BY PAUL O’DONOGHUE, Senior Correspondent
Data privacy and AML regulatory bodies have to work together to harmonize rules for more effective regulation and AFC outcomes, the FATF president has said.
Elisa de Anda Madrazo, the newly-appointed president of the Financial Action Task Force, said that there is often friction between different watchdogs.
Delivering the Opening Address at ‘International Anti-Financial Crime Summit 2024’ in London, she said while there has been “quite successful” co-operation between AML and data authorities at a domestic level, this is often not replicated internationally.
“It is a challenge when you try to take that [co-operation] across jurisdictions,” de Anda told the conference.
“Ten years ago, each of these groups created their own standards, without really talking to each other. The friction wasn’t much, there was enough flexibility to find compatibility.
“But that’s not the case today. We have regulated so much in both areas that right now, the friction is intense and we’re not finding the cooperation that we need.”
De Anda added an additional challenge is that while FATF sets global AML standards, there is not a similar body for data privacy.
“We have a very important effort in Europe, but that’s one region of the world. There’s no real global effort,” she said.
“For the private sector it’s a challenge when you’re developing a new technology. Because you have to deal with two supervisors that, on many occasions, are not talking to each other.
“We need AML and data protection supervisors to talk to each other, encourage the use of new technologies and leave the past behind.”
De Anda said the FATF will talk to global privacy bodies in an attempt to help promote more cooperation at an international level.
There was a strong reaction from delegates when Ms de Anda highlighted how safeguards for hashtag#data protection, hashtag#privacy and those for AML/CFT have operated in a disconnected way.
While technology is part of the answer, so is the need for harmonisation of rules and better cooperation between AML and data protection and privacy authorities, Ms de Anda told banking and fintech chiefs.
She also highlighted the challenge of ensuring countries have fully effective risk-based preventive AML/CFT measures. “Adopting a risk-based approach isn’t just about adhering to standards—it’s about making a tangible impact on financial inclusion and developing strong risk assessments to foster trust,” the President said.
During the next two years, FATF aims to advance financial inclusion by strengthening the implementation of the risk-based approach.
To achieve this, the agency will update the relevant standard and guidance and ensure that jurisdictions and assessors benefit from updated training, including on supervisors’ risk-based approach, and promote the use of simplified due diligence measures in low-risk situations.
During a Q&A session after her address the President was asked about criticism in some quarters about FATF listing low capacity countries rather than countries with high AML risk – and how the agency is addressing the concerns.
Ms de Anda spoke about better reconciling the need to ensure that AML controls remain strong with the equally valid need to promote financial inclusion.
As President she described how she has championed the work on unintended consequences within FATF, including on inappropriate use of AML measures to clamp down on the NPO sector in some jurisdictions. It’s an issue FATF is continuing to address, she told delegates.
“There is no doubt the address served as a rallying cry to the FCC leaders from across the UK, EU and US and reinforced the important work being done by AFC professionals across industry, regulation and law enforcement,” said moderator Stephen Rae after the fireside chat.
Speaking at the same conference, the FATF boss also revealed that the organization is set to change how it adds countries to its grey list.
De Anda said she expected the changes, which are aimed at avoiding penalizing smaller nations, will result in a sharp reduction in the number of jurisdictions on the list.
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