Stuart Levey, who served as undersecretary of the Treasury for terrorism and financial integrity in the George W. Bush and Obama administrations, has highlighted a little-known but critical tool for combating terrorism and money laundering: the international Financial Action Task Force (FATF).
The FATF had just 16 members when formed by the G-7 nations in 1989; today, more than 180 countries have their practices in combating illicit finance evaluated by the task force.
“Financial institutions around the globe pay close attention to FATF’s assessments and use them to decide whether or how to operate in specific countries,” writes Levey, a senior fellow with the Council on Foreign Relations. “Countries’ fears of landing on one of FATF’s warning lists, and their intense desire to remove themselves from those lists once named, are powerful tools for self-improvement.”
The U.S. FATF delegation includes members of Congress, financial regulators and representatives of the National Security Council and the State and Justice Departments. The FATF’s mission includes monitoring individual countries’ cooperation with international sanctions against al-Qaida and creating multinational regimes to dismantle terror networks.
The FATF has helped focus international scrutiny on the refusal of Iran to cooperate in preventing illicit financial activity. Last year it criticized Iran’s “failure to meaningfully address the ongoing and substantial deficiencies” in its efforts against money laundering and terror financing. The task force urged financial institutions to subject their business dealings with Iran to additional scrutiny and called on all jurisdictions to take action “to protect their financial sectors from money laundering and financing of terrorism risks emanating from Iran.”
The FATF warned other jurisdictions to take into account Tehran’s pattern of non-cooperation “when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction.”
Writing in Foreign Policy magazine, Levey suggests that the FATF also has an important role to play in helping to recover money stolen by ousted Arab dictators. By working in conjunction with the United Nations and Switzerland (a country which last year passed what Levey describes as “arguably the world’s toughest law for repatriating the ill-gotten gains of corrupt politicians to the people of those countries”), FATF could create a powerful new motivator for fighting corruption.
Read the full article here.