UNITED NATIONS OFFSHORE FORUM
30TH-31ST MARCH, 2000
- The United Nations Global Programme against Money Laundering Forum (GPML Forum) held in the Cayman Islands on 30th-31st March 2000, hosted jointly by the United Nations Office for Drug Control and Crime Prevention (UNODCCP) and the Cayman Government, brought together some 100 participants from 45 jurisdictions.
- The GPML Forum is a new initiative within the UNODCCP Global Programme against Money Laundering. Its objective is to obtain global commitment to internationally accepted standards of financial regulation and anti-money laundering measures as they apply to the provision of cross border financial services; these standards are set out in the UN GPML Forum statement of minimum standards which is attached to this communiqué. (Hereinafter "the minimum standards")
- The opinion was expressed at the Forum that for its objective to be achieved the following principles should be adopted:
that the approach should be global and non-discriminatory;
that there should be proper recognition of the positive action already taken or being taken by the many individual jurisdictions participating in the Forum;
that there should be a formal agreement between all jurisdictions engaged in the provision of cross border financial services that they would not seek to attract business through the promotion of regulatory arbitrage;
that there should be no sanction imposed on individual jurisdictions for non-compliance with the accepted international standards in advance of a full, fair, transparent and consultative process of evaluation, and unless sufficient opportunity has been provided to make good any deficiencies identified;
- The Forum in concluding its deliberations, supported the UNODCCP objective of denying criminals access to global financial markets, and agreed
all international financial services centers should be invited to enter - as soon as possible, and no later than 30 September 2000 - into a formal governmental commitment to the aforesaid minimum standards;
that the practical application of this commitment would be supported where necessary by a programme of technical assistance provided by UNODCCP; and by a programme of research initiated by UNODCCP designed to secure a deeper understanding of money laundering cross border in what will continue to be a fast changing field;
that in the light of the current dynamic situation the positive participative approach of the UN GPML Forum should be continued, and extended in its coverage, in the future;
jurisdictions expressed the view that the UNODCCP should ensure that the various international initiatives that involve a process of evaluation of compliance with the accepted international standards should be undertaken in a co-ordinated, fair and sufficient manner and in accordance with the principles of natural justice.
5. Without prejudice to the agreement expressed above, presentations and discussion in the Forum brought to light the following additional points:
high standards of financial regulation and anti-money laundering measures do not inhibit, and indeed there is evidence that they encourage, the growth of legitimate cross border financial services.
wherever possible the jurisdictions should seek to prevent financial services providers from advertising their services in a way that suggests that lower regulatory standards are available in the jurisdiction in which they operate or which they are promoting.
jurisdictions differ in their size and available resources and, therefore, the timetable for achieving compliance with the accepted international standards will not necessarily be the same for all.
in the provision of cross border financial services the distinction should not be drawn between so-called on-shore and off-shore jurisdictions but between those that are compliant and those that are non-compliant in the application of the accepted international standards.
there should be no barriers to the exchange of information necessary for effective financial regulation and anti-money laundering measures to be exercised on a global basis.
co-operation between jurisdictions is facilitated and encouraged through memoranda of understanding, mutual legal assistance treaties and similar instruments.
seized asset sharing agreements can be a strong incentive for co-operation in the pursuit of those engaged in financial crime.
providers of anti-money laundering technical assistance, whether governmental or inter-governmental bodies, should co-operate to the greatest extent possible to ensure the best use of resources, to address gaps in coverage, and to avoid unnecessary overlap.
regulatory resources should be adequate to cope with the scope and nature of the financial services being provided in the jurisdiction and in any event, be sufficient to meet the minimum standards.
preventive action is less costly and more effective than enforcement and therefore a regulatory regime that embraces rigorous authorization and know your customer requirements is essential.
action should be taken to create an effective comprehensive data base of the regulatory regimes and financial services activity licensed in all jurisdictions.
- The UN GPML Forum (United Nations Global Programme against Money Laundering Forum) is an ODCCP (Office for Drug Control and Crime Prevention) initiative that will propose minimum operating requirements for preventing and deterring infiltration of criminal proceeds into the cross-border financial services industry. In the implementation of the minimum operating requirements set out below the Informal Advisory Group is of the opinion that attention must be focused on all jurisdictions that provide international cross-border financial services, and not only those jurisdictions commonly identified as "offshore centers".
