assets of designated persons and entities are frozen under EU Common Foreign and Security Policy (CFSP) Council decisions and Council regulations. EU member states may have to take additional measures to implement the freeze, and all natural and legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. within the EU have to respect the freeze and not make funds available to designated persons and entities. should require all natural and legal persons within the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. to freeze In the context of confiscation and provisional measures (e.g., Recommendations 4, 32 and 38), the term freeze means to prohibit the transfer, conversion, disposition or movement of any property, equipment or other instrumentalities on the basis of, and for the duration of the validity of, an action initiated by a competent authority or a court under a freezing mechanism, or until a forfeiture or confiscation determination is made by a competent authority.
         For the purposes of Recommendations 6 and 7 on the implementation of targeted financial sanctions, the term freeze means to prohibit the transfer, conversion, disposition or movement of any funds or other assets that are owned or controlled by designated persons or entities on the basis of, and for the duration of the validity of, an action initiated by the United Nations Security Council or in accordance with applicable Security Council resolutions by a competent authority or a court.
         In all cases, the frozen property, equipment, instrumentalities, funds or other assets remain the property of the natural or legal person(s) that held an interest in them at the time of the freezing and may continue to be administered by third parties, or through other arrangements established by such natural or legal person(s) prior to the initiation of an action under a freezing mechanism, or in accordance with other national provisions. As part of the implementation of a freeze, countries may decide to take control of the property, equipment, instrumentalities, or funds or other assets as a means to protect against flight. , without delay The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly. and without prior notice, the funds or other assets of designated persons and entities. This obligation should extend to: all funds or other assets that are owned or controlled by the designated person or entityThe term designated person or entity refers to:
         1) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
         2) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
         3) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
         4) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
         5) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions. , and not just those that can be tied to a particular act, plot or threat of proliferation; those funds or other assets that are wholly or jointly owned or controlled, directly or indirectly, by designated persons or entities; and the funds or other assets derived or generated from funds or other assets owned or controlled directly or indirectly by designated persons or entities, as well as funds or other assets of persons and entities acting on behalf of, or at the direction of designated persons or entities.
      2. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. ensure that any funds or other assets are prevented from being made available by their nationals or by any persons or entities within their territories, to or for the benefit of designated persons or entities unless licensed, authorised or otherwise notified in accordance with the relevant Security Council resolutions (see Section E below).
      3. Countries should have mechanisms for communicating designations to financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
         1) Acceptance of deposits and other repayable funds from the public.
         2) Lending.
         3) Financial leasing.
         4) Money or value transfer services.
         5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
         6) Financial guarantees and commitments.
         7) Trading in:
         a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
         b) foreign exchange;
         c) exchange, interest rate and index instruments;
         d) transferable securities;
         8) Participation in securities issues and the provision of financial services related to such issues.
         9) Individual and collective portfolio management.
         11) Otherwise investing, administering or managing funds or money on behalf of other persons.
         12) Underwriting and placement of life insurance and other investment related insurance.
         13) Money and currency changing.
         and DNFBPs immediately upon taking such action, and providing clear guidance, particularly to financial institutions and other persons or entities, including DNFBPs, that may be holding targeted funds or other assets, on their obligations in taking action under freezing mechanisms.
      4. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. require financial institutions and DNFBPs*Security Council resolutions apply to all natural and legal persons within the country. to report to competent authorities any assets frozen or actions taken in compliance with the prohibition requirements of the relevant Security Council resolutions, including attempted transactions, and ensure that such information is effectively utilised by competent authorities.
      5. Countries should adopt effective measures which protect the rights of bona fide third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17. acting in good faith when implementing the obligations under Recommendation 7.
      6. Countries should adopt appropriate measures for monitoring, and ensuring compliance by, financial institutions and DNFBPs with the relevant laws or enforceable means Please refer to the Note on the Legal Basis of requirements on Financial Institutions and DNFBPs. governing the obligations under Recommendation 7. Failure to comply with such laws, or enforceable means should be subject to civil, administrative or criminal sanctions.
4. DE-LISTING, UNFREEZING AND PROVIDING ACCESS TO FROZEN FUNDS OR OTHER ASSETS
   7. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. develop and implement publicly known procedures to submit de-listing requests to the Security Council in the case of designated persons and entities, that, in the view of the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions., do not or no longer meet the criteria for designation. Once the Security Council or the relevant Sanctions Committee has delisted the person or entity, the obligation to freeze In the context of confiscation and provisional measures (e.g., Recommendations 4, 32 and 38), the term freeze means to prohibit the transfer, conversion, disposition or movement of any property, equipment or other instrumentalities on the basis of, and for the duration of the validity of, an action initiated by a competent authority or a court under a freezing mechanism, or until a forfeiture or confiscation determination is made by a competent authority.
      For the purposes of Recommendations 6 and 7 on the implementation of targeted financial sanctions, the term freeze means to prohibit the transfer, conversion, disposition or movement of any funds or other assets that are owned or controlled by designated persons or entities on the basis of, and for the duration of the validity of, an action initiated by the United Nations Security Council or in accordance with applicable Security Council resolutions by a competent authority or a court.
      In all cases, the frozen property, equipment, instrumentalities, funds or other assets remain the property of the natural or legal person(s) that held an interest in them at the time of the freezing and may continue to be administered by third parties, or through other arrangements established by such natural or legal person(s) prior to the initiation of an action under a freezing mechanism, or in accordance with other national provisions. As part of the implementation of a freeze, countries may decide to take control of the property, equipment, instrumentalities, or funds or other assets as a means to protect against flight. no longer exists. In the case of resolution 1718 (2006) and its successor resolutions, such procedures and criteria should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be in accordance with any applicable guidelines or procedures adopted by the Security Council pursuant to resolution 1730 (2006) and any successor resolutions, including those of the Focal Point mechanism established under that resolution. Countries should enable listed persons and entities to petition a request for delisting at the Focal Point for de-listing established pursuant to resolution 1730 (2006), or should inform designated persons or entities to petition the Focal Point directly.
   8. For persons or entities with the same or similar name as designated persons or entities, who are inadvertently affected by a freezing mechanism (i.e., a false positive), countries should develop and implement publicly known procedures to unfreeze the funds or other assets of such persons or entities in a timely manner, upon verification that the person or entity involved is not a designated person or entityThe term designated person or entity refers to:
      1) individual, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1267 (1999) (the 1267 Committee), as being individuals associated with Al-Qaida, or entities and other groups and undertakings associated with Al-Qaida;
      2) individuals, groups, undertakings and entities designated by the Committee of the Security Council established pursuant to resolution 1988 (2011) (the 1988 Committee), as being associated with the Taliban in constituting a threat to the peace, stability and security of Afghanistan, or entities and other groups and undertakings associated with the Taliban;
      3) any natural or legal person or entity designated by jurisdictions or a supra-national jurisdiction pursuant to Security Council resolution 1373 (2001);
      4) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1718 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to resolution 1718 (2006) (the 1718 Sanctions Committee) pursuant to Security Council resolution 1718 (2006); and
      5) any natural or legal person or entity designated for the application of targeted financial sanctions pursuant to Security Council resolution 1737 (2006) and its successor resolutions by the Security Council in annexes to the relevant resolutions, or by the Security Council Committee established pursuant to paragraph 18 of resolution 1737 (2006) (the 1737 Sanctions Committee) pursuant to resolution 1737 (2006) and its successor resolutions. .
   9. Where countries have determined that the exemption conditions set out in resolution 1718 (2006) and resolution 2231 (2015) are met, countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. authorise access to funds or other assets in accordance with the procedures set out therein.
   10. Countries should permit the addition to the accountsReferences to “accounts” should be read as including other similar business relationships between financial institutions and their customers. frozen pursuant to resolution 1718 (2006) or resolution 2231 (2015) of interests or other earnings due on those accountsReferences to “accounts” should be read as including other similar business relationships between financial institutions and their customers. or payments due under contracts, agreements or obligations that arose prior to the date on which those accountsReferences to “accounts” should be read as including other similar business relationships between financial institutions and their customers. became subject to the provisions of this resolution, provided that any such interest, other earnings and payments continue to be subject to these provisions and are frozen.
   11. Freezing action taken pursuant to resolution 1737 (2006) and continued bу resolution 2231 (2015) оr taken pursuant to resolution 2231 (2015), shall not prevent a designated person or entity from making any payment due under a contract entered into prior to the listing of such person or entity, provided that:
       1. the relevant countries have determined that the contract is not related to any of the prohibited items, materials, equipment, goods, technologies, assistance, training, financial assistance, investment, brokering or services referred to in resolution 2231 (2015) and any future successor resolutions;
       2. the relevant countries have determined that the payment is not directly or indirectly received by a person or entity subject to the measures in paragraph 6 of Аnnеx В to resolution 2231 (2015); and
       3. the relevant countries have submitted prior notification to the Security Council of the intention to make or receive such payments or to authorise, where appropriate, the unfreezing of funds, other financial assets or economic resources for this purpose, ten working days prior to such authorisation.*In cases where the designated person or entity is a financial institution, jurisdictions should consider the FATF guidance issued as an annex to The Implementation of Financial Provisions of United Nations Security Council Resolutions to Counter the Proliferation of Weapons of Mass Destruction, adopted in June 2013.
   12. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. have mechanisms for communicating de-listings and unfreezings to the financial sector and the DNFBPs immediately upon taking such action, and providing adequate guidance, particularly to financial institutions and other persons or entities, including DNFBPs, that may be holding targeted funds or other assets, on their obligations to respect a de-listing or unfreezing action.
5. UNITED NATIONS DESIGNATION CRITERIA
   13. The criteria for designation The term designation refers to the identification of a person or entity that is subject to targeted financial sanctions pursuant to: 1) United Nations Security Council resolution 1267 (1999) and its successor resolutions; 2) Security Council resolution 1373 (2001), including the determination that the relevant sanctions will be applied to the person or entity and the public communication of that determination; 3) Security Council resolution1718 (2006) and its successor resolutions; 4) Security Council resolution 1737 (2006) and its successor resolutions; and 5) any future Security Council resolutions which impose targeted financial sanctions in the context of the financing of proliferation of weapons of mass destruction. as specified in the relevant United Nations Security Council resolution are:
       1. On DPRK Resolutions 1718 (2006), 2087 (2013), 2094 (2013) and 2270 (2016):
          1. any person or entity engaged in the Democratic People’s Republic of Korea (DPRK)’s nuclear-related, other WMD-related and ballistic missile-related programs;
          2. any person or entity acting on behalf of or at the direction of any person or entity designated under subsection 13(a)(i) or subsection 13(a)(ii)*The funds or assets of these persons or entities are frozen regardless of whether they are specifically identified by the Committee. Further, resolution 2270 (2016) ОР23 expanded the scope of targeted financial sanctions obligations under resolution 1718 (2006), bу applying these to the Ocean Maritime Management Company vessels specified in Annex III of resolution 2270 (2016).;
          3. any legal person or entity owned or controlled, directly or indirectly, bу any person or entity designated under subsection 13(a)(i) or subsection 13(a)(ii)*Ibid.;
          4. any person or entity that has assisted in the evasion of sanctions or in violating the provisions of resolutions 1718 (2006) and 1874 (2009);
          5. any person or entity that has contributed to DPRK's prohibited programmes, activities prohibited bу the DPRK-related resolutions, or to the evasion of provisions; or
          6. any entity of the Government of the DPRK or the Workers’ Party of Korea, or person or entity acting on their behalf or at their direction, or bу any entity owned or controlled bу them, that countries determine are associated with the DPRK's nuclear or ballistic missile programmes or other activities prohibited bу resolution 1718 (2006) and successor resolutions.
       2. On Iran — Resolution 2231(2015):
          1. any person or entity having engaged in, directly associated with or provided support for Iran's proliferation sensitive nuclear activities contrary to Iran's commitments in the Joint Comprehensive Plan of Action (JСРОА) or the development of nuclear weapon delivery systems, including through the involvement in procurement of prohibited items, goods, equipment, materials and technology specified in Annex В to resolution 2231 (2015);
          2. any person or entity assisting designated persons or entities in evading or acting inconsistently with the JCPOA or resolution 2231 (2015); and
          3. any person or entity acting of behalf or at а direction of any person or entity in subsection 13(b)(i), subsection 13(b)(ii) and/or subsection 13(b)(iii), or bу any entities owned or controlled bу them.

