Thursday, 23 March, 2023

APG’s Annual Report; Important Aspect for Bangladesh

Nironjan Roy

Asia Pacific Group (APG) on Money Laundering, which acts as an associate member of FATF (Financial Action Task Force), is an inter-governmental body comprising of 41 member states in the Asia Pacific region. This body has some observers from other regions as well. The APG was established with member countries from Asia and Pacific zone for mutual benefit and cooperation among the members states to effectively fight against money laundering and terrorist financing. As per article 1 of the APG Terms of Reference, this group is established as non-political but technical body whose members are committed to effectively implement and enforce internationally accepted standard practice and laws for fighting against money laundering, financing of terrorism and proliferation financing set by the FATF. The main objective of APG is adaptation, implementation and enforcement of internationally accepted anti-money laundering and counter terrorist financing standard set by FATF in their 41 recommendation and 8 special recommendations. Current Co-Chairs of APG are represented by Australia and Canada. One Co-Chair position is permanent which is held by Australia, while other Co-Chair position is held in rotation among the member countries. Bangladesh held the position of Co-Chair of this group during the period of 2018-20. APG has recently released their annual report for the reporting period of 2021-22 what is very important for our country’s banking sector. Not only Bangladesh Bank but also all commercial banks should carefully go through this report and have clear understanding of the relevant contents. 

APG’s Priorities: APG has set up some priorities what are aligned with the present challenges to fight against money laundering and terrorist financing. These priorities, as highlighted in their recently released annual report, are briefly stated here. (I) Mutual evaluations have highlighted the challenges many FATF and APG members are facing in meeting the FATF’s standards on beneficial ownership transparency. Providing a platform for jurisdictions to learn from each other can help with the implementation of these standards. (II) Revisions to R. 24 were endorsed by the FATF in March 2022 leading to opportunities for training. (III) Grand corruption is largely conceived of occurring when political elites steal large sums of public funds or otherwise power for personal or political advantage. This large-scale, high-level corruption is an international challenge and can hinder the implementation of international anti-corruption obligations and enforcement of related domestic laws; seriously impede the effective implementation of the FATF Standards and threaten financial integrity; contribute to a culture of impunity; and cause serious and widespread harm to individuals and societies. (IV) The intrinsic link between money laundering and grand corruption is well recognized, including by FATF ministers in the April 2022 Declaration, as is the role for successfully leveraging the FATF standards to prevent and combat corruption. (V) Other two important priorities include (a) combating terrorist financing and (b) digital transformation / data analytics. Combating terrorist financing further includes (i) terrorism threats continue to evolve, from large terrorist organizations, and (ii) according to the United Nations Office of Counter-Terrorism, effective efforts to counter the financing of terrorism need to rely more on financial intelligence sharing between countries and enhanced coordination between the public and private sector. Digital transformation / data analytics include increasing expertise and use of data analytics by authorities and focus on digital transformation of AML/CFT was a priority for the 2020 – 2022 term.

Deliverable actions: It is true that all priorities as set by APG cannot be equality accomplished and APG Co Chairs were well aware of that. Therefore, they identified some deliverable actions from the predetermined priorities. Deliverable actions as identified by APG are stated here. (I) Technical seminar where participants will learn about the changes to the FATF standards and guidance and hear from a range of FATF members on their experiences in the implementation of a beneficial ownership registry. (II) Technical seminar where participants will learn about the issue of grand corruption, the FATF’s standard on international cooperation and how it can help to fight grand corruption, as well as presentations on asset recovery regime and the G20 Anti-Corruption Working Group commitments. (III) Webinar from FINTRAC on a FIU’s role in combating terrorist financing and a general overview of priority terrorist financing-related trends/issues. (IV) Continuation of webinars on developments in the field of data analytics. (V) Pilot a bilateral assistance program where APG members reach out and receive targeted training from experts in the field of data analytics.

