Monday, November 5, 2012
In February 2012, the international Financial Action Task Force (FATF) has issued substantially revised guidance on money laundering legislation. One of the aims of the new FATF recommendations is "improved transparency", specifically requiring that there is reliable information available about the beneficial ownership and control of companies, trusts, and other legal persons or legal arrangements. For the first time tax evasion is recognised by FATF as a predicate offence for money laundering. As expected, FATF has also added tax crimes to the list of predicate offences for money laundering - a development welcomed by most countries. It will bring the proceeds of tax fraud within the scope of the powers and authorities used to investigate money laundering - which are typically far more extensive and intrusive than those used to investigate "ordinary" crime. The new guidance also suggests a risk-based approach to anti-money-laundering (AML) legislation, in which more stringent measures will be mandated where the risks are higher, with the option of simplified measures where the risks are lower. The 180 governments affiliated to FATF will now be expected to amend their AML legislation to conform to the new guidance. FATF will begin a new round of peer review evaluations of its member countries in 2013, focussing more intensively on assessing how effectively countries have implemented the standards. New research is needed to explore fraud risk indicators to recognise symptoms of tax evasion.