1. INTRODUCTION
   1. Given the variety of legal forms that non-profit organisations (NPOs) can have, depending on the country, the FATF has adopted a functional definition of NPO. This definition is based on those activities and characteristics of an organisation which put it at risk of terrorist financing abuse, rather than on the simple fact that it is operating on a non-profit basis. For the purposes of this Recommendation, NPO refers to a legal person or arrangement or organisation that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of “good works”. Without prejudice to Recommendation 1, this Recommendation only applies to those NPOs which fall within the FATF definition of an NPO. It does not apply to the entire universe of NPOs.
   2. NPOs play a vital role in the world economy and in many national economies and social systems. Their efforts complement the activity of the governmental and business sectors in providing essential services, comfort and hope to those in need around the world. The FATF recognises the vital importance of NPOs in providing these important charitable services, as well as the difficulty of providing assistance to those in need, often in high risk areas and conflict zones, and applauds the efforts of NPOs to meet such needs. The FATF also recognises the intent and efforts to date of NPOs to promote transparency within their operations and to prevent terrorist financing abuse, including through the development of programmes aimed at discouraging radicalisation and violent extremism. The ongoing international campaign against terrorist financing has identified cases in which terrorists and terrorist organisations exploit some NPOs in the sector to raise and move funds, provide logistical support, encourage terrorist recruitment, or otherwise support terrorist organisations and operations. As well, there have been cases where terrorists create sham charities or engage in fraudulent fundraising for these purposes. This misuse not only facilitates terrorist activity, but also undermines donor confidence and jeopardises the very integrity of NPOs. Therefore, protecting NPOs from terrorist financing abuse is both a critical component of the global fight against terrorism and a necessary step to preserve the integrity of NPOs and the donor community. Measures to protect NPOs from potential terrorist financing abuse should be targeted and in line with the risk-based approach. It is also important for such measures to be implemented in a manner which respects countries’ obligations under the Charter of the United Nations and international human rights law.
   3. Some NPOs may be vulnerable to terrorist financing abuse by terrorists for a variety of reasons. NPOs enjoy the public trust, have access to considerable sources of funds, and are often cash-intensive. Furthermore, some NPOs have a global presence that provides a framework for national and international operations and financial transactions, often within or near those areas that are most exposed to terrorist activity. In some cases, terrorist organisations have taken advantage of these and other characteristics to infiltrate some NPOs and misuse funds and operations to cover for, or support, terrorist activity.
2. OBJECTIVES AND GENERAL PRINCIPLES
   4. The objective of Recommendation 8 is to ensure that NPOs are not misused by terrorist organisations: (i) to pose as legitimate entities; (ii) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures; or (iii) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes, but diverted for terrorist purposes. In this Interpretive Note, the approach taken to achieve this objective is based on the following general principles:
      1. A risk-based approach applying focused measures in dealing with identified threats of terrorist financing abuse to NPOs is essential given the diversity within individual national sectors, the differing degrees to which parts of each sector may be vulnerable to terrorist financing abuse, the need to ensure that legitimate charitable activity continues to flourish, and the limited resources and authorities available to combat terrorist financing in each country.
      2. Flexibility in developing a national response to terrorist financing abuse of NPOs is essential, in order to allow it to evolve over time as it faces the changing nature of the terrorist financing threat.
      3. Past and ongoing terrorist financing abuse of NPOs requires countries to adopt effective and proportionate measures, which should be commensurate to the risks identified through a risk-based approach.
      4. Focused measures adopted by countries to protect NPOs from terrorist financing abuse should not disrupt or discourage legitimate charitable activities. Rather, such measures should promote accountability and engender greater confidence among NPOs, across the donor community and with the general public, that charitable funds and services reach intended legitimate beneficiaries. Systems that promote achieving a high degree of accountability, integrity and public confidence in the management and functioning of NPOs are integral to ensuring they cannot be abused for terrorist financing.
      5. Countries are required to identify and take effective and proportionate action against NPOs that either are exploited by, or knowingly supporting, terrorists or terrorist organisations taking into account the specifics of the case. Countries should aim to prevent and prosecute, as appropriate, terrorist financing and other forms of terrorist support. Where NPOs suspected of, or implicated in, terrorist financing or other forms of terrorist support are identified, the first priority of countries must be to investigate and halt such terrorist financing or support. Actions taken for this purpose should, to the extent reasonably possible, minimise negative impact on innocent and legitimate beneficiaries of charitable activity. However, this interest cannot excuse the need to undertake immediate and effective actions to advance the immediate interest of halting terrorist financing or other forms of terrorist support provided by NPOs.
      6. Developing cooperative relationships among the public and private sectors and with NPOs is critical to understanding NPOs’ risks and risk mitigation strategies, raising awareness, increasing effectiveness and fostering capabilities to combat terrorist financing abuse within NPOs. Countries should encourage the development of academic research on, and information-sharing in, NPOs to address terrorist financing related issues.
3. MEASURES
   5. Without prejudice to the requirements of Recommendation 1, since not all NPOs are inherently high risk (and some may represent little or no risk at all), countries should identify which subset of organisations fall within the FATF definition of NPO. In undertaking this exercise, countries should use all relevant sources of information in order to identify features and types of NPOs, which, by virtue of their activities or characteristics, are likely to be at risk of terrorist financing abuse*For example, such information could be provided by regulators, tax authorities, FIUs, donor organisations or law enforcement and intelligence authorities.. It is also crucial to identify the nature of threats posed by terrorist entities to the NPOs which are at risk as well as how terrorist actors abuse those NPOs. Countries should review the adequacy of measures, including laws and regulations, that relate to the subset of the NPO sector that may be abused for terrorism financing support in order to be able to take proportionate and effective actions to address the risks identified. These exercises could take a variety of forms and may or may not be a written product. Countries should also periodically reassess the sector by reviewing new information on the sector’s potential vulnerabilities to terrorist activities to ensure effective implementation of measures.
   6. There is a diverse range of approaches in identifying, preventing and combating terrorist financing abuse of NPOs. An effective approach should involve all four of the following elements: (a) sustained outreach, (b) targeted risk-based supervision or monitoring,(c) effective investigation and information gathering and (d) effective mechanisms for international cooperation. The following measures represent examples of specific actions that countries should take with respect to each of these elements, in order to protect NPOs from potential terrorist financing abuse.
      1. Sustained outreach concerning terrorist financing issues
         1. Countries should have clear policies to promote accountability, integrity and public confidence in the administration and management of NPOs.
         2. Countries should encourage and undertake outreach and educational programmes to raise and deepen awareness among NPOs as well as the donor community about the potential vulnerabilities of NPOs to terrorist financing abuse and terrorist financing risks, and the measures that NPOs can take to protect themselves against such abuse.
         3. Countries should work with NPOs to develop and refine best practices to address terrorist financing risks and vulnerabilities and thus protect them from terrorist financing abuse.
         4. Countries should encourage NPOs to conduct transactions via regulated financial channels, wherever feasible, keeping in mind the varying capacities of financial sectors in different countries and in different areas of urgent charitable and humanitarian concerns.
      2. Targeted risk-based supervision or monitoring of NPOs
         Countries should take steps to promote effective supervision or monitoring. A “one- size-fits-all” approach would be inconsistent with the proper implementation of a risk- based approach as stipulated under Recommendation 1 of the FATF Standards. In practice, countries should be able to demonstrate that risk-based measures apply to NPOs at risk of terrorist financing abuse. It is also possible that existing regulatory or other measures may already sufficiently address the current terrorist financing risk to the NPOs in a jurisdiction, although terrorist financing risks to the sector should be periodically reviewed. Appropriate authorities should monitor the compliance of NPOs with the requirements of this Recommendation, including the risk-based measures being applied to them*In this context, rules and regulations may include rules and standards applied by self-regulatory organisations and accrediting institutions.. Appropriate authorities should be able to apply effective, proportionate and dissuasive sanctions for violations by NPOs or persons acting on behalf of these NPOs*The range of such sanctions might include freezing of accounts, removal of trustees, fines, de-certification, de-licensing and de-registration. This should not preclude parallel civil, administrative or criminal proceedings with respect to NPOs or persons acting on their behalf where appropriate.. The following are some examples of measures that could be applied to NPOs, in whole or in part, depending on the risks identified:
         1. NPOs could be required to license or register. This information should be available to competent authorities and encouraged to be available to the public*Specific licensing or registration requirements for counter terrorist financing purposes are not necessary. For example, in some countries, NPOs are already registered with tax authorities and monitored in the context of qualifying for favourable tax treatment (such as tax credits or tax exemptions)..
         2. NPOs could be required to maintain information on: (1) the purpose and objectives of their stated activities; and (2) the identity of the person(s) who own, control or direct their activities, including senior officers, board members and trustees. This information could be publicly available either directly from the NPO or through appropriate authorities.
         3. NPOs could be required to issue annual financial statements that provide detailed breakdowns of incomes and expenditures.
         4. NPOs could be required to have appropriate controls in place to ensure that all funds are fully accounted for, and are spent in a manner that is consistent with the purpose and objectives of the NPO’s stated activities.
         5. NPOs could be required to take reasonable measures to confirm the identity, credentials and good standing of beneficiaries*The term beneficiaries refers to those natural persons, or groups of natural persons who receive charitable, humanitarian or other types of assistance through the services of the NPO. and associate NPOs and thatthey are not involved with and/or using the charitable funds to support terrorists or terrorist organisations*This does not mean that NPOs are expected to identify each specific individual, as such a requirement would not always be possible and would, in some instances, impede the ability of NPOs to provide much-needed services.. However, NPOs should not be required to conduct customer due diligence. NPOs could be required to take reasonable measures to document the identity of their significant donors and to respect donor confidentiality. The ultimate objective of this requirement is to prevent charitable funds from being used to finance and support terrorists and terrorist organisations.
         6. NPOs could be required to maintain, for a period of at least five years, records of domestic and international transactions that are sufficiently detailed to verify that funds have been received and spent in a manner consistent with the purpose and objectives of the organisation, and could be required to make these available to competent authorities upon appropriate authority. This also applies to information mentioned in paragraphs (ii) and (iii) above. Where appropriate, records of charitable activities and financial operations by NPOs could also be made available to the public.
      3. Effective information gathering and investigation
         1. Countries should ensure effective cooperation, coordination and information- sharing to the extent possible among all levels of appropriate authorities or organisations that hold relevant information on NPOs.
         2. Countries should have investigative expertise and capability to examine those NPOs suspected of either being exploited by, or actively supporting, terrorist activity or terrorist organisations.
         3. Countries should ensure that full access to information on the administration and management of a particular NPO (including financial and programmatic information) may be obtained during the course of an investigation.
         4. Countries should establish appropriate mechanisms to ensure that, when there is suspicion or reasonable grounds to suspect that a particular NPO: (1) is involved in terrorist financing abuse and/or is a front for fundraising by a terrorist organisation; (2) is being exploited as a conduit for terrorist financing, including for the purpose of escaping asset freezing measures, or other forms of terrorist support; or (3) is concealing or obscuring the clandestine diversion of funds intended for legitimate purposes, but redirected for the benefit of terrorists or terrorist organisations, that this information is promptly shared with relevant competent authorities, in order to take preventive or investigative action.
      4. Effective capacity to respond to international requests for information about an NPO of concern. Consistent with Recommendations on international cooperation, countries should identify appropriate points of contact and procedures to respond to international requests for information regarding particular NPOs suspected of terrorist financing or involvement in other forms of terrorist support.
4. RESOURCES FOR SUPERVISION, MONITORING, AND INVESTIGATION
   7. Countries should provide their appropriate authorities, which are responsible for supervision, monitoring and investigation of their NPO sector, with adequate financial, human and technical resources.

• A.
  CUSTOMER DUE DILIGENCE AND TIPPING-OFF
  1. If, during the establishment or course of the customer relationship, or when conducting occasional transactions, a financial institution suspects that transactions relate to money laundering or terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations., then the institution should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must.:
     1. normally seek to identify and verify the identity*Reliable, independent source documents, data or information will hereafter be referred to as “identification data” of the customer and the beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement., whether permanent or occasional, and irrespective of any exemption or any designated threshold that might otherwise apply; and
     2. make a suspicious transaction report (STR) to the financial intelligence unit (FIU), in accordance with Recommendation 20.
  2. Recommendation 21 prohibits financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
     1) Acceptance of deposits and other repayable funds from the public.
     2) Lending.
     3) Financial leasing.
     4) Money or value transfer services.
     5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
     6) Financial guarantees and commitments.
     7) Trading in:
     a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
     b) foreign exchange;
     c) exchange, interest rate and index instruments;
     d) transferable securities;
     8) Participation in securities issues and the provision of financial services related to such issues.
     9) Individual and collective portfolio management.
     11) Otherwise investing, administering or managing funds or money on behalf of other persons.
     12) Underwriting and placement of life insurance and other investment related insurance.
     13) Money and currency changing.
     , their directors, officers and employees from disclosing the fact that an STR or related information is being reported to the FIU. A risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. exists that customers could be unintentionally tipped off when the financial institution is seeking to perform its customer due diligence (CDD) obligations in these circumstances. The customer’s awareness of a possible STR or investigation could compromise future efforts to investigate the suspected money laundering or terrorist financing operation.
  3. Therefore, if financial institutions form a suspicion that transactions relate to money laundering or terrorist financing, they should take into account the risk of tipping-off when performing the CDD process. If the institution reasonably believes that performing the CDD process will tip-off the customer or potential customer, it may choose not to pursue that process, and should file an STR. Institutions should ensure that their employees are aware of, and sensitive to, these issues when conducting CDD.
• B.
  CDD – PERSONS ACTING ON BEHALF OF A CUSTOMER
  4. When performing elements (a) and (b) of the CDD measures specified under Recommendation 10, financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
     1) Acceptance of deposits and other repayable funds from the public.
     2) Lending.
     3) Financial leasing.
     4) Money or value transfer services.
     5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
     6) Financial guarantees and commitments.
     7) Trading in:
     a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
     b) foreign exchange;
     c) exchange, interest rate and index instruments;
     d) transferable securities;
     8) Participation in securities issues and the provision of financial services related to such issues.
     9) Individual and collective portfolio management.
     11) Otherwise investing, administering or managing funds or money on behalf of other persons.
     12) Underwriting and placement of life insurance and other investment related insurance.
     13) Money and currency changing.
     should also be required to verify that any person purporting to act on behalf of the customer is so authorised, and should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. identify and verify the identity of that person.
• C.
  CDD FOR LEGAL PERSONS AND ARRANGEMENTS
  5. When performing CDD measures in relation to customers that are legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. or Legal arrangementsLegal arrangements refers to express trusts or other similar legal arrangements. Examples of other similar arrangements (for AML/CFT purposes) include fiducie, treuhand and fideicomiso.*In these Recommendations references to legal arrangements such as trusts (or other similar arrangements) being the customer of a financial institution or DNFBP or carrying out a transaction, refers to situations where a natural or legal person that is the trustee establishes the business relationship or carries out the transaction on the behalf of the beneficiaries or according to the terms of the trust. The normal CDD requirements for customers that are natural or legal persons would continue to apply, including paragraph 4 of INR.10, but the additional requirements regarding the trust and the beneficial owners of the trust (as defined) would also apply., financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
     1) Acceptance of deposits and other repayable funds from the public.
     2) Lending.
     3) Financial leasing.
     4) Money or value transfer services.
     5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
     6) Financial guarantees and commitments.
     7) Trading in:
     a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
     b) foreign exchange;
     c) exchange, interest rate and index instruments;
     d) transferable securities;
     8) Participation in securities issues and the provision of financial services related to such issues.
     9) Individual and collective portfolio management.
     11) Otherwise investing, administering or managing funds or money on behalf of other persons.
     12) Underwriting and placement of life insurance and other investment related insurance.
     13) Money and currency changing.
     should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be required to identify and verify the customer, and understand the nature of its business, and its ownership and control structure. The purpose of the requirements set out in (a) and (b) below, regarding the identification and verification of the customer and the beneficial owner, is twofold: first, to prevent the unlawful use of legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. and arrangements, by gaining a sufficient understanding of the customer to be able to properly assess the potential money laundering and terrorist financing risks All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. associated with the business relationship; and, second, to take appropriate steps to mitigate the risks. As two aspects of one process, these requirements are likely to interact and complement each other naturally. In this context, financial institutions should be required to:
     1. Identify the customer and verify its identity. The type of information that would normally be needed to perform this function would be:
        1. Name, legal form and proof of existence – verification could be obtained, for example, through a certificate of incorporation, a certificate of good standing, a partnership agreement, a deed of trust, or other documentation from a reliable independent source proving the name, form and current existence of the customer.
        2. The powers that regulate and bind the legal person or arrangement (e.g. the memorandum and articles of association of a company), as well as the names of the relevant persons having a senior management position in the legal person or arrangement (e.g. senior managing directors in a company, trustee The terms trust and trustee should be understood as described in and consistent with Article 2 of the Hague Convention on the law applicable to trusts and their recognition
           Trustees may be professional (e.g. depending on the jurisdiction, a lawyer or trust company) if they are paid to act as a trustee in the course of their business, or non-professional (e.g. a person acting without reward on behalf of family). (s) of a trust).
        3. The address of the registered office, and, if different, a principal place of business.
     2. Identify the beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.s of the customer and take reasonable measuresThe term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks.*In determining the reasonableness of the identity verification measures, regard should be had to the money laundering and terrorist financing risks posed by the customer and the business relationship. to verify the identity of such persons, through the following information:
        1. For legal persons*Measures (i.i) to (i.iii) are not alternative options, but are cascading measures, with each to be used where the previous measure has been applied and has not identified a beneficial owner.
           1. The identity of the natural persons (if any – as ownership interests can be so diversified that there are no natural persons (whether acting alone or together) exercising control of the legal person or arrangement through ownership) who ultimately have a controlling ownership interest*A controlling ownership interest depends on the ownership structure of the company. It may be based on a threshold, e.g. any person owning more than a certain percentage of the company (e.g. 25%). in a legal person; and
           2. to the extent that there is doubt under (i.i) as to whether the person(s) with the controlling ownership interest are the beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.(s) or where no natural person exerts control through ownership interests, the identity of the natural persons (if any) exercising control of the legal person or arrangement through other means.
           3. Where no natural person is identified under (i.i) or (i.ii) above, financial institutions should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. identify and take reasonable measures The term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks. to verify the identity of the relevant natural person who holds the position of senior managing official.
        2. For legal arrangements Legal arrangements refers to express trusts or other similar legal arrangements. Examples of other similar arrangements (for AML/CFT purposes) include fiducie, treuhand and fideicomiso.:
           1. Trusts – the identity of the settlor Settlors are natural or legal persons who transfer ownership of their assets to trustees by means of a trust deed or similar arrangement., the trustee(s), the protector (if any), the beneficiaries or class of beneficiaries*For beneficiary(ies) of trusts that are designated by characteristics or by class, financial institutions should obtain sufficient information concerning the beneficiary to satisfy the financial institution that it will be able to establish the identity of the beneficiary at the time of the payout or when the beneficiary intends to exercise vested rights., and any other natural person exercising ultimate effective control over the trust (including through a chain of control/ownership);
           2. Other types of legal arrangements – the identity of persons in equivalent or similar positions.