Changes and typologies report: During the meeting APG members have agreed to a number of important governance related matters and adopted some changes. One important change is made with regards to the VTC (View Through Conversation) reporting policy to remove the requirement to collect information from the global network on VTC schemes that are not complex and do not breach AML/CFT measures. The Annual Typologies Report 2022, adopted in July 2022, contains a synopsis of the typology projects undertaken in 2021-22, recent trends in money laundering and terrorist financing, and a number of case studies. The report includes a chapter on the illicit financial flows from money laundering associated with proceeds of illegal, unreported and unregulated fishing.

Strategic Goal: APG had set up four strategic goals for 2021-22, which included (I) effective multilateral organization, (II) effectively organized and engaged multilateral organizations, (III) conducting and responding to assessments and (IV) working cooperatively and supporting implementation and achievement of these strategic goals with challenges and difficulty arisen out of two years shutdown situation resultant from CORONA virus pandemic. Nevertheless, they made extensive efforts to keep moving ahead with pace mostly with the help of technological facilities and virtual involvement. To what extent these strategic goals are achieved, have been elaborated in their annual report. However, based on their previous achievement and in the wake of opening up the world, the group has set up their new strategic goas for the year 2022-23 what includes (I) be an effective technical assistance cell supporting implementation of the FATF standards and the world of the global AML/CFT network in the pacific region, (II) strengthening national AML / CFT regimes, (III) improving and enforcing AML / CFT regulation and (IV) increasing detection, investigation and prosecution of money laundering and terrorist financing.  

Target and progress: The APG had undertaken some target-oriented action plans and initially their target was 11 member countries. First target was to make their targeted 11 members have an AML/CFT coordination mechanism with high-level representation that meets at least twice a year, Progress so far made indicates that 9 members have a functioning AML/CTF mechanism. Their second target was that all targeted 11 member countries will have a risk-based national AML / CFT policy / strategy against which 7 countries have made progress. Their third target was to make all 11 targeted members countries attend at least two APG / APG supported events and two events of other regional organizations what was completely achieved. Their fourth but important target was to make 75% (8) of pacific members have risk sensitive framework for AML / CFT supervision of financial institutions against which achievement is only 55% (6) pacific member countries. Their fifth target was to make 75% (8) of pacific members have a policy / strategy to pursue money laundering investigation and asset confiscation in higher risk predicate crimes and achievement against this target is only 27% (3) of pacific members. Their sixth target includes 75% (8) pacific members which will have policies / procedures for FIU analysis and disseminating STRs. Their seventh target is to make 75% (8) pacific members follow continued progress to address technical compliance deficiencies on other FATF recommendations and so far, no pacific members requested compliance re-rating. Their another target was to make all pacific member countries have up-to-date money laundering and terrorist financing related risk information and their achievement against this target is only 11 pacific members countries. The APG has set up a good number of targets, what cannot be touched in this short writing, however, those targets which seem to be important particularly in Bangladesh context, are mentioned here. Any reader, banker or financial analyst, if interested, can easily find this information in the APG’s published annual report.

Thoroughly reviewing this report is very important for the bankers particularly for those who are responsible for ensuring compliance with anti-money launder and counter terrorist financing rules and regulation. This report depicts the previously set up priorities, important changes already taken place or going to be taken place, next priorities, strategies and goals. Even, fully compliant countries, partially compliant countries and even non-compliant countries with respect to setting up target and achievement thereof, are also discussed in the annual report. After reviewing this report, Bangladesh Bank will be able to ascertain our country’s position in complying with internationally acceptable anti-money laundering and counter terrorist financial standard and if there are any deficiencies, corrective measures can be taken. Although this report is typically for Bangladesh Bank, more importantly for FIU (Financial Intelligence Unit), yet equally important for commercial banks as well, because they are the frontline fighter against money laundering and terrorist financing.


The writer is a banker,

Toronto, Canada.

Email: [email protected]