- The UN is prepared to assist through technical assistance, training and mentoring programs States committed to adoption of the following proposals. In the delivery of this assistance, the UN is committed to excellence and will coordinate its program with all other assistance providers to assure maximum beneficial results.
- The UN GPML Forum should express support for the anti-money laundering, regulatory and supervisory principles and standards published by the [United Nations, Basle Committee on Banking Supervision, IOSCO, IAIS, FATF, and G7].
- Further efforts should be made by all of the above referenced entities and by the Financial Stability Forum to keep each other informed of their activities so as to ensure effective coordination.
- Significant differences exist in the nature of business undertaken by each jurisdiction and in their respective capacity to implement the minimum operating principles and standards. The Global Programme against Money Laundering (GPML) will tailor its training and technical assistance to meet the specific needs of each participating jurisdiction.
All jurisdictions with active and developing cross-border financial services sectors should, at minimum, have in place an achievable program that will provide for:
- POLITICAL COMMITMENT TO: 1, 2, 3
- 1988 UN Convention, The UN Political Declaration and Action Plan against Money Laundering adopted at the Twentieth Special Session of the United Nations General Assembly (Resolution S20/4 of 10 June 1998) and 1999 GPML Forum Minimum Performance Standards
- Financial Action Task Force: "Forty Recommendations"
- Basle Committee: "Core Principles for Effective Banking Supervision"
- Basle Committee: "The Supervision of Cross-Border Banking"
- G7 (Ministers’ Working Group on Financial Crime): Ten Key Principles for the Improvement of International Cooperation Regarding Financial Crimes and Regulatory Abuses
- G7 (Finance Ministers): "Information Sharing: Ten Key Principles"
- IOSCO: "Objectives and Principles of Securities Regulation"
- IAIS: [General principles applying to the supervision of international insurers and insurance groups]
1 Experts comprising the Informal Advisory Group hold the view that a commitment from all acceding governments should be obtained by way of a ministerial statement.
2 The standards listed are those the Informal Advisory Group consider should have general application. A commitment to additional standards may be called for by individual organizations (e.g. the CFATF 19 Principles; Council of Europe Conventions on Mutual Assistance; European Union Directives).
3 The standards listed are current. The framework will need to be kept under review in the light of any changes in the standards (e.g. in the Financial Action Task Force’s Forty Recommendations) or any new statement of minimum standards, (e.g. by the G7 Financial Stability Forum; FATF Criteria for Cooperating/Non-Cooperating Jurisdictions).
- ENACTMENT OF ESSENTIAL LEGISLATION COVERING 4
- All crimes anti-money laundering
- Investigation of fraud
- Money laundering countermeasures in financial services authorization and supervision
- International cooperation; appropriate gateways through secrecy legislation or civil/common law
- An adequate framework of company law.
RESOURCES/ORGANISATION STRUCTURE IN PLACE TO PUT LEGISLATION/PRINCIPLES INTO PRACTICAL EFFECT
- Financial services regulatory/supervisory structure providing for the authorization and regulation/supervision of financial services on an independent basis (i.e. free of political and private sector interference)
- An independent and functioning Financial Intelligence Unit together with a procedure providing for cooperation between the financial service regulators/supervisors, enforcement authorities (police and customs) and the legal services (prosecutors) 5
- Appropriate independent judicial services allied with sufficient anti fraud and prosecution powers
- Procedures for international cooperation (MOUs, Mutual Legal Assistance Treaties or Letters of Agreement)
- Application of "know your customer" requirements to all financial service providers (banking, investment fund management, insurance, company and trust administrators and [Internet service providers])
- Procedures for unusual and/or suspicious transaction reporting, investigation and prosecution with appropriate immunities for those reporting
- Presence of an adequate number of experienced staff supported by appropriate funding and effective training
- Appropriate enforcement processes
- Adequate record keeping.
4 "Essential" legislation is considered by the Informal Advisory Group to be that required to provide for the full and effective application of the standards covered by the required political commitment. This will need to be the subject of continuing review in the light of the further development of international standards (e.g. in respect of company service providers).
5 As required for membership of the Egmont Group.