     Where the customer or the owner of the controlling interest is a company listed on a stock exchange and subject to disclosure requirements (either by stock exchange rules or through law or enforceable means Please refer to the Note on the Legal Basis of requirements on Financial Institutions and DNFBPs.) which impose requirements to ensure adequate transparency of beneficial ownership, or is a majority-owned subsidiary of such a company, it is not necessary to identify and verify the identity of any shareholder or beneficial owner of such companies.
     

     The relevant identification data The term identification data refers to reliable, independent source documents, data or information. may be obtained from a public register, from the customer or from other reliable sources.

• D.
  CDD FOR BENEFICIARIES OF LIFE INSURANCE POLICIES
  6. For life or other investment-related insurance business, financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
     1) Acceptance of deposits and other repayable funds from the public.
     2) Lending.
     3) Financial leasing.
     4) Money or value transfer services.
     5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
     6) Financial guarantees and commitments.
     7) Trading in:
     a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
     b) foreign exchange;
     c) exchange, interest rate and index instruments;
     d) transferable securities;
     8) Participation in securities issues and the provision of financial services related to such issues.
     9) Individual and collective portfolio management.
     11) Otherwise investing, administering or managing funds or money on behalf of other persons.
     12) Underwriting and placement of life insurance and other investment related insurance.
     13) Money and currency changing.
     should, in addition to the CDD measures required for the customer and the beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement., conduct the following CDD measures on the beneficiary(ies)refers to those natural persons, or groups of natural persons who receive charitable, humanitarian or other types of assistance through the services of the NPO. of life insurance and other investment related insurance policies, as soon as the beneficiary(ies) are identified/designated:
     1. For beneficiary(ies) that are identified as specifically named natural or legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. or legal arrangements Legal arrangements refers to express trusts or other similar legal arrangements. Examples of other similar arrangements (for AML/CFT purposes) include fiducie, treuhand and fideicomiso. – taking the name of the person;
     2. For beneficiary(ies) that are designated by characteristics or by class (e.g. spouse or children at the time that the insured event occurs) or by other means (e.g. under a will) – obtaining sufficient information concerning the beneficiary to satisfy the financial institution that it will be able to establish the identity of the beneficiary at the time of the payout.
     The information collected under (a) and/or (b) should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be recorded and maintained in accordance with the provisions of Recommendation 11.
  7. For both the cases referred to in 6(a) and (b) above, the verification of the identity of the beneficiary(ies) should occur at the time of the payout.
  8. The beneficiary of a life insurance policy should be included as a relevant risk factor by the financial institution in determining whether enhanced CDD measures are applicable. If the financial institution determines that a beneficiary who is a legal person or a legal arrangement presents a higher risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1., then the enhanced CDD measures should include reasonable measures The term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks. to identify and verify the identity of the beneficial owner of the beneficiary, at the time of payout.
  9. Where a financial institution is unable to comply with paragraphs 6 to 8 above, it should consider making a suspicious transaction report.
• E.
  RELIANCE ON IDENTIFICATION AND VERIFICATION ALREADY PERFORMED
  10. The CDD measures set out in Recommendation 10 do not imply that financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      have to repeatedly identify and verify the identity of each customer every time that a customer conducts a transaction. An institution is entitled to rely on the identification and verification steps that it has already undertaken, unless it has doubts about the veracity of that information. Examples of situations that might lead an institution to have such doubts could be where there is a suspicion of money laundering in relation to that customer, or where there is a material change in the way that the customer’s account is operated, which is not consistent with the customer’s business profile
• F.
  TIMING OF VERIFICATION
  11. Examples of the types of circumstances (in addition to those referred to above for beneficiaries of life insurance policies) where it would be permissible for verification to be completed after the establishment of the business relationship, because it would be essential not to interrupt the normal conduct of business, include:
      • Non face-to-face business.
      • Securities transactions. In the securities industry, companies and intermediaries may be required to perform transactions very rapidly, according to the market conditions at the time the customer is contacting them, and the performance of the transaction may be required before verification of identity is completed.
  12. financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      will also need to adopt risk management procedures with respect to the conditions under which a customer may utilise the business relationship prior to verification. These procedures should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. include a set of measures, such as a limitation of the number, types and/or amount of transactions that can be performed and the monitoring of large or complex transactions being carried out outside the expected norms for that type of relationship.
• G.
  EXISTING CUSTOMERS
  13. Financial institutions should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be required to apply CDD measures to existing customers*Existing customers as at the date that the national requirements are brought into force. on the basis of materiality and risk, and to conduct due diligence on such existing relationships at appropriate times, taking into account whether and when CDD measures have previously been undertaken and the adequacy of data obtained.
• H.
  RISK BASED APPROACH*The RBA does not apply to the circumstances when CDD should be required but may be used to determine the extent of such measures.
  14. The examples below are not mandatory elements of the FATF Standards, and are included for guidance only. The examples are not intended to be comprehensive, and although they are considered to be helpful indicators, they may not be relevant in all circumstances.

  Higher risks

  15. There are circumstances where the risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. of money laundering or terrorist financing is higher, and enhanced CDD measures have to be taken. When assessing the money laundering and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels, examples of potentially higher-risk situations (in addition to those set out in Recommendations 12 to 16) include the following:
      1. Customer risk factors:
         • The business relationship is conducted in unusual circumstances (e.g. significant unexplained geographic distance between the financial institution and the customer).
         • Non-resident customers.
         • legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. or arrangements that are personal asset-holding vehicles.
         • Companies that have nominee shareholders or shares in bearer form.
         • Business that are cash-intensive.
         • The ownership structure of the company appears unusual or excessively complex given the nature of the company’s business.
      2. Country or geographic risk factors:*Under Recommendation 19 it is mandatory for countries to require financial institutions to apply enhanced due diligence when the FATF calls for such measures to be introduced.
         • Countries identified by credible sources, such as mutual evaluation or detailed assessment reports or published follow-up reports, as not having adequate AML/CFT systems.
         • Countries subject to sanctions, embargos or similar measures issued by, for example, the United Nations.
         • Countries identified by credible sources as having significant levels ofcorruption or other criminal activity Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3..
         • Countries or geographic areas identified by credible sources as providing funding or support for terrorist activities, or that have designated terrorist organisations The term terrorist organisation refers to any group of terrorists that: (i) commits, or attempts to commit, terrorist acts by any means, directly or indirectly, unlawfully and wilfully; (ii) participates as an accomplice in terrorist acts; (iii) organises or directs others to commit terrorist acts; or (iv) contributes to the commission of terrorist acts by a group of persons acting with a common purpose where the contribution is made intentionally and with the aim of furthering the terrorist act or with the knowledge of the intention of the group to commit a terrorist act. operating within their countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions..
      3. Product, service, transaction or delivery channel risk factors:
         • Private banking.
         • Anonymous transactions (which may include cash).
         • Non-face-to-face business relationships or transactions.
         • Payment received from unknown or un-associated third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17.

  Lower risks

  16. There are circumstances where the risk of money laundering or terrorist financing may be lower. In such circumstances, and provided there has been an adequate analysis of the risk by the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. or by the financial institution, it could be reasonable for a country to allow its financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      to apply simplified CDD measures.
  17. When assessing the money laundering and terrorist financing risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels, examples of potentially lower risk situations include the following:
      1. Customer risk factors:
         • Financial institutions and DNFBPs – where they are subject to requirements to combat money laundering and terrorist financing consistent with the FATF Recommendations, have effectively implemented those requirements, and are effectively supervised or monitored in accordance with the Recommendations to ensure compliance with those requirements.
         • Public companies listed on a stock exchange and subject to disclosure requirements (either by stock exchange rules or through law or enforceable means Please refer to the Note on the Legal Basis of requirements on Financial Institutions and DNFBPs.), which impose requirements to ensure adequate transparency of beneficial ownership.
         • Public administrations or enterprises.
      2. Product, service, transaction or delivery channel risk factors:
         • Life insurance policies where the premium is low (e.g. an annual premium of less than USD/EUR 1,000 or a single premium of less than USD/EUR 2,500).
         • Insurance policies for pension schemes if there is no early surrender optionand the policy cannot be used as collateral.
         • A pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages, and the scheme rules do not permit the assignment of a member’s interest under the scheme.
         • Financial products or services that provide appropriately defined and limited services to certain types of customers, so as to increase access for financial inclusion purposes.
      3. Country risk factors:
         • Countries identified by credible sources, such as mutual evaluation or detailed assessment reports, as having effective AML/CFT systems.
         • Countries identified by credible sources as having a low level of corruption or other criminal activity Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3..

      In making a risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. assessment, countries or financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      could, when appropriate, also take into account possible variations in money laundering and terrorist financing risk between different regions or areas within a countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions..

  18. Having a lower money laundering and terrorist financing risk for identification and verification purposes does not automatically mean that the same customer is lower risk for all types of CDD measures, in particular for ongoing monitoring of transactions.

  Risk variables

  19. When assessing the money laundering and terrorist financing risks relating to types of customers, countries or geographic areas, and particular products, services, transactions or delivery channels risk, a financial institution should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. take into account risk variables relating to those risk categories. These variables, either singly or in combination, may increase or decrease the potential risk posed, thus impacting the appropriate level of CDD measures. Examples of such variables include:
      • The purpose of an account or relationship.
      • The level of assets to be deposited by a customer or the size of transactions undertaken.
      • The regularity or duration of the business relationship.

  Enhanced CDD measures

  20. financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      should examine, as far as reasonably possible, the background and purpose of all complex, unusual large transactions, and all unusual patterns of transactions, which have no apparent economic or lawful purpose. Where the risks of money laundering or terrorist financing are higher, financial institutions should be required to conduct enhanced CDD measures, consistent with the risks identified. In particular, they should increase the degree and nature of monitoring of the business relationship, in order to determine whether those transactions or activities appear unusual or suspicious. Examples of enhanced CDD measures that could be applied for higher-risk business relationships include:
      • Obtaining additional information on the customer (e.g. occupation, volume of assets, information available through public databases, internet, etc.), and updating more regularly the identification data The term identification data refers to reliable, independent source documents, data or information. of customer and beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement..
      • Obtaining additional information on the intended nature of the business relationship.
      • Obtaining information on the source of funds or source of wealth of the customer.
      • Obtaining information on the reasons for intended or performed transactions.
      • Obtaining the approval of senior management to commence or continue the business relationship.
      • Conducting enhanced monitoring of the business relationship, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.
      • Requiring the first payment to be carried out through an account in the customer’s name with a bank subject to similar CDD standards.

  Simplified CDD measures

  21. Where the risks of money laundering or terrorist financing are lower, financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      could be allowed to conduct simplified CDD measures, which should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. take into account the nature of the lower risk. The simplified measures should be commensurate with the lower risk factors (e.g. the simplified measures could relate only to customer acceptance measures or to aspects of ongoing monitoring). Examples of possible measures are:
      • Verifying the identity of the customer and the beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. after the establishment of the business relationship (e.g. if account transactions rise above a defined monetary threshold).
      • Reducing the frequency of customer identification updates.
      • Reducing the degree of on-going monitoring and scrutinising transactions, based on a reasonable monetary threshold.
      • Not collecting specific information or carrying out specific measures to understand the purpose and intended nature of the business relationship, but inferring the purpose and nature from the type of transactions or business relationship established.

      Simplified CDD measures are not acceptable whenever there is a suspicion of money laundering or terrorist financing, or where specific higher-risk scenarios apply.

  Thresholds

  22. The designated threshold for occasional transactions under Recommendation 10 is USD/EUR 15,000. Financial transactions above the designated threshold include situations where the transaction is carried out in a single operation or in several operations that appear to be linked.

  Ongoing due diligence

  23. Financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      should be required to ensure that documents, data or information collected under the CDD process is kept up-to-date and relevant by undertaking reviews of existing records, particularly for higher-risk categories of customers.

Financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
1) Acceptance of deposits and other repayable funds from the public.
2) Lending.
3) Financial leasing.
4) Money or value transfer services.
5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
6) Financial guarantees and commitments.
7) Trading in:
a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
b) foreign exchange;
c) exchange, interest rate and index instruments;
d) transferable securities;
8) Participation in securities issues and the provision of financial services related to such issues.
9) Individual and collective portfolio management.
11) Otherwise investing, administering or managing funds or money on behalf of other persons.
12) Underwriting and placement of life insurance and other investment related insurance.
13) Money and currency changing.
should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. take reasonable measures The term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks. to determine whether the beneficiaries of a life insurance policy and/or, where required, the beneficial ownerBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. of the beneficiaryThe meaning of the term beneficiary in the FATF Recommendations depends on the context:
- In trust law, a beneficiary is the person or persons who are entitled to the benefit of any trust arrangement. A beneficiary can be a natural or legal person or arrangement. All trusts (other than charitable or statutory permitted non-charitable trusts) are required to have ascertainable beneficiaries. While trusts must always have some ultimately ascertainable beneficiary, trusts may have no defined existing beneficiaries but only objects of a power until some person becomes entitled as beneficiary to income or capital on the expiry of a defined period, known as the accumulation period. This period is normally coextensive with the trust perpetuity period which is usually referred to in the trust deed as the trust period.
- In the context of life insurance or another investment linked insurance policy, a beneficiary is the natural or legal person, or a legal arrangement, or category of persons, who will be paid the policy proceeds when/if an insured event occurs, which is covered by the policy.
Please also refer to the Interpretive Notes to Recommendations 10 and 16. are politically exposed persons Foreign PEPs are individuals who are or have been entrusted with prominent public functions by a foreign country, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.
Domestic PEPs are individuals who are or have been entrusted domestically with prominent public functions, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.
Persons who are or have been entrusted with a prominent function by an international organisation refers to members of senior management, i.e. directors, deputy directors and members of the board or equivalent functions.
The definition of PEPs is not intended to cover middle ranking or more junior individuals in the foregoing categories.. This should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. occur at the latest at the time of the payout. Where there are higher risks All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. identified, in addition to performing normal CDD measures, financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
1) Acceptance of deposits and other repayable funds from the public.
2) Lending.
3) Financial leasing.
4) Money or value transfer services.
5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
6) Financial guarantees and commitments.
7) Trading in:
a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
b) foreign exchange;
c) exchange, interest rate and index instruments;
d) transferable securities;
8) Participation in securities issues and the provision of financial services related to such issues.
9) Individual and collective portfolio management.
11) Otherwise investing, administering or managing funds or money on behalf of other persons.
12) Underwriting and placement of life insurance and other investment related insurance.
13) Money and currency changing.
should be required to:

The similar relationships to which financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
1) Acceptance of deposits and other repayable funds from the public.
2) Lending.
3) Financial leasing.
4) Money or value transfer services.
5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
6) Financial guarantees and commitments.
7) Trading in:
a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
b) foreign exchange;
c) exchange, interest rate and index instruments;
d) transferable securities;
8) Participation in securities issues and the provision of financial services related to such issues.
9) Individual and collective portfolio management.
11) Otherwise investing, administering or managing funds or money on behalf of other persons.
12) Underwriting and placement of life insurance and other investment related insurance.
13) Money and currency changing.
should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. apply criteria (a) to (e) include, for example those established for securities transactions or funds transfers, whether for the cross-border financial institution as principal or for its customers.

The term payable-through accountsReferences to "accounts" should be read as including other similar business relationships between financial institutions and their customers. refers to correspondent accountsReferences to "accounts" should be read as including other similar business relationships between financial institutions and their customers. that are used directly by third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17. to transact business on their own behalf.

A countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. need not impose a separate licensing or registration system with respect to natural or legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. already licensed or registered as financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
1) Acceptance of deposits and other repayable funds from the public.
2) Lending.
3) Financial leasing.
4) Money or value transfer services.
5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
6) Financial guarantees and commitments.
7) Trading in:
a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
b) foreign exchange;
c) exchange, interest rate and index instruments;
d) transferable securities;
8) Participation in securities issues and the provision of financial services related to such issues.
9) Individual and collective portfolio management.
11) Otherwise investing, administering or managing funds or money on behalf of other persons.
12) Underwriting and placement of life insurance and other investment related insurance.
13) Money and currency changing.
(as defined by the FATF Recommendations) within that country, which, under such license or registration, are permitted to perform money or value transfer services Money or value transfer services (MVTS) refers to financial services that involve the acceptance of cash, cheques, other monetary instruments or other stores of value and the payment of a corresponding sum in cash or other form to a beneficiary by means of a communication, message, transfer, or through a clearing network to which the MVTS provider belongs. Transactions performed by such services can involve one or more intermediaries and a final payment to a third party, and may include any new payment methods. Sometimes these services have ties to particular geographic regions and are described using a variety of specific terms, including hawala, hundi, and fei-chen., and which are already subject to the full range of applicable obligations under the FATF Recommendations.

1. OBJECTIVE
   1. Recommendation 16 was developed with the objective of preventing terrorists and other criminals from having unfettered access to wire transfers for moving their funds, and for detecting such misuse when it occurs. Specifically, it aims to ensure that basic information on the originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. and beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. of wire transfers is immediately available:
      1. to appropriate law enforcement and/or prosecutorial authorities to assist them in detecting, investigating, and prosecuting terrorists or other criminals, and tracing their assets;
      2. to financial intelligence units for analysing suspicious or unusual activity, and disseminating it as necessary, and
      3. to ordering, intermediary and beneficiary financial institutionsrefers to the financial institution which receives the wire transfer from the ordering financial institution directly or through an intermediary financial institution and makes the funds available to the beneficiary. to facilitate the identification and reporting of suspicious transactions, and to implement the requirements to take freezing action and comply with prohibitions from conducting transactions with designated persons and entities, as per the obligations set out in the relevant United Nations Security Council resolutions, such as resolution 1267 (1999) and its successor resolutions, and resolution 1373 (2001) relating to the prevention and suppression of terrorism and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations..
   2. To accomplish these objectives, countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. have the ability to trace all wire transfers. Due to the potential terrorist financing threat posed by small wire transfers, countries should minimise thresholds taking into account the risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. of driving transactions underground and the importance of financial inclusion. It is not the intention of the FATF to impose rigid standards or to mandate a single operating process that would negatively affect the payment system.
2. SCOPE
   3. Recommendation 16 applies to cross-border wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. and domestic wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in the same country. This term therefore refers to any chain of wire transfer that takes place entirely within the borders of a single country, even though the system used to transfer the payment message may be located in another country. The term also refers to any chain of wire transfer that takes place entirely within the borders of the European Economic Area (EEA) , including serial payments refers to a direct sequential chain of payment where the wire transfer and accompanying payment message travel together from the ordering financial institution to the beneficiary financial institution directly or through one or more intermediary financial institutions (e.g. correspondent banks)., and cover payments refers to a wire transfer that combines a payment message sent directly by the ordering financial institution to the beneficiary financial institution with the routing of the funding instruction (the cover) from the ordering financial institution to the beneficiary financial institution through one or more intermediary financial institutions..
   4. Recommendation 16 is not intended to cover the following types of payments:
      1. Any transfer that flows from a transaction carried out using a credit or debit or prepaid card for the purchase of goods or services, so long as the credit or debit or prepaid card number accompanies all transfers flowing from the transaction. However, when a credit or debit or prepaid card is used as a payment system to effect a person-to-person wire transfer, the transaction is covered by Recommendation 16, and the necessary information should be included in the message.
      2. Financial institution-to-financial institution transfers and settlements, where both the originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. person and the beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. person are financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
         1) Acceptance of deposits and other repayable funds from the public.
         2) Lending.
         3) Financial leasing.
         4) Money or value transfer services.
         5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
         6) Financial guarantees and commitments.
         7) Trading in:
         a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
         b) foreign exchange;
         c) exchange, interest rate and index instruments;
         d) transferable securities;
         8) Participation in securities issues and the provision of financial services related to such issues.
         9) Individual and collective portfolio management.
         11) Otherwise investing, administering or managing funds or money on behalf of other persons.
         12) Underwriting and placement of life insurance and other investment related insurance.
         13) Money and currency changing.
         acting on their own behalf.
   5. Countries may adopt a de minimis threshold for cross-border wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. (no higher than USD/EUR 1,000), below which the following requirements should apply:
      1. Countries should ensure that financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
         1) Acceptance of deposits and other repayable funds from the public.
         2) Lending.
         3) Financial leasing.
         4) Money or value transfer services.
         5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
         6) Financial guarantees and commitments.
         7) Trading in:
         a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
         b) foreign exchange;
         c) exchange, interest rate and index instruments;
         d) transferable securities;
         8) Participation in securities issues and the provision of financial services related to such issues.
         9) Individual and collective portfolio management.
         11) Otherwise investing, administering or managing funds or money on behalf of other persons.
         12) Underwriting and placement of life insurance and other investment related insurance.
         13) Money and currency changing.
         include with such transfers: (i) the name of the originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer.; (ii) the name of the beneficiary; and (iii) an account number for each, or a unique transaction reference number refers to a combination of letters, numbers or symbols, determined by the payment service provider, in accordance with the protocols of the payment and settlement system or messaging system used for the wire transfer.. Such information need not be verified for accuracy, unless there is a suspicion of money laundering or terrorist financing, in which case, the financial institution should verify the information pertaining to its customer.
      2. Countries may, nevertheless, require that incoming cross-border wire transfers below the threshold contain required and accurateis used to describe information that has been verified for accuracy. originator information.
3. CROSS-BORDER QUALIFYING WIRE TRANSFERS
   6. Information accompanying all qualifying wire transfers should always contain:
      1. the name of the originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer.;
      2. the originator account number where such an account is used to process the transaction;
      3. the originator's address, or national identity number, or customer identification number*The customer identification number refers to a number which uniquely identifies the originator to the originating financial institution and is a different number from the unique transaction reference number referred to in paragraph 7. The customer identification number must refer to a record held by the originating financial institution which contains at least one of the following: the customer address, a national identity number, or a date and place of birth., or date and place of birth;
      4. the name of the beneficiary; and
      5. the beneficiary account number where such an account is used to process the transaction.
   7. In the absence of an account, a unique transaction reference number should be included which permits traceability of the transaction.
   8. Where several individual cross-border wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. from a single originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. are bundled in a batch file for transmission to beneficiaries, they may be exempted from the requirements of paragraph 6 in respect of originator information, provided that they include the originator's account number or unique transaction reference number refers to a combination of letters, numbers or symbols, determined by the payment service provider, in accordance with the protocols of the payment and settlement system or messaging system used for the wire transfer. (as described in paragraph 7 above), and the batch file contains required and accurate is used to describe information that has been verified for accuracy. originator information, and full beneficiary information, that is fully traceable within the beneficiary countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions..
4. DOMESTIC WIRE TRANSFERS
   9. Information accompanying domestic wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in the same country. This term therefore refers to any chain of wire transfer that takes place entirely within the borders of a single country, even though the system used to transfer the payment message may be located in another country. The term also refers to any chain of wire transfer that takes place entirely within the borders of the European Economic Area (EEA) should also include originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. information as indicated for cross-border wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country., unless this information can be made available to the beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. financial institution and appropriate authoritiesRefers to competent authorities, including accrediting institutions, and self-regulatory bodies. by other means. In this latter case, the ordering financial institution refers to the financial institution which initiates the wire transfer and transfers the funds upon receiving the request for an wire transfer on behalf of the originator. need only include the account number or a unique transaction reference number, provided that this number or identifier will permit the transaction to be traced back to the originator or the beneficiary.
   10. The information should be made available by the ordering financial institution within three business days of receiving the request either from the beneficiary financial institutionrefers to the financial institution which receives the wire transfer from the ordering financial institution directly or through an intermediary financial institution and makes the funds available to the beneficiary. or from appropriate competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.. Law enforcement authorities should be able to compel immediate production of such information.
5. RESPONSIBILITIES OF ORDERING, INTERMEDIARY AND BENEFICIARY FINANCIAL INSTITUTIONS

   Ordering financial institution

   11. The ordering financial institution refers to the financial institution which initiates the wire transfer and transfers the funds upon receiving the request for an wire transfer on behalf of the originator. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. ensure that Qualifying wire transfers means a cross-border wire transfer above any applicable threshold as described in paragraph 5 of the Interpretive Note to Recommendation 16. contain required and accurate is used to describe information that has been verified for accuracy. originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. information, and required beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. information.
   12. The ordering financial institution should ensure that cross-border wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. below any applicable threshold contain the name of the originator and the name of the beneficiary and an account number for each, or a unique transaction reference number refers to a combination of letters, numbers or symbols, determined by the payment service provider, in accordance with the protocols of the payment and settlement system or messaging system used for the wire transfer..
   13. The ordering financial institution should maintain all originator and beneficiary information collected, in accordance with Recommendation 11.
   14. The ordering financial institution should not be allowed to execute the wire transfer if it does not comply with the requirements specified above.

   Intermediary financial institution Refers to a financial institution in a serial or cover payment chain that receives and transmits a wire transfer on behalf of the ordering financial institution and the beneficiary financial institution, or another intermediary financial institution.

   15. For cross-border wire transfers, financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
       1) Acceptance of deposits and other repayable funds from the public.
       2) Lending.
       3) Financial leasing.
       4) Money or value transfer services.
       5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
       6) Financial guarantees and commitments.
       7) Trading in:
       a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
       b) foreign exchange;
       c) exchange, interest rate and index instruments;
       d) transferable securities;
       8) Participation in securities issues and the provision of financial services related to such issues.
       9) Individual and collective portfolio management.
       11) Otherwise investing, administering or managing funds or money on behalf of other persons.
       12) Underwriting and placement of life insurance and other investment related insurance.
       13) Money and currency changing.
       processing an intermediary element of such chains of wire transfers should ensure that all originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. and beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. information that accompanies a wire transfer is retained with it
   16. Where technical limitations prevent the required originator or beneficiary information accompanying a cross-border wire transfer refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. from remaining with a related domestic wire transfer, a record should be kept, for at least five years, by the receiving Intermediary financial institution Refers to a financial institution in a serial or cover payment chain that receives and transmits a wire transfer on behalf of the ordering financial institution and the beneficiary financial institution, or another intermediary financial institution. of all the information received from the ordering financial institution or another intermediary financial institution.
   17. An intermediary financial institution should take reasonable measures The term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks. to identify crossborder wire transfers that lack required originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. information or required beneficiary information. Such measures should be consistent with straight-through processing. refers to payment transactions that are conducted electronically without the need for manual intervention.
   18. An intermediary financial institution should have effective risk-based policies and procedures for determining: (i) when to execute, reject, or suspend a wire transfer lacking required originator or required beneficiary information; and (ii) the appropriate follow-up action.

   Beneficiary financial institution

   19. A beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. financial institution should take reasonable measures The term Reasonable Measures means: appropriate measures which are commensurate with the money laundering or terrorist financing risks. to identify cross-border wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in different countries. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. that lack required originator or required beneficiary information. Such measures may include post-event monitoring or real-time monitoring where feasible.
   20. For Qualifying wire transfers means a cross-border wire transfer above any applicable threshold as described in paragraph 5 of the Interpretive Note to Recommendation 16., a beneficiary financial institutionrefers to the financial institution which receives the wire transfer from the ordering financial institution directly or through an Intermediary financial institution and makes the funds available to the beneficiary. should verify the identity of the beneficiary, if the identity has not been previously verified, and maintain this information in accordance with Recommendation 11.
   21. A beneficiary financial institution should have effective risk-based policies and procedures for determining: (i) when to execute, reject, or suspend a wire transfer lacking required originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. or required beneficiary information; and (ii) the appropriate follow-up action.
6. MONEY OR VALUE TRANSFER SERVICE OPERATORS
   22. Money or value transfer services Money or value transfer services (MVTS) refers to financial services that involve the acceptance of cash, cheques, other monetary instruments or other stores of value and the payment of a corresponding sum in cash or other form to a beneficiary by means of a communication, message, transfer, or through a clearing network to which the MVTS provider belongs. Transactions performed by such services can involve one or more intermediaries and a final payment to a third party, and may include any new payment methods. Sometimes these services have ties to particular geographic regions and are described using a variety of specific terms, including hawala, hundi, and fei-chen. (MVTS) providers should be required to comply with all of the relevant requirements of Recommendation 16 in the countries in which they operate, directly or through their agentsFor the purposes of Recommendations 14 and 16, agent means any natural or legal person providing MVTS on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider.. In the case of a MVTS provider that controls both the ordering and the beneficiaryrefers to the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer. side of a wire transfer, the MVTS provider:
       1. should take into account all the information from both the ordering and beneficiary sides in order to determine whether an STR has to be filed; and
       2. should file an STR in any countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. affected by the suspicious wire transfer, and make relevant transaction information available to the Financial Intelligence Unit.

1. This Recommendation does not apply to outsourcing or agency relationships. In a thirdparty reliance scenario, the third party should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be subject to CDD and record-keeping requirements in line with Recommendations 10 and 11, and be regulated, supervised or monitored. The third party will usually have an existing business relationship with the customer, which is independent from the relationship to be formed by the customer with the relying institution, and would apply its own procedures to perform the CDD measures. This can be contrasted with an outsourcing/agency scenario, in which the outsourced entity applies the CDD measures on behalf of the delegating financial institution, in accordance with its procedures, and is subject to the delegating financial institution's control of the effective implementation of those procedures by the outsourced entity.
2. For the purposes of Recommendation 17, the term relevant competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. means (i) the home authority, that should be involved for the understanding of group policies and controls at group-wide level, and (ii) the host authorities, that should be involved for the branches/subsidiaries.
3. The term third parties means financial institutions or DNFBPs that are supervised or monitored and that meet the requirements under Recommendation 17.

1. Financial institutions' Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
   1) Acceptance of deposits and other repayable funds from the public.
   2) Lending.
   3) Financial leasing.
   4) Money or value transfer services.
   5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
   6) Financial guarantees and commitments.
   7) Trading in:
   a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
   b) foreign exchange;
   c) exchange, interest rate and index instruments;
   d) transferable securities;
   8) Participation in securities issues and the provision of financial services related to such issues.
   9) Individual and collective portfolio management.
   11) Otherwise investing, administering or managing funds or money on behalf of other persons.
   12) Underwriting and placement of life insurance and other investment related insurance.
   13) Money and currency changing.
   programmes against money laundering and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. include:
   1. the development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees;
   2. an ongoing employee training programme; and
   3. an independent audit function to test the system.
2. The type and extent of measures to be taken should be appropriate having regard to the risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. of money laundering and terrorist financing and the size of the business.
3. Compliance management arrangements should include the appointment of a compliance officer at the management level.
4. Financial groups' Financial group means a group that consists of a parent company or of any other type of legal person exercising control and coordinating functions over the rest of the group for the application of group supervision under the Core Principles, together with branches and/or subsidiaries that are subject to AML/CFT policies and procedures at the group level. programmes against money laundering and terrorist financing should be applicable to all branches and majority-owned subsidiaries of the financial group. These programmes should include measures under (a) to (c) above, and should be appropriate to the business of the branches and majority-owned subsidiaries. Such programmes should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be implemented effectively at the level of branches and majority-owned subsidiaries. These programmes should include policies and procedures for sharing information required for the purposes of CDD and money laundering and terrorist financing risk management. Grouplevel compliance, audit, and/or AML/CFT functions should be provided with customer, account, and transaction information from branches and subsidiaries when necessary for AML/CFT purposes. This should include information and analysis of transactions or activities which appear unusual (if such analysis was done); and could include an STR, its underlying information, or the fact that an STR has been submitted. Similarly, branches and subsidiaries should receive such information from these group-level functions when relevant and appropriate to risk management. Adequate safeguards on the confidentiality and use of information exchanged should bе in place, including to prevent tipping-off. Countries maу determine the scope and extent of this information sharing. based on the sensitivity of the information, and its relevance to AML/CFT risk management.

