The Financial Action Task Force (FATF) announced today that 76 percent of supervised countries have now "satisfactorily implemented" the FATF's 40 Recommendations.
The figure is up from 36% in 2012, demonstrating the "positive impact" of the FATF's Mutual Evaluations and Follow-up processes, according to the organization.
However, the report points out that many countries still face "substantial challenges" in implementing effective risk-based policies, such as difficulty investigating and prosecuting high-profile cross-border cases and preventing anonymous shell companies and trusts from being used for illegal purposes.
Since 2013, data from FATF and FSRB mutual evaluation reports has been used to compile the report on the State of Effectiveness and Compliance with FATF Standards.
FATF found that countries have made "huge progress" in improving technical compliance by "establishing and enacting a broad range of laws and regulations to better tackle money laundering, terrorist financing and proliferation financing."
According to the FATF, these efforts have resulted in a "firm legislative basis for national authorities to ‘follow the money’ that fuels crime and terrorism."
The report's findings will be used to inform FATF's Strategic Review, which aims to make the next cycle of FATF assessments "more timely, risk-based, and effective," according to FATF.
The proposed changes to the 5th round of assessments are expected to include a much shorter mutual evaluation cycle and more frequent assessments of countries.
According to the FATF, countries will place a "greater emphasis" on major risks and context in order to ensure that they "focus on the areas where the risks are highest."
A results-oriented follow-up assessment process will also be implemented, with the goal of focusing on specific actions to combat money laundering, terrorist financing, and weapons of mass destruction financing.
Many countries are currently taking a "box-ticking" approach to laws and regulations, according to FATF. FATF has also advised countries to focus on the full and effective implementation of FATF standards.
The watchdog also advised countries to concentrate on "tangible results" in order to better combat cross-border cases and the use of anonymous shell companies.
By fLEXI tEAM