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Commonwealth money laundering feature, anti-money laundering organisations series.

THERE is a large and growing list of regional money laundering organisations, with formal or informal links with the Financial Action Task Force (FATF), so a question mark could hang over why the Commonwealth is getting involved in fighting dirty money. After all, it is an organisation that emerged from the demise of the British Empire, containing as disparate bunch of 53 developed and developing countries as you could imagine. But, claims its secretariat's criminal law section consultant Martin Polaine, these historical ties and the fact that the Commonwealth has been around since the 1926 give strength to the organisation. Established relations between member states and its secretariat "is a good basis to build on", he said: "They recognise the secretariat as a service for expertise, especially for criminal law, and for training, capacity building and legislative drafting." The organisation has been focusing heavily on both anti-money laundering (AML) and the combating the financing of terrorism (CFT) in recent years, with terror finance being an increasingly important priority since the September 11 attacks. Given the wide range of the organisation's political responsibilities, the Commonwealth's AML/CFT response has inevitably been included in a broad set of policies designed to help its member countries resist their exposure to terrorists, either as a target or as a safe haven.

A key issue here has been the development of model laws and detailed legal advice. Indeed, the fact Commonwealth members are all ex- or existing British colonies and territories, (except for formerly Portuguese Mozambique), means that there is a shared common law heritage, which gives model laws developed by the secretariat particular relevance. Take the secretariat's useful 'Implementation Kits for the [various] Counter-Terrorism Conventions'--(see shared_asp_files/uploadedfiles/{8AE4DB15-88A5-46F2-8037 -357DFF7D3EC1}_Implementation%20Kits%20for%20Counter-Terrorism.pdf). There is a special chapter on implementing the 1999 the UN Convention on the Suppression of the Financing of Terrorism. As well as explaining its text, the kit offers model domestic laws that could implement the convention after ratification by a Commonwealth country. There is also advice on how this convention affects the implementation of other conventions, for instance on deciding whether someone is involved in a terrorist conspiracy. Crucially, the kit explains how the 1999 financing convention "made a clear distinction between the civil law concept of 'association malfaiteur' and the roughly similar common law concept of conspiracy", a key issue for Commonwealth countries dealing with states drawing on the civil law tradition. Another key area where the Commonwealth has developed legal advice is its 'model legislative provisions on measures to combat terrorism', drawn up in 2002, which cover a range of financial issues. They advise, for instance, that member countries ensure charities are covered by sufficient financial controls so that governments can effectively resist their financial exploitation by terror groups; they underline that member states should abide by the UN Convention on the Suppression of the Financing of Terrorism; and they push for member countries to use their Financial Investigation Units for tracking down terror financing, as well as standard criminal money laundering, building terrorism finance information exchange agreements with other FIUs. Another piece of advice is the Commonwealth countries ensure that their laws not only allow for the seizure of terrorist funds, but that these laws are similar to those in place to sequester criminal proceeds. The Commonwealth has not however drawn up a model law on fighting money laundering per se, but has been advising the International Monetary Fund and the UN Office on Drugs and Crime in their legislative drafting efforts.

(See uploadedfiles/{32AF830D-F83A-4432-8051750C789531A5 }_final_terrorism_law.pdf)

So plenty of legal advice is being made available to Commonwealth countries. As these are model laws or guidelines, stressed Mr Polaine, they sometimes raise questions in member states, as well as answering them. "We get specific requests for assistance", he notes, which the secretariat will respond to, sometimes mobilising external experts. Indeed, in an ongoing terrorist finance project, involving the provision of training to Commonwealth government officials, courses involve member counties being "encouraged to come up with follow up requests", a process that has been particularly popular amongst Caribbean countries. The programme has seen Commonwealth specialists advise and help train national anti-terror finance units. "Countries are becoming aware of the need to build up ranks of specialists", he said.

When the MLB went