5. In the case of their foreign operations, where the minimum AML/CFT requirements of the host countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. are less strict than those of the home country, financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
   1) Acceptance of deposits and other repayable funds from the public.
   2) Lending.
   3) Financial leasing.
   4) Money or value transfer services.
   5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
   6) Financial guarantees and commitments.
   7) Trading in:
   a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
   b) foreign exchange;
   c) exchange, interest rate and index instruments;
   d) transferable securities;
   8) Participation in securities issues and the provision of financial services related to such issues.
   9) Individual and collective portfolio management.
   11) Otherwise investing, administering or managing funds or money on behalf of other persons.
   12) Underwriting and placement of life insurance and other investment related insurance.
   13) Money and currency changing.
   should be required to ensure that their branches and majority-owned subsidiaries in host countries implement the requirements of the home country, to the extent that host country laws and regulations permit.
   If the host country does not permit the proper implementation of the measures above, financial groups Financial group means a group that consists of a parent company or of any other type of legal person exercising control and coordinating functions over the rest of the group for the application of group supervision under the Core Principles, together with branches and/or subsidiaries that are subject to AML/CFT policies and procedures at the group level. should apply appropriate additional measures to manage the money laundering and terrorist financing risks, and inform their home supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions (�financial supervisors� 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions.. If the additional measures are not sufficient, competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. in the home country should consider additional supervisory actions, including placing additional controls on the financial group, including, as appropriate, requesting the financial group to close down its operations in the host country.

1. The enhanced due diligence measures that could be undertaken by financial institutions Financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
   1) Acceptance of deposits and other repayable funds from the public.
   2) Lending.
   3) Financial leasing.
   4) Money or value transfer services.
   5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
   6) Financial guarantees and commitments.
   7) Trading in:
   a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
   b) foreign exchange;
   c) exchange, interest rate and index instruments;
   d) transferable securities;
   8) Participation in securities issues and the provision of financial services related to such issues.
   9) Individual and collective portfolio management.
   11) Otherwise investing, administering or managing funds or money on behalf of other persons.
   12) Underwriting and placement of life insurance and other investment related insurance.
   13) Money and currency changing.
   include those measures set out in paragraph 20 of the Interpretive Note to Recommendation 10, and any other measures that have a similar effect in mitigating risks All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1..
2. Examples of the countermeasures that could be undertaken by countries include the following, and any other measures that have a similar effect in mitigating risks:
   1. Requiring financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      to apply specific elements of enhanced due diligence.
   2. Introducing enhanced relevant reporting mechanisms or systematic reporting of financial transactions.
   3. Refusing the establishment of subsidiaries or branches or representative offices of financial institutions from the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. concerned, or otherwise taking into account the fact that the relevant financial institution is from a country that does not have adequate AML/CFT systems.
   4. Prohibiting financial institutions from establishing branches or representative offices in the country concerned, or otherwise taking into account the fact that the relevant branch or representative office would be in a country that does not have adequate AML/CFT systems.
   5. Limiting business relationships or financial transactions with the identified country or persons in that country.
   6. Prohibiting financial institutions from relying on third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17. located in the country concerned to conduct elements of the CDD process.
   7. Requiring financial institutions to review and amend, or if necessary terminate, correspondent relationships with financial institutions in the country concerned.
   8. Requiring increased supervisory examination and/or external audit requirements for branches and subsidiaries of financial institutions based in the country concerned.
   9. Requiring increased external audit requirements for financial groups Financial group means a group that consists of a parent company or of any other type of legal person exercising control and coordinating functions over the rest of the group for the application of group supervision under the Core Principles, together with branches and/or subsidiaries that are subject to AML/CFT policies and procedures at the group level. with respect to any of their branches and subsidiaries located in the country concerned.

   There should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be effective measures in place to ensure that financial institutions are advised of concerns about weaknesses in the AML/CFT systems of other countries

1. The reference to criminal activity Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3. in Recommendation 20 refers to all criminal acts that would constitute a predicate offence for money laundering or, at a minimum, to those offences that would constitute a predicate offence, as required by Recommendation 3. Countries are strongly encouraged to adopt the first of these alternatives.

2. The reference to terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. in Recommendation 20 refers to: the financing of terrorist acts A terrorist act includes:
   1) an act which constitutes an offence within the scope of, and as defined in one of the following treaties: (i) Convention for the Suppression of Unlawful Seizure of Aircraft (1970); (ii) Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971); (iii) Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973); (iv) International Convention against the Taking of Hostages (1979); (v) Convention on the Physical Protection of Nuclear Material (1980); (vi) Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988); (vii) Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation ( 2005); (viii) Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (2005); (ix) International Convention for the Suppression of Terrorist Bombings (1997); and (x) International Convention for the Suppression of the Financing of Terrorism (1999).
   2) any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a Government or an international organisation to do or to abstain from doing any act. and also terrorist organisations The term terrorist organisation refers to any group of terrorists that: (i) commits, or attempts to commit, terrorist acts by any means, directly or indirectly, unlawfully and wilfully; (ii) participates as an accomplice in terrorist acts; (iii) organises or directs others to commit terrorist acts; or (iv) contributes to the commission of terrorist acts by a group of persons acting with a common purpose where the contribution is made intentionally and with the aim of furthering the terrorist act or with the knowledge of the intention of the group to commit a terrorist act. or individual terrorists, even in the absence of a link to a specific terrorist act or acts.
3. All suspicious transactions, including attempted transactions, should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be reported regardless of the amount of the transaction.
4. The reporting requirement should be a direct mandatory obligation, and any indirect or implicit obligation to report suspicious transactions, whether by reason of possible prosecution for a money laundering or terrorist financing offence References (except in Recommendation 4) to a terrorist financing offence refer not only to the primary offence or offences, but also to ancillary offences. or otherwise (so called "indirect reporting"), is not acceptable.

1. The designated thresholds for transactions are as follows:
   • Casinos (under Recommendation 22) - USD/EUR 3,000
   • For dealers in precious metals and dealers in precious stones when engaged in any cash transaction (under Recommendations 22 and 23) - USD/EUR 15,000.

   Financial transactions above a designated threshold include situations where the transaction is carried out in a single operation or in several operations that appear to be linked.

2. The Interpretive Notes that apply to financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
   1) Acceptance of deposits and other repayable funds from the public.
   2) Lending.
   3) Financial leasing.
   4) Money or value transfer services.
   5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
   6) Financial guarantees and commitments.
   7) Trading in:
   a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
   b) foreign exchange;
   c) exchange, interest rate and index instruments;
   d) transferable securities;
   8) Participation in securities issues and the provision of financial services related to such issues.
   9) Individual and collective portfolio management.
   11) Otherwise investing, administering or managing funds or money on behalf of other persons.
   12) Underwriting and placement of life insurance and other investment related insurance.
   13) Money and currency changing.
   are also relevant to DNFBPs, where applicable. For the purposes of R.23, the requirements referring to ‘financial groups’ in R.18 apply to DNFBP groups operating under the same structure as financial groups. In addition, countries should consider applying the requirements for group-wide programmes to DNFBPs operating in other structures sharing common ownership, management or compliance control to the extent that those structures could better mitigate ML/TF risks by applying group-wide programmes. The type and extent of measures to be taken should be appropriate to the business conducted, the risk of money laundering and terrorist financing and the size of the business. For example, as set out in INR.18, countries may determine the scope and extent of information sharing, based on the sensitivity of the information, and its relevance to AML/CFT risk management.
3. To comply with Recommendations 22 and 23, countries do not need to issue laws or enforceable means that relate exclusively to lawyers, notaries, accountants and the other designated non-financial businesses and professions, so long as these businesses or professions are included in laws or enforceable means covering the underlying activities.

INTERPRETIVE NOTE TO RECOMMENDATION 22 (DNFBPS - CUSTOMER DUE DILIGENCE)

1. Real estate agentsFor the purposes of Recommendations 14 and 16, agent means any natural or legal person providing MVTS on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. comply with the requirements of Recommendation 10 with respect to both the purchasers and vendors of the property Property means assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets..
2. Casinos should implement Recommendation 10, including identifying and verifying the identity of customers, when their customers engage in financial transactions equal to or above USD/EUR 3,000. Conducting customer identification at the entry to a casino could be, but is not necessarily, sufficient. Countries must require casinos to ensure that they are able to link customer due diligence information for a particular customer to the transactions that the customer conducts in the casino.

1. The designated thresholds for transactions are as follows:
   • Casinos (under Recommendation 22) - USD/EUR 3,000
   • For dealers in precious metals and dealers in precious stones when engaged in any cash transaction (under Recommendations 22 and 23) - USD/EUR 15,000.

   Financial transactions above a designated threshold include situations where the transaction is carried out in a single operation or in several operations that appear to be linked.

2. The Interpretive Notes that apply to financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
   1) Acceptance of deposits and other repayable funds from the public.
   2) Lending.
   3) Financial leasing.
   4) Money or value transfer services.
   5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
   6) Financial guarantees and commitments.
   7) Trading in:
   a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
   b) foreign exchange;
   c) exchange, interest rate and index instruments;
   d) transferable securities;
   8) Participation in securities issues and the provision of financial services related to such issues.
   9) Individual and collective portfolio management.
   11) Otherwise investing, administering or managing funds or money on behalf of other persons.
   12) Underwriting and placement of life insurance and other investment related insurance.
   13) Money and currency changing.
   are also relevant to DNFBPs, where applicable. To comply with Recommendations 22 and 23, countries do not need to issue laws or enforceable means Please refer to the Note on the Legal Basis of requirements on Financial Institutions and DNFBPs. that relate exclusively to lawyers, notaries, accountants and the other designated non-financial businesses and professions, so long as these businesses or professions are included in laws or enforceable means covering the underlying activities.

INTERPRETIVE NOTE TO RECOMMENDATION 23 (DNFBPS - OTHER MEASURES)

1. Lawyers, notaries, other independent legal professionals, and accountants acting as independent legal professionals, are not required to report suspicious transactions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.
2. It is for each countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. to determine the matters that would fall under legal professional privilege or professional secrecy. This would normally cover information lawyers, notaries or other independent legal professionals receive from or obtain through one of their clients: (a) in the course of ascertaining the legal position of their client, or (b) in performing their task of defending or representing that client in, or concerning judicial, administrative, arbitration or mediation proceedings.
3. Countries may allow lawyers, notaries, other independent legal professionals and accountants to send their STR to their appropriate self-regulatory bodies, provided that there are appropriate forms of cooperation between these organisations and the FIU.
4. Where lawyers, notaries, other independent legal professionals and accountants acting as independent legal professionals seek to dissuade a client from engaging in illegal activity, this does not amount to tipping-off.

1. Competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be able to obtain, or have access in a timely fashion to, adequate, accurateis used to describe information that has been verified for accuracy. and up-to-date information on the beneficial ownership and control of companies and other legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. (beneficial ownership information*Beneficial ownership information for legal persons is the information referred to in the interpretive note to Recommendation 10, paragraph 5(b)(i). Controlling shareholders as referred to in, paragraph 5(b)(i) of the interpretive note to Recommendation 10 may be based on a threshold, e.g. any persons owning more than a certain percentage of the company (e.g. 25%).) that are created*References to creating a legal person, include incorporation of companies or any other mechanism that is used. in the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions., as well as those that present ML/TF risks and have sufficient links*Countries may determine what is considered a sufficient link on the basis of risk. Examples of sufficiency tests may include, but are not limited to, when a company has permanent establishment/branch/agency, has significant business activity or has significant and ongoing business relations with financial institutions or DNFBPs, subject to AML/CFT regulation, has significant real estate/other local investment, employs staff, or is a tax resident, in the country. with their country (if they are not created in the country). Countries may choose the mechanisms they rely on to achieve this objective, although they should also comply with the minimum requirements set out below. Countries should utilise a combination of mechanisms to achieve the objective.
2. As part of the process described in paragraph 1 of ensuring that there is adequate transparency regarding legal persons, countries should have mechanisms that:
   1. identify and describe the different types, forms and basic features of legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities. in the country.
   2. identify and describe the processes for: (i) the creation of those legal persons; and (ii) the obtaining and recording of basic and beneficial ownership information;
   3. make the above information publicly available; and
   4. assess the money laundering and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. risks All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1. associated with different types of legal persons created in the country, and take appropriate steps to manage and mitigate the risks that they identify; and
   5. assess the money laundering and terrorist financing risks to which their country is exposed, associated with different types of foreign-created legal persons, and take appropriate steps to manage and mitigate the risks that they identify*This could be done through national and/or supranational measures. These could include requiring beneficial ownership information on some types of foreign-created legal persons to be held as set out under paragraph 7..

1. BASIC INFORMATION
   3. In order to determine who the beneficial ownersBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. of a company*Recommendation 24 applies to all forms of legal persons. The requirements are described primarily with reference to companies, but similar requirements should be applied to other types of legal person, taking into account their different forms and structures - as set out in Section E. are, competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. will require certain basic information about the company, which, at a minimum, would include information about the legal ownership and control structure of the company. This would include information about the status and powers of the company, its shareholders and its directors.
   4. All companies created in a countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. should be registered in a company registry.*"Company registry" refers to a register in the country of companies incorporated or licensed in that country and normally maintained by or for the incorporating authority. It does not refer to information held by or for the company itself. Whichever combination of mechanisms is used to obtain and record beneficial ownership information (see section B), there is a set of basic information on a company that needs to be obtained and recorded by the company*The information can be recorded by the company itself or by a third person under the company's responsibility. as a necessary prerequisite. The minimum basic information to be obtained and recorded by a company should be:
      1. company name, proof of incorporation, legal form and status, the address of the registered office, basic regulating powers (e.g. memorandum & articles of association), a list of directors, and unique identifier such as a tax identification number or equivalent (where this exists)*This information should be made public, as set out in paragraph 11.; and
      2. a register of its shareholders or members, containing the names of the shareholders and members and number of shares held by each shareholder*This is applicable to the nominal owner of all registered shares. and categories of shares (including the nature of the associated voting rights).
   5. The company registry*Or another public body in the case of a tax identification number. should record all the basic information set out in paragraph 4(a) above.
   6. The company should maintain the basic information set out in paragraph 4(b) within the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions., either at its registered office or at another location notified to the company registry. However, if the company or company registry holds beneficial ownership information within the country, then the register of shareholders need not be in the country, provided that the company can provide this information promptly on request.
2. BENEFICIAL OWNERSHIP INFORMATION
   7. Countries should follow a multi-pronged approach in order to ensure that the beneficial ownership of a company can be determined in a timely manner by a competent authority. Countries should decide, on the basis of risk, context and materiality, what form of registry or alternative mechanisms they will use to enable efficient access to information by competent authorities, and should document their decision. This should include the following:
      1. Countries should require companies to obtain and hold adequate, accurate and up-to-date information on the company’s own beneficial ownership; to co-operate with competent authorities to the fullest extent possible in determining the beneficial owner, including making the information available to competent authorities in a timely manner; and to co-operate with financial institutions/DNFBPs to provide adequate, accurate and up-to-date information on the company’s beneficial ownership information;
      2. (i) Countries should require adequate, accurate and up-to-date information on the beneficial ownership of legal persons to be held by a public authority or body (for example a tax authority, FIU, company registry, or beneficial ownership registry). Information need not be held by a single body only*A body could record beneficial ownership information alongside other information (e.g. basic ownership and incorporation information, tax information), or the source of information could take the form of multiple registries (e.g. for provinces or districts, for sectors, or for specific types of legal person such as NPOs), or of a private body entrusted with this task by the public authority.;
      3. (ii) Countries may decide to use an alternative mechanism instead of (b)(i) if it also provides authorities with efficient access to adequate, accurate and up-to-date BO information. For these purposes reliance on basic information or existing information alone is insufficient, but there must be some specific mechanism that provides efficient access to the information;
      4. Countries should use any additional supplementary measures that are necessary to ensure the beneficial ownership of a company can be determined; including for example information held by regulators or stock exchanges; or obtained by financial institutions and/or DNFBPs in accordance with Recommendations 10 and 22*Countries should be able to determine in a timely manner whether a company has or controls an account with a financial institution within the country..
   8. All the persons, authorities and entities mentioned above, and the company itself (or its administrators, liquidators or other persons involved in the dissolution of the company), should maintain the information and records referred to for at least five years after the date on which the company is dissolved or otherwise ceases to exist, or five years after the date on which the company ceases to be a customer of the professional intermediary or the financial institution.
3. TIMELY ACCESS TO ADEQUATE, ACCURATE AND UP-TO-DATE INFORMATION

   9. Countries should have mechanisms that ensure that basic information and beneficial ownership information, including information provided to the company registry and any available information referred to in paragraph 7, is adequate, accurate and up to date.

      Adequate information is information that is sufficient to identify*Examples of information aimed at identifying the natural person(s) who are the beneficial owner(s) include the full name, nationality(ies), the full date and place of birth, residential address, national identification number and document type, and the tax identification number or equivalent in the country of residence. the natural person(s) who are the beneficial owner(s), and the means and mechanisms through which they exercise beneficial ownership or control.

      Accurate information is information, which has been verified to confirm its accuracy by verifying the identity and status of the beneficial owner using reliable, independently sourced/obtained documents, data or information. The extent of verification measures may vary according to the specific level of risk.

      Countries should consider complementary measures as necessary to support the accuracy of beneficial ownership information, e.g. discrepancy reporting.

      Up-to-date information is information which is as current and up-to-date as possible, and is updated within a reasonable period (e.g. within one month) following any change.

   10. Competent authorities, and in particular law enforcement authorities and FIUs, should have all the powers necessary to be able to obtain timely access to the basic and beneficial ownership information held by the relevant parties, including rapid and efficient access to information held or obtained by a public authority or body or other competent authority on basic and beneficial ownership information, and/or on the financial institutions or DNFBPs which hold this information. In addition, countries should ensure public authorities at national level and others as appropriate have timely access to basic and beneficial ownership information on legal persons in the course of public procurement.
   11. Countries should require their company registry to facilitate timely access by financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
       1) Acceptance of deposits and other repayable funds from the public.
       2) Lending.
       3) Financial leasing.
       4) Money or value transfer services.
       5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
       6) Financial guarantees and commitments.
       7) Trading in:
       a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
       b) foreign exchange;
       c) exchange, interest rate and index instruments;
       d) transferable securities;
       8) Participation in securities issues and the provision of financial services related to such issues.
       9) Individual and collective portfolio management.
       11) Otherwise investing, administering or managing funds or money on behalf of other persons.
       12) Underwriting and placement of life insurance and other investment related insurance.
       13) Money and currency changing.
       , DNFBPs and other countries' competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. to the public information they hold, and, at a minimum to the information referred to in paragraph 4(a) above. Countries should also consider facilitating timely access by financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
       1) Acceptance of deposits and other repayable funds from the public.
       2) Lending.
       3) Financial leasing.
       4) Money or value transfer services.
       5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
       6) Financial guarantees and commitments.
       7) Trading in:
       a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
       b) foreign exchange;
       c) exchange, interest rate and index instruments;
       d) transferable securities;
       8) Participation in securities issues and the provision of financial services related to such issues.
       9) Individual and collective portfolio management.
       11) Otherwise investing, administering or managing funds or money on behalf of other persons.
       12) Underwriting and placement of life insurance and other investment related insurance.
       13) Money and currency changing.
       and DNFBPs to information referred to in paragraph 4(b) above and to beneficial ownership information held pursuant to paragraph 7 above, and could consider facilitating public access to this information.
4. OBSTACLES TO TRANSPARENCY
   12. Countries should take measures to prevent and mitigate the risk of the misuse of bearer shares and bearer share warrants*Or any other similar instruments without traceability. by prohibiting the issuance of new bearer shares and bearer share warrants; and, for any existing bearer shares and bearer share warrants, by applying one or more of the following mechanisms within a reasonable timeframe*These requirements do not apply to newly issued and existing bearer shares or bearer share warrants of a company listed on a stock exchange and subject to disclosure requirements (either by stock exchange rules or through law or enforceable means) which impose requirements to ensure adequate transparency of beneficial ownership.:
       1. converting them into a registered form; or
       2. immobilising them by requiring them to be held with a regulated financial institution or professional intermediary, with timely access to the information by the competent authorities; and
       3. during the period before (a) or (b) is completed, requiring holders of bearer instruments to notify the company, and the company to record their identity before any rights associated therewith can be exercised.
   13. Countries should take measures to prevent and mitigate the risk of the misuse of nominee shareholding and nominee directors, by applying one or more of the following mechanisms:
       1. requiring nominee shareholders and directors to disclose their nominee status and the identity of their nominator to the company and to any relevant registry, and for this information to be included in the relevant register, and for the information to be obtained, held or recorded by the public authority or body or the alternative mechanism referred to in paragraph 7. Nominee status should be included in public information;
       2. requiring nominee shareholders and directors to be licensed*A country need not impose a separate licensing or registration system with respect to natural or legal persons already licensed or registered as financial institutions or DNFBPs (as defined by the FATF Recommendations) within that country, which, under such license or registration, are permitted to perform nominee activities and which are already subject to the full range of applicable obligations under the FATF Recommendations., for their nominee status and the identity of their nominator to be obtained, held or recorded by the public authority or body or alternative mechanism referred to in paragraph 7 and for them to maintain information identifying their nominator and the natural person on whose behalf the nominee is ultimately acting*Identifying the beneficial owner in situations where a nominee holds a controlling interest or otherwise exercises effective control requires establishing the identity of the natural person on whose behalf the nominee is ultimately, directly or indirectly, acting., and make this information available to the competent authorities upon request*For intermediaries involved in such nominee activities, reference should be made to R.22 and R.28 in fulfilling the relevant requirements.;or
       3. enforcing a prohibition of the use of nominee shareholders or nominee directors.
5. OTHER LEGAL PERSONS
   14. In relation to foundations, Anstalt, Waqf*Except in countries where Waqf are legal arrangements under R.25. and limited liability partnerships, countries should take similar measures and impose similar requirements, as those required for companies, taking into account their different forms and structures.
   15. As regards other types of legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities., countries should take into account the different forms and structures of those other legal persons, and the levels of money laundering and terrorist financing risks associated with each type of legal person, with a view to achieving appropriate levels of transparency. At a minimum, countries should ensure that similar types of basic information should be recorded and kept accurateis used to describe information that has been verified for accuracy. and current by such legal persons, and that such information is accessible in a timely way by competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.. Countries should review the money laundering and terrorist financing risks associated with such other legal persons Legal persons refers to any entities other than natural persons that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities., and, based on the level of risk All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1., determine the measures that should be taken to ensure that competent authorities have timely access to adequate, accurate and current beneficial ownership information for such legal persons.
6. LIABILITY AND SANCTIONS
   16. There should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be a clearly stated responsibility to comply with the requirements in this Interpretive Note, as well as liability and effective, proportionate and dissuasive sanctions, as appropriate for any legal or natural person that fails to properly comply with the requirements.
7. INTERNATIONAL COOPERATION
   17. Countries should rapidly, constructively and effectively provide international cooperation in relation to basic and beneficial ownership information, on the basis set out in Recommendations 37 and 40. This should include (a) facilitating access by foreign competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. to basic information held by company registries; (b) exchanging information on shareholders; and (c) using their powers, in accordance with their domestic law, to obtain beneficial ownership information on behalf of foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU).. Countries should monitor the quality of assistance they receive from other countries in response to requests for basic and beneficial ownership information or requests for assistance in locating beneficial ownersBeneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. residing abroad.

1. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. require trustees The terms trust and trustee should be understood as described in and consistent with Article 2 of the Hague Convention on the law applicable to trusts and their recognition
   Trustees may be professional (e.g. depending on the jurisdiction, a lawyer or trust company) if they are paid to act as a trustee in the course of their business, or non-professional (e.g. a person acting without reward on behalf of family). of any express trust Express trust refers to a trust clearly created by the settlor, usually in the form of a document e.g. a written deed of trust. They are to be contrasted with trusts which come into being through the operation of the law and which do not result from the clear intent or decision of a settlor to create a trust or similar legal arrangements (e.g. constructive trust). governed under their law to obtain and hold adequate, accurateis used to describe information that has been verified for accuracy., and current beneficial ownership information regarding the trust. This should include information on the identity of the settlor Settlors are natural or legal persons who transfer ownership of their assets to trustees by means of a trust deed or similar arrangement., the trustee(s), the protector (if any), the beneficiaries or class of beneficiaries, and any other natural person exercising ultimate effective control over the trust. Countries should also require trustees of any trust governed under their law to hold basic information on other regulated agentsFor the purposes of Recommendations 14 and 16, agent means any natural or legal person providing MVTS on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider. of, and service providers to, the trust, including investment advisors or managers, accountants, and tax advisors.
2. All countries should take measures to ensure that trustees disclose their status to financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
   1) Acceptance of deposits and other repayable funds from the public.
   2) Lending.
   3) Financial leasing.
   4) Money or value transfer services.
   5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
   6) Financial guarantees and commitments.
   7) Trading in:
   a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
   b) foreign exchange;
   c) exchange, interest rate and index instruments;
   d) transferable securities;
   8) Participation in securities issues and the provision of financial services related to such issues.
   9) Individual and collective portfolio management.
   11) Otherwise investing, administering or managing funds or money on behalf of other persons.
   12) Underwriting and placement of life insurance and other investment related insurance.
   13) Money and currency changing.
   and DNFBPs when, as a trustee, forming a business relationship or carrying out an occasional transaction above the threshold. Trustees should not be prevented by law or enforceable means Please refer to the Note on the Legal Basis of requirements on Financial Institutions and DNFBPs. from providing competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. with any information relating to the trust*Domestic competent authorities or the relevant competent authorities of another country pursuant to an appropriate international cooperation request.; or from providing financial institutions and DNFBPs, upon request, with information on the beneficial ownership and the assets of the trust to be held or managed under the terms of the business relationship.
3. Countries are encouraged to ensure that other relevant authorities, persons and entities hold information on all trusts with which they have a relationship. Potential sources of information on trusts, trustees The terms trust and trustee should be understood as described in and consistent with Article 2 of the Hague Convention on the law applicable to trusts and their recognition
   Trustees may be professional (e.g. depending on the jurisdiction, a lawyer or trust company) if they are paid to act as a trustee in the course of their business, or non-professional (e.g. a person acting without reward on behalf of family). , and trust assets are:
   1. Registries (e.g. a central registry of trusts or trust assets), or asset registries for land, property Property means assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets., vehicles, shares or other assets.
   2. Other competent authorities that hold information on trusts and trustees (e.g. tax authorities which collect information on assets and income relating to trusts).
   3. Other agentsFor the purposes of Recommendations 14 and 16, agent means any natural or legal person providing MVTS on behalf of an MVTS provider, whether by contract with or under the direction of the MVTS provider. and service providers to the trust, including investment advisors or managers, lawyers, or trust and company service providers.
4. Competent authorities, and in particular law enforcement authorities, should have all the powers necessary to obtain timely access to the information held by trustees and other parties, in particular information held by financial institutions and DNFBPs on: (a) the beneficial ownership; (b) the residence of the trustee; and (c) any assets held or managed by the financial institution or DNFBP, in relation to any trustees with which they have a business relationship, or for which they undertake an occasional transaction.
5. Professional trustees should be required to maintain the information referred to in paragraph 1 for at least five years after their involvement with the trust ceases. Countries are encouraged to require non-professional trustees and the other authorities, persons and entities mentioned in paragraph 3 above to maintain the information for at least five years.
6. Countries should require that any information held pursuant to paragraph 1 above should be kept accurateis used to describe information that has been verified for accuracy. and be as current and up-to-date as possible, and the information should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be updated within a reasonable period following any change.
7. Countries should consider measures to facilitate access to any information on trusts that is held by the other authorities, persons and entities referred to in paragraph 3, by financial institutions and DNFBPs undertaking the requirements set out in Recommendations 10 and 22.
8. In the context of this Recommendation, countries are not required to give legal recognition to trusts. Countries need not include the requirements of paragraphs 1, 2 and 6 in legislation, provided that appropriate obligations to such effect exist for trustees (e.g. through common law or case law).

Other Legal arrangementsLegal arrangements refers to express trusts or other similar legal arrangements. Examples of other similar arrangements (for AML/CFT purposes) include fiducie, treuhand and fideicomiso.

9. As regards other types of legal arrangement with a similar structure or function, countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. take similar measures to those required for trusts, with a view to achieving similar levels of transparency. At a minimum, countries should ensure that information similar to that specified above in respect of trusts should be recorded and kept accurateis used to describe information that has been verified for accuracy. and current, and that such information is accessible in a timely way by competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities..

International Cooperation

10. Countries should rapidly, constructively and effectively provide international cooperation in relation to information, including beneficial ownership information, on trusts and other legal arrangements Legal arrangements refers to express trusts or other similar legal arrangements. Examples of other similar arrangements (for AML/CFT purposes) include fiducie, treuhand and fideicomiso. on the basis set out in Recommendations 37 and 40. This should include (a) facilitating access by foreign competent authorities to any information held by registries or other domestic authorities; (b) exchanging domestically available information on the trusts or other legal arrangement; and (c) using their competent authorities' powers, in accordance with domestic law, in order to obtain beneficial ownership information on behalf of foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). .

Liability and Sanctions

11. Countries should ensure that there are clear responsibilities to comply with the requirements in this Interpretive Note; and that trustees are either legally liable for any failure to perform the duties relevant to meeting the obligations in paragraphs 1, 2, 6 and (where applicable) 5; or that there are effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative, for failing to comply.*This does not affect the requirements for effective, proportionate, and dissuasive sanctions for failure to comply with requirements elsewhere in the Recommendations. Countries should ensure that there are effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative, for failing to grant to competent authorities timely access to information regarding the trust referred to in paragraphs 1 and 5.

