There are a handful of organizations that we talk about a lot in this industry. In this article, I will talk a bit about what they do and how or why they matter.
- Egmont Group
The Organisation for Economic Co-operation and Development (OECD) traces its roots back to 1948, when the Organisation for European Economic Co-operation (OEEC) was formed in the aftermath of the second world war. Its initial purpose was to facilitate the implemention of the Marshall Plan.
In 1961, the organisation was reformed as OECD and membership extended beyond Europe.
Its purpose today is to achieve economic growth, financial stability, and raising standards of living. OECD invests heavily in education.
OECD also publishes a lot of statistics on demographics, which are generally considered trustworthy. The organisation as a whole enjoys an overall strong reputation in anywhere from academic to political circles. It is a very influential organisation.
Since 1998, the OECD has been hunting down jurisdictions which engage in so-called harmful tax practices. The OECD believes that tax havens (offshore jurisdictions) are responsible for tax funds being lost and people and economic growth suffering as a consequence.
The OECD shaped the modern tax treaties, setting up models for Double Taxation Avoidance Treaties (DTA) and Tax Information Exchange Agreements (TIEA). It is also the master behind the Common Reporting Standard (CSR) and the oft-dreaded Automatic Exchange of Information (AEOI). The CSR is the standard which makes AEOI possible.
OECD conducts peer reviews of jurisdiction, in which it assesses jurisdictions based on a set of criteria, to ultimately determine how up to par the jurisdiction is with international standards and recommendations as set out by OECD (and FATF). These reviews carry a fair amount of importance as they affect the reputability of a jurisdiction.
In addition to strong-arming jurisdictions into signing up for AEOI, the OECD also maintains the EOI-Tax website which hosts mostly up to date lists of tax treaties for jurisdictions.
While FATF-GAFI is not the organisations full name, the English name is often hyphenated with the French translation: Financial Action Task Force – Groupe d’Action Financière.
Formed in 1989 by the G7, FATF’s purpose is to set standards for fighting money laundering and perform continuous reviews of jurisdiction.
In 1990, FATF issued its list of forty recommendations for the prevention of money laundering. This has since been amended and is now referred to as the The Forty Recommendations and Special Recommendations on Terrorism Financing.
FATF is seen as tremendously influential. (Most) Banks and governments take FATF seriously. Some flaunt FATF and show arrogance (see for example Turkey). Some don’t have the resources to comply with FATF. But by and large – FATF’s word is law.
While being blacklisted or called out by OECD hurts a jurisdiction reputationally, FATF black lists can have a severe negative impact on a jurisdiction’s ability to engage in financial transactions with other jurisdictions, especially the wealthier jurisdictions that sit at the helm of FATF.
Nine so-called FSRBs (FATF-Style Regional Bodies) have been formed to focus on local and regional implementation of FATF recommendations.
- GAFILAT (formerly GAFISUD)
While FATF itself only has 34 members, members of FSRBs are effectively under FATF’s direction. Some jurisdictions are members of multiple organisations.
The 34 members are:
- Hong Kong
- New Zealand
- Russian Federation
- South Africa
- United Kingdom
- United States
APGML – Asia Pacific Group on Money Laundering
The APGML is the Asia-Pacific was founded in 1987. It is the FSRB for Asia-Pacific region, with 41 members:
- Brunei Darussalam
- Cook Islands
- Hong Kong
- Malaysia (including Labuan)
- Marshall Islands
- New Zealand
- Papua New Guinea
- Solomon Islands
- South Korea
- Sri Lanka
- Taiwan (Chinese Taipei)
- United States of America
CFATF – Caribbean FATF
The CFATF-GAFIC was formed in 1992 and acts as the FSRB for the Caribbean region. Its members 27 members include some of the world’s most high-profile tax havens:
- Antigua and Barbuda
- British Virgin Islands
- Cayman Islands
- Dominican Republic
- El Salvador
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vincent and the Grenadines
- Sint Maarten
- The Bahamas
- Trinidad and Tobago
- Turks and Caicos Islands
With more a majority of its members being tax havens, CFATF’s work is on the one hand considered especially important and on the other hand, it has more than once been accused of failing to be biased and not being critical enough of shortcomings.
EAG – Eurasian Group
EAG was founded in 2004 and has nine members:
With subpar infrastructure, rampant corruption (to varying degrees), and other larger sociopolitical challenges, the region and its members pose significant money laundering risks and EAG is by many not seen as doing a good enough job.
ESAAMLG – Eastern and Southern Africa Anti-Money Laundering Group
As of writing this, the ESAAMLG website has been hacked and defaced. Fortunately, the hackers were kind enough not to erase any data but be cautious when visiting the website.
ESAAMLG was founded in 2000 and among its 16 members, we find both Mauritius and the Seychelles:
- South Africa
GABAC – Central Africa Anti-Money Laundering Group
GABAC is woefully unequipped to execute its tasks. Money laundering is rampant in this region and while things are getting better, improvement comes slowly. Formed in 2000, its members are:
- Central African Republic
- Equatorial Guinea
- Republic of the Congo
GAFILAT – Latin America Anti-Money Laundering Group
Formed in 2000, GAFILAT is the FSRB for Central and South America, but generally not Caribbean nations as can be seen by Belize having joined CFATF but not GAFILAT. It has 16 members:
- Costa Rica
GIABA – West Africa Money Laundering Group
GIABA was formed in 1999 and is the FSRB responsible for the western parts of Africa. Its 15 members are:
- Burkina Faso
- Cape Verde
- Ivory Coast (Côte d’Ivoire)
- Sierra Leone
The Comoros is an observatory member.
With members such as Ghana, Nigeria, and Ivory Coast, GIABA is an FSRB with some of the most demanding tasks.
MENAFATF – Middle East and North Africa FATF
The youngest FSRB, MENAFATF (also GAFIMOAN) was formed in 2004. There are 19 members of MENAFATF:
- Palestinian Authority
- Saudi Arabia
- United Arab Emirates (Abu Dhabi, Dubai, Ras al-Khaimah)
MONEYAL – Council of Europe Anti-Money Laundering Group
Moneyval was established in 1997 under the much-less-pronouncable PC-R-EV, the group renamed in 2002 and expanded its scope to include not only anti-money laundering but also the prevention of financing of terrorism.
Owing to its ties to Council of Europe and close ties with several international bodies, Moneyval is generally considered one of the most prolific FSRBs.
Moneyval has 34 members, many of which are tax havens or otherwise important international financial services centers:
- Bosnia and Herzegovina
- Cyprus (excluding Northern Cyprus)
- Czech Republic
- Holy See (the Vatican)
- Isle of Man
- San Marino
- Slovak Republic
While it started before FATF, one of FATF’s recommendations is for jurisdiction to set up a so-called Financial Intelligence Unit (FIU) which is the central point for executive administration of the recommendations. It is the FIUs which collect suspicious activity reports (SAR), collate them, and pass on to law enforcement.
Actual implementation varies across jurisdiction. An FIU is often a supplementary or complementary authority to a jurisdiction’s Financial Services Commission.
The Egmont Group of Financial Intelligence Units sports every FIU in the world as its members.
As a collection of every FIU, the Egmont Group meets to share information, set standards, and formulate overall strategies. Together, the FIUs engage in exchange of information, international cooperation and coordination between themselves.
There are many other organisations out there, such as organisations for industry practitioners (as opposed to regulators) and certain sectors will have their own organisations which all come together and form the financial services industry.