Risk-based approach to Supervision

1. Risk-based approach to supervision refers to: (a) the general process by which a supervisor, according to its understanding of risks All references to risk refer to the risk of money laundering and/or terrorist financing. This term should be read in conjunction with the Interpretive Note to Recommendation 1., allocates its resources to AML/CFT supervision; and (b) the specific process of supervising institutions that apply an AML/CFT risk-based approach.
2. Adopting a risk-based approach to supervising financial institutions' AML/CFT systems and controls allows supervisory authorities to shift resources to those areas that are perceived to present higher risk. As a result, supervisory authorities can use their resources more effectively. This means that supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions ("financial supervisors" 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions.: (a) should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. have a clear understanding of the money laundering and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. risks present in a countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.; and (b) should have on-site and off-site access to all relevant information on the specific domestic and international risks associated with customers, products and services of the supervised institutions, including the quality of the compliance function of the financial institution or group. The frequency and intensity of onsite and off-site AML/CFT supervision of financial institutions/groups should be based on the money laundering and terrorist financing risks, and the policies, internal controls and procedures associated with the institution/group, as identified by the supervisor's assessment of the institution/group's risk profile, and on the money laundering and terrorist financing risks present in the country.
3. The assessment of the money laundering and terrorist financing risk profile of a financial institution/group, including the risks of non-compliance, should be reviewed both periodically and when there are major events or developments in the management and operations of the financial institution/group, in accordance with the country's established practices for ongoing supervision. This assessment should not be static: it will change depending on how circumstances develop and how threats evolve.
4. AML/CFT supervision of financial institutions/groups that apply a risk-based approach should take into account the degree of discretion allowed under the RBA to the financial institution/group, and encompass, in an appropriate manner, a review of the risk assessments underlying this discretion, and of the adequacy and implementation of its policies, internal controls and procedures.
5. These principles should apply to all financial institutions/groups. To ensure effective AML/CFT supervision, supervisors should take into consideration the characteristics of the financial institutions/groups, in particular the diversity and number of financial institutions, and the degree of discretion allowed to them under the RBA.

Resources of supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions ("financial supervisors" 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions.

6. Countries should ensure that financial supervisors have adequate financial, human and technical resources. These supervisors should have sufficient operational independence and autonomy to ensure freedom from undue influence or interference. Countries should have in place processes to ensure that the staff of these authorities maintain high professional standards, including standards concerning confidentiality, and should be of high integrity and be appropriately skilled.

1. Risk-based approach to supervision refers to: (a) the general process by which a supervisor or SRB, according to its understanding of risks, allocates its resources to AML/CFT supervision; and (b) the specific process of supervising or monitoring DNFBPs that apply an AML/CFT risk-based approach.
2. Supervisors or SRBs should determine the frequency and intensity of their supervisory or monitoring actions on DNFBPs on the basis of their understanding of the money laundering and terrorist financing risks, and taking into consideration the characteristics of the DNFBPs, in particular their diversity and number, in order to ensure effective AML/CFT supervision or monitoring. This means having a clear understanding of the money laundering and terrorist financing risks: (a) present in the country; and (b) associated with the type of DNFBP and their customers, products and services.
3. Supervisors or SRBs assessing the adequacy of the AML/CFT internal controls, policies and procedures of DNFBPs should properly take into account the money laundering and terrorist financing risk profile of those DNFBPs, and the degree of discretion allowed to them under the RBA.
4. Supervisors or SRBs should have adequate powers to perform their functions (including powers to monitor and sanction), and adequate financial, human and technical resources. Countries should have in place processes to ensure that the staff of those authorities maintain high professional standards, including standards concerning confidentiality, and should be of high integrity and be appropriately skilled.

1. GENERAL
   1. This note explains the core mandate and functions of a financial intelligence unit (FIU) and provides further clarity on the obligations contained in the standard. The FIU is part of, and plays a central role in, a country'sAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. AML/CFT operational network, and provides support to the work of other competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.. Considering that there are different FIU models, Recommendation 29 does not prejudge a country's choice for a particular model, and applies equally to all of them.
2. FUNCTIONS
   1. Receipt
      2. The FIU serves as the central agency for the receipt of disclosures filed by reporting entities. At a minimum, this information should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. include suspicious transaction reports, as required by Recommendation 20 and 23, and it should include other information as required by national legislation (such as cash transaction reports, wire transfers reports and other threshold-based declarations/disclosures).
   2. Analysis
      3. FIU analysis should add value to the information received and held by the FIU. While all the information should be considered, the analysis may focus either on each single disclosure received or on appropriate selected information, depending on the type and volume of the disclosures received, and on the expected use after dissemination. FIUs should be encouraged to use analytical software to process information more efficiently and assist in establishing relevant links. However, such tools cannot fully replace the human judgement element of analysis. FIUs should conduct the following types of analysis:
         • Operational analysis uses available and obtainable information to identify specific targets (e.g. persons, assets, criminal networks and associations), to follow the trail of particular activities or transactions, and to determine links between those targets and possible proceeds Proceeds refers to any property derived from or obtained, directly or indirectly, through the commission of an offence. of crime, money laundering, predicate offences or terrorist financing.
         • Strategic analysis uses available and obtainable information, including data that may be provided by other competent authorities, to identify money laundering and terrorist financing related trends and patterns. This information is then also used by the FIU or other state entities in order to determine money laundering and terrorist financing related threats and vulnerabilities. Strategic analysis may also help establish policies and goals for the FIU, or more broadly for other entities within the AML/CFT regime.
   3. Dissemination
      4. The FIU should be able to disseminate, spontaneously and upon request, information and the results of its analysis to relevant competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.. Dedicated, secure and protected channels should be used for the dissemination.
         • Spontaneous dissemination: The FIU should be able to disseminate information and the results of its analysis to competent authorities when there are grounds to suspect money laundering, predicate offences or terrorist financing. Based on the FIU's analysis, the dissemination of information should be selective and allow the recipient authorities to focus on relevant cases/information.
         • Dissemination upon request: The FIU should be able to respond to information requests from competent authorities pursuant to Recommendation 31. When the FIU receives such a request from a competent authority, the decision on conducting analysis and/or dissemination of information to the requesting authority should remain with the FIU.
3. ACCESS TO INFORMATION
   1. Obtaining Additional Information from Reporting Entities
      5. In addition to the information that entities report to the FIU (under the receipt function), the FIU should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be able to obtain and use additional information from reporting entities as needed to perform its analysis properly. The information that the FIU should be permitted to obtain could include information that reporting entities are required to maintain pursuant to the relevant FATF Recommendations (Recommendations 10, 11 and 22).
   2. Access to Information from other sources
      6. In order to conduct proper analysis, the FIU should have access to the widest possible range of financial, administrative and law enforcement information. This should include information from open or public sources, as well as relevant information collected and/or maintained by, or on behalf of, other authorities and, where appropriate, commercially held data.
4. INFORMATION SECURITY AND CONFIDENTIALITY
   7. In order to conduct proper analysis, the FIU should have access to the widest possible range Information received, processed, held or disseminated by the FIU must be securely protected, exchanged and used only in accordance with agreed procedures, policies and applicable laws and regulations. An FIU must, therefore, have rules in place governing the security and confidentiality of such information, including procedures for handling, storage, dissemination, and protection of, as well as access to such information. The FIU should ensure that its staff members have the necessary security clearance levels and understanding of their responsibilities in handling and disseminating sensitive and confidential information. The FIU should ensure that there is limited access to its facilities and information, including information technology systems.
5. OPERATIONAL INDEPENDENCE
   8. The FIU should be operationally independent and autonomous, meaning that the FIU should have the authority and capacity to carry out its functions freely, including the autonomous decision to analyse, request and/or disseminate specific information. In all cases, this means that the FIU has the independent right to forward or disseminate information to competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities..
   9. An FIU may be established as part of an existing authority. When a FIU is located within the existing structure of another authority, the FIU's core functions should be distinct from those of the other authority.
   10. The FIU should be provided with adequate financial, human and technical resources, in a manner that secures its autonomy and independence and allows it to conduct its mandate effectively. Countries should have in place processes to ensure that the staff of the FIU maintain high professional standards, including standards concerning confidentiality, and should be of high integrity and be appropriately skilled.
   11. The FIU should also be able to make arrangements or engage independently with other domestic competent authorities or foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). on the exchange of information.
6. UNDUE INFLUENCE OR INTERFERENCE
   12. The FIU should be able to obtain and deploy the resources needed to carry out its functions, on an individual or routine basis, free from any undue political, government or industry influence or interference, which might compromise its operational independence.
7. EGMONT GROUP
   13. Countries should ensure that the FIU has regard to the Egmont Group Statement of Purpose and its Principles for Information Exchange Between Financial Intelligence Units for Money Laundering and Terrorism Financing Cases (these documents set out important guidance concerning the role and functions of FIUs, and the mechanisms for exchanging information between FIUs). The FIU should apply for membership in the Egmont Group.
8. LARGE CASH TRANSACTION REPORTING
   14. Countries should consider the feasibility and utility of a system where financial institutions and DNFBPs would report all domestic and international currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. transactions above a fixed amount.

1. There should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. be designated law enforcement authorities that have responsibility for ensuring that money laundering, predicate offences and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. are properly investigated through the conduct of a financial investigation. Countries should also designate one or more competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. to identify, trace, and initiate freezing and seizing of property Property means assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets. that is, or may become, subject to confiscationThe term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law..
2. A 'financial investigation' means an enquiry into the financial affairs related to a criminal activity Criminal activity refers to: (a) all criminal acts that would constitute a predicate offence for money laundering in the country; or (b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 3., with a view to:
   • identifying the extent of criminal networks and/or the scale of criminality;
   • identifying and tracing the proceeds Proceeds refers to any property derived from or obtained, directly or indirectly, through the commission of an offence. of crime, terrorist funds The term funds refers to assets of every kind, whether corporeal or incorporeal, tangible or intangible, movable or immovable, however acquired, and legal documents or instruments in any form, including electronic or digital, evidencing title to, or interest in, such assets. or any other assets that are, or may become, subject to confiscationThe term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law.; and
   • developing evidence which can be used in criminal proceedings.
3. A 'parallel financial investigation' refers to conducting a financial investigation alongside, or in the context of, a (traditional) criminal investigation into money laundering, terrorist financing and/or predicate offence(s). Law enforcement investigators of predicate offences should either be authorised to pursue the investigation of any related money laundering and terrorist financing offences References (except in Recommendation 4) to a terrorist financing offence refer not only to the primary offence or offences, but also to ancillary offences. during a parallel investigation, or be able to refer the case to another agency to follow up with such investigations.
4. Countries should consider taking measures, including legislative ones, at the national level, to allow their competent authorities investigating money laundering and terrorist financing cases to postpone or waive the arrest of suspected persons and/or the seizure of the money, for the purpose of identifying persons involved in such activities or for evidence gathering. Without such measures the use of procedures such as controlled deliveries and undercover operations are precluded.
5. Recommendation 30 also applies to those competent authorities, which are not law enforcement authorities, per se, but which have the responsibility for pursuing financial investigations of predicate offences, to the extent that these competent authorities are exercising functions covered under Recommendation 30.
6. Anti-corruption enforcement authorities with enforcement powers may be designated to investigate money laundering and terrorist financing offences arising from, or related to, corruption offences under Recommendation 30, and these authorities should also have sufficient powers to identify, trace, and initiate freezing and seizing of assets.
7. The range of law enforcement agencies and other competent authorities mentioned above should be taken into account when countries make use of multi-disciplinary groups in financial investigations.
8. Law enforcement authorities and prosecutorial authorities should have adequate financial, human and technical resources. Countries should have in place processes to ensure that the staff of these authorities maintain high professional standards, including standards concerning confidentiality, and should be of high integrity and be appropriately skilled.

1. OBJECTIVES
   1. Recommendation 32 was developed with the objective of ensuring that terrorists and other criminals cannot finance their activities or launder the proceeds Proceeds refers to any property derived from or obtained, directly or indirectly, through the commission of an offence. of their crimes through the physical cross-border transportation refers to any in-bound or out-bound physical transportation of currency or BNIs from one country to another country. The term includes the following modes of transportation: (1) physical transportation by a natural person, or in that person's accompanying luggage or vehicle; (2) shipment of currency or BNIs through containerised cargo or (3) the mailing of currency or BNIs by a natural or legal person. of currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. and bearer negotiable instrumentsBearer negotiable instruments (BNIs) includes monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted.. Specifically, it aims to ensure that countries have measures to: (a) detect the physical crossborder transportation of currency and bearer negotiable instruments; (b) stop or restrain currency and bearer negotiable instruments that are suspected to be related to terrorist financing or money laundering when used to describe currency or BNIs, refers to currency or BNIs that are: (i) the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts or terrorist organisations; or (ii) laundered, proceeds from money laundering or predicate offences, or instrumentalities used in or intended for use in the commission of these offences.; (c) stop or restrain currency or bearer negotiable instruments that are falsely declared or disclosed; (d) apply appropriate sanctions for making a false declaration refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is required for submission in the declaration or otherwise requested by the authorities. This includes failing to make a declaration as required. or disclosure; and (e) enable confiscationThe term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law. of currency or bearer negotiable instruments that are related to terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. or money laundering.
2. THE TYPES OF SYSTEMS THAT MAY BE IMPLEMENTED TO ADDRESS THE ISSUE OF CASH COURIERS
   2. Countries may meet their obligations under Recommendation 32 and this Interpretive Note by implementing one of the following types of systems. However, countries do not have to use the same type of system for incoming and outgoing cross-border transportation of currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. or bearer negotiable instruments:

   Declaration system

   3. All persons making a physical cross-border transportation of currency or bearer negotiable instrumentsBearer negotiable instruments (BNIs) includes monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted. (BNIs), which are of a value exceeding a pre-set, maximum threshold of USD/EUR 15,000, are required to submit a truthful declaration to the designated competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities.. Countries may opt from among the following three different types of declaration system: (i) a written declaration system for all travellers; (ii) a written declaration system for those travellers carrying an amount of currency or BNIs above a threshold; and (iii) an oral declaration system. These three systems are described below in their pure form. However, it is not uncommon for countries to opt for a mixed system.
      1. Written declaration system for all travellers: In this system, all travellers are required to complete a written declaration before entering the countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.. This would include questions contained on common or customs declaration forms. In practice, travellers have to make a declaration whether or not they are carrying currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. or BNIs (e.g. ticking a “yes” or “no” box).
      2. Written declaration system for travellers carrying amounts above a threshold: In this system, all travellers carrying an amount of currency or BNIs above a pre-set designated threshold are required to complete a written declaration form. In practice, the traveller is not required to fill out any forms if they are not carrying currency or BNIs over the designated threshold.
      3. Oral declaration system for all travellers: In this system, all travellers are required to orally declare if they carry an amount of currency or BNIs above a prescribed threshold. Usually, this is done at customs entry points by requiring travellers to choose between the "red channel" (goods to declare) and the "green channel" (nothing to declare). The choice of channel that the traveller makes is considered to be the oral declaration. In practice, travellers do not declare in writing, but are required to actively report to a customs official.

   Disclosure system

   4. Countries may opt for a system whereby travellers are required to provide the authorities with appropriate information upon request. In such systems, there is no requirement for travellers to make an upfront written or oral declaration. In practice, travellers need to be required to give a truthful answer to competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. upon request.
3. ADDITIONAL ELEMENTS APPLICABLE TO BOTH SYSTEMS
   5. Whichever system is implemented, countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. ensure that their system incorporates the following elements:
      1. The declaration/disclosure system should apply to both incoming and outgoing transportation of currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. and BNIs.
      2. Upon discovery of a false declaration refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is required for submission in the declaration or otherwise requested by the authorities. This includes failing to make a declaration as required. /disclosure of currency or bearer negotiable instrumentsBearer negotiable instruments (BNIs) includes monetary instruments in bearer form such as: traveller’s cheques; negotiable instruments (including cheques, promissory notes and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery; incomplete instruments (including cheques, promissory notes and money orders) signed, but with the payee’s name omitted. or a failure to declare/disclose them, designated competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. should have the authority to request and obtain further information from the carrier with regard to the origin of the currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. or BNIs and their intended use.
      3. Information obtained through the declaration/disclosure process should be available to the FIU, either through a system whereby the FIU is notified about suspicious crossborder transportation incidents, or by making the declaration/disclosure information directly available to the FIU in some other way.
      4. At the domestic level, countries should ensure that there is adequate coordination among customs, immigration and other related authorities on issues related to the implementation of Recommendation 32.
      5. In the following two cases, competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. should be able to stop or restrain cash or BNIs for a reasonable time, in order to ascertain whether evidence of money laundering or terrorist financing may be found: (i) where there is a suspicion of money laundering or terrorist financing; or (ii) where there is a false declaration refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is required for submission in the declaration or otherwise requested by the authorities. This includes failing to make a declaration as required. or false disclosure refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is asked for upon request in the disclosure or otherwise requested by the authorities. This includes failing to make a disclosure as required. .
      6. The declaration/disclosure system should allow for the greatest possible measure of international cooperation and assistance in accordance with Recommendations 36 to 40. To facilitate such cooperation, in instances when: (i) a declaration or disclosure which exceeds the maximum threshold of USD/EUR 15,000 is made; or (ii) where there is a false declaration or false disclosure; or (iii) where there is a suspicion of money laundering or terrorist financing, this information shall be retained for use by competent authorities. At a minimum, this information will cover: (i) the amount of currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. or BNIs declared, disclosed or otherwise detected; and (ii) the identification data The term identification data refers to reliable, independent source documents, data or information. of the bearer(s).
      7. Countries should implement Recommendation 32 subject to strict safeguards to ensure proper use of information and without restricting either: (i) trade payments between countries for goods and services; or (ii) the freedom of capital movements, in any way.
4. SANCTIONS
   6. Persons who make a false declaration refers to a misrepresentation of the value of currency or BNIs being transported, or a misrepresentation of other relevant data which is required for submission in the declaration or otherwise requested by the authorities. This includes failing to make a declaration as required. or disclosure should be subject to effective, proportionate and dissuasive sanctions, whether criminal civil or administrative. Persons who are carrying out a physical cross-border transportation refers to any in-bound or out-bound physical transportation of currency or BNIs from one country to another country. The term includes the following modes of transportation: (1) physical transportation by a natural person, or in that person's accompanying luggage or vehicle; (2) shipment of currency or BNIs through containerised cargo or (3) the mailing of currency or BNIs by a natural or legal person. of currency Currency refers to banknotes and coins that are in circulation as a medium of exchange. or BNIs that is related to terrorist financing, money laundering or predicate offences should also be subject to effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative, and should be subject to measures, consistent with Recommendation 4, which would enable the confiscationThe term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law. of such currency or BNIs.
   7. Authorities responsible for implementation of Recommendation 32 should have adequate financial, human and technical resources. Countries should have in place processes to ensure that the staff of these authorities maintain high professional standards, including standards concerning confidentiality, and should be of high integrity and be appropriately skilled.
5. GOLD, PRECIOUS METALS AND PRECIOUS STONES
   8. For the purposes of Recommendation 32, gold, precious metals and precious stones are not included, despite their high liquidity and use in certain situations as a means of exchange or transmitting value. These items may be otherwise covered under customs laws and regulations. If a countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions. discovers an unusual cross-border movement of gold, precious metals or precious stones, it should consider notifying, as appropriate, the Customs Service or other competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. of the countries from which these items originated and/or to which they are destined, and should cooperate with a view toward establishing the source, destination, and purpose of the movement of such items, and toward the taking of appropriate action.

Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. establish mechanisms that will enable their competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. to effectively manage and, when necessary, dispose of, property Property means assets of every kind, whether corporeal or incorporeal, moveable or immoveable, tangible or intangible, and legal documents or instruments evidencing title to, or interest in such assets. that is frozen or seized The term seize means to prohibit the transfer, conversion, disposition or movement of property on the basis of an action initiated by a competent authority or a court under a freezing mechanism. However, unlike a freezing action, a seizure is effected by a mechanism that allows the competent authority or court to take control of specified property. The seized property remains the property of the natural or legal person(s) that holds an interest in the specified property at the time of the seizure, although the competent authority or court will often take over possession, administration or management of the seized property., or has been confiscated. These mechanisms should be applicable both in the context of domestic proceedings, and pursuant to requests by foreign countries.

INTERPRETIVE NOTE TO RECOMMENDATION 38 (MUTUAL LEGAL ASSISTANCE: FREEZING AND CONFISCATION)

1. Countries should consider establishing an asset forfeiture fund into which all, or a portion of, confiscated property will be deposited for law enforcement, health, education, or other appropriate purposes. Countries should take such measures as may be necessary to enable them to share among or between other countries confiscated property, in particular, when confiscationThe term confiscation, which includes forfeiture where applicable, means the permanent deprivation of funds or other assets by order of a competent authority or a court. Confiscation or forfeiture takes place through a judicial or administrative procedure that transfers the ownership of specified funds or other assets to be transferred to the State. In this case, the person(s) or entity(ies) that held an interest in the specified funds or other assets at the time of the confiscation or forfeiture loses all rights, in principle, to the confiscated or forfeited funds or other assets. Confiscation or forfeiture orders are usually linked to a criminal conviction or a court decision whereby the confiscated or forfeited property is determined to have been derived from or intended for use in a violation of the law. is directly or indirectly a result of coordinated law enforcement actions.
2. With regard to requests for cooperation made on the basis of non-conviction based confiscation Non-conviction based confiscation means confiscation through judicial procedures related to a criminal offence for which a criminal conviction is not required. proceedings, countries need not have the authority to act on the basis of all such requests, but should be able to do so, at a minimum in circumstances when a perpetrator is unavailable by reason of death, flight, absence, or the perpetrator is unknown.

• A.
  PRINCIPLES APPLICABLE TO ALL FORMS OF INTERNATIONAL COOPERATION

  Obligations on requesting authorities

  1. When making requests for cooperation, competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. make their best efforts to provide complete factual and, as appropriate, legal information, including indicating any need for urgency, to enable a timely and efficient execution of the request, as well as the foreseen use of the information requested. Upon request, requesting competent authorities should provide feedback to the requested competent authority on the use and usefulness of the information obtained.

  Unduly restrictive measures

  2. Countries should not prohibit or place unreasonable or unduly restrictive conditions on the provision of exchange of information or assistance. In particular competent authorities should not refuse a request for assistance on the grounds that:
     1. the request is also considered to involve fiscal matters; and/or
     2. laws require financial institutions Financial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
        1) Acceptance of deposits and other repayable funds from the public.
        2) Lending.
        3) Financial leasing.
        4) Money or value transfer services.
        5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
        6) Financial guarantees and commitments.
        7) Trading in:
        a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
        b) foreign exchange;
        c) exchange, interest rate and index instruments;
        d) transferable securities;
        8) Participation in securities issues and the provision of financial services related to such issues.
        9) Individual and collective portfolio management.
        11) Otherwise investing, administering or managing funds or money on behalf of other persons.
        12) Underwriting and placement of life insurance and other investment related insurance.
        13) Money and currency changing.
        or DNFBPs (except where the relevant information that is sought is held in circumstances where legal privilege or legal professional secrecy applies) to maintain secrecy or confidentiality; and/or
     3. there is an inquiry, investigation or proceeding underway in the requested countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions., unless the assistance would impede that inquiry, investigation or proceeding; and/or
     4. the nature or status (civil, administrative, law enforcement, etc.) of the requesting counterpart authority is different from that of its foreign counterpart.

  Safeguards on information exchanged

  3. Exchanged information should be used only for the purpose for which the information was sought or provided. Any dissemination of the information to other authorities or third parties For the purposes of Recommendations 6 and 7, the term third parties includes, but is not limited to, financial institutions and DNFBPs. Please also refer to the IN to Recommendation 17., or any use of this information for administrative, investigative, prosecutorial or judicial purposes, beyond those originally approved, should be subject to prior authorisation by the requested competent authority.
  4. Competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. should maintain appropriate confidentiality for any request for cooperation and the information exchanged, in order to protect the integrity of the investigation or inquiry*Information may be disclosed if such disclosure is required to carry out the request for cooperation., consistent with both parties' obligations concerning privacy and data protection. At a minimum, competent authorities should protect exchanged information in the same manner as they would protect similar information received from domestic sources. Countries should establish controls and safeguards to ensure that information exchanged by competent authorities is used only in the manner authorised. Exchange of information should take place in a secure way, and through reliable channels or mechanisms. Requested competent authorities may, as appropriate, refuse to provide information if the requesting competent authority cannot protect the information effectively.

  Power to search for information

  5. Competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. should be able to conduct inquiries on behalf of a foreign counterpart, and exchange with their foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). all information that would be obtainable by them if such inquiries were being carried out domestically.
• B.
  PRINCIPLES APPLICABLE TO SPECIFIC FORMS OF INTERNATIONAL COOPERATION
  6. The general principles above should apply to all forms of exchange of information between counterparts or non-counterparts, subject to the paragraphs set out below.

  Exchange of information between FIUs

  7. FIUs should exchange information with foreign FIUs, regardless of their respective status; be it of an administrative, law enforcement, judicial or other nature. To this end, FIUs should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. have an adequate legal basis for providing cooperation on money laundering, associated predicate offences and terrorist financing Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations..
  8. When making a request for cooperation, FIUs should make their best efforts to provide complete factual, and, as appropriate, legal information, including the description of the case being analysed and the potential link to the requested countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.. Upon request and whenever possible, FIUs should provide feedback to their foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). on the use of the information provided, as well as on the outcome of the analysis conducted, based on the information provided.
  9. FIUs should have the power to exchange:
     1. all information required to be accessible or obtainable directly or indirectly by the FIU under the FATF Recommendations, in particular under Recommendation 29; and
     2. any other information which they have the power to obtain or access, directly or indirectly, at the domestic level, subject to the principle of reciprocity.

  Exchange of information between financial supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions ("financial supervisors" 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions.*This refers to financial supervisors which are competent authorities.

  10. Financial supervisors should cooperate with their foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). , regardless of their respective nature or status. Efficient cooperation between financial supervisors aims at facilitating effective AML/CFT supervision of financial institutionsFinancial institutions means any natural or legal person who conducts as abusiness one or more of the following activities or operations for or on behalf of a customer:
      1) Acceptance of deposits and other repayable funds from the public.
      2) Lending.
      3) Financial leasing.
      4) Money or value transfer services.
      5) Issuing and managing means of payment (e.g. credit and debit cards,cheques, traveller's cheques, money orders and bankers' drafts, electronic money).
      6) Financial guarantees and commitments.
      7) Trading in:
      a) money market instruments (cheques, bills, certificates of deposit, derivatives etc.);
      b) foreign exchange;
      c) exchange, interest rate and index instruments;
      d) transferable securities;
      8) Participation in securities issues and the provision of financial services related to such issues.
      9) Individual and collective portfolio management.
      11) Otherwise investing, administering or managing funds or money on behalf of other persons.
      12) Underwriting and placement of life insurance and other investment related insurance.
      13) Money and currency changing.
      . To this end, financial supervisors should have an adequate legal basis for providing cooperation, consistent with the applicable international standards for supervision, in particular with respect to the exchange of supervisory information related to or relevant for AML/CFT purposes.
  11. Financial supervisors should be able to exchange with foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). information domestically available to them, including information held by financial institutions, and in a manner proportionate to their respective needs. Financial supervisors should be able to exchange the following types of information when relevant for AML/CFT purposes, in particular with other relevant supervisors that have a shared responsibility for financial institutions operating in the same group:
      1. Regulatory information, such as information on the domestic regulatory system, and general information on the financial sectors.
      2. Prudential information, in particular for Core Principle Supervisors, such as information on the financial institution's business activities, beneficial ownership, management, and fit and properness.
      3. AML/CFT information, such as internal AML/CFT procedures and policies of financial institutions, customer due diligence information, customer files, samples of accountsReferences to "accounts" should be read as including other similar business relationships between financial institutions and their customers. and transaction information.
  12. Financial supervisors Supervisors refers to the designated competent authorities or non-public bodies with responsibilities aimed at ensuring compliance by financial institutions ("financial supervisors" 60Including Core Principles supervisors who carry out supervisory functions that are related to the implementation of the FATF Recommendations.) and/or DNFBPs with requirements to combat money laundering and terrorist financing. Non-public bodies (which could include certain types of SRBs) should have the power to supervise and sanction financial institutions or DNFBPs in relation to the AML/CFT requirements. These nonpublic bodies should also be empowered by law to exercise the functions they perform, and be supervised by a competent authority in relation to such functions. should be able to conduct inquiries on behalf of foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). , and, as appropriate, to authorise or facilitate the ability of foreign counterparts to conduct inquiries themselves in the country, in order to facilitate effective group supervision.
  13. Any dissemination of information exchanged or use of that information for supervisory and non- supervisory purposes, should be subject to prior authorisation by the requested financial supervisor, unless the requesting financial supervisor is under a legal obligation to disclose or report the information. In such cases, at a minimum, the requesting financial supervisor should promptly inform the requested authority of this obligation. The prior authorisation includes any deemed prior authorisation under a Memorandum of Understanding or the Multi-lateral Memorandum of Understanding issued by a core principlesCore Principles refers to the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, the Objectives and Principles for Securities Regulation issued by the International Organization of Securities Commissions, and the Insurance Supervisory Principles issued by the International Association of Insurance Supervisors. standard-setter applied to information exchanged under a Memorandum of Understanding or the Multi-lateral Memorandum of Understanding.

  Exchange of information between law enforcement authorities

  14. Law enforcement authorities should be able to exchange domestically available information with foreign counterparts Foreign counterparts refers to foreign competent authorities that exercise similar responsibilities and functions in relation to the cooperation which is sought, even where such foreign competent authorities have a different nature or status (e.g. depending on the country, AML/CFT supervision of certain financial sectors may be performed by a supervisor that also has prudential supervisory responsibilities or by a supervisory unit of the FIU). for intelligence or investigative purposes relating to money laundering, associated predicate offences or terrorist financing, including the identification and tracing of the proceeds Proceeds refers to any property derived from or obtained, directly or indirectly, through the commission of an offence. and instrumentalities of crime.
  15. Law enforcement authorities should also be able to use their powers, including any investigative techniques available in accordance with their domestic law, to conduct inquiries and obtain information on behalf of foreign counterparts. The regimes or practices in place governing such law enforcement cooperation, such as the agreements between Interpol, Europol or Eurojust and individual countries, should govern any restrictions on use imposed by the requested law enforcement authority.
  16. Law enforcement authorities should be able to form joint investigative teams to conduct cooperative investigations, and, when necessary, countries should establish bilateral or multilateral arrangements to enable such joint investigations. Countries are encouraged to join and support existing AML/CFT law enforcement networks, and develop bi-lateral contacts with foreign law enforcement agencies, including placing liaison officers abroad, in order to facilitate timely and effective cooperation.

  Exchange of information between non-counterparts

  17. Countries should For the purposes of assessing compliance with the FATF Recommendations, the word should has the same meaning as must. permit their competent authoritiesCompetent authorities refers to all public authorities with designated responsibilities for combating money laundering and/or terrorist financing. In particular, this includes the FIU; the authorities that have the function of investigating and/or prosecuting money laundering, associated predicate offences and terrorist financing, and seizing/freezing and confiscating criminal assets; authorities receiving reports on cross-border transportation of currency & BNIs; and authorities that have AML/CFT supervisory or monitoring responsibilities aimed at ensuring compliance by financial institutions and DNFBPs with AML/CFT requirements. SRBs are not to be regarded as a competent authorities. to exchange information indirectly with non-counterparts, applying the relevant principles above. Indirect exchange of information refers to the requested information passing from the requested authority through one or more domestic or foreign authorities before being received by the requesting authority. Such an exchange of information and its use may be subject to the authorisation of one or more competent authorities of the requested countryAll references in the FATF Recommendations to country or countries apply equally to territories or jurisdictions.. The competent authority that requests the information should always make it clear for what purpose and on whose behalf the request is made.
  18. Countries are also encouraged to permit a prompt and constructive exchange of information directly with non-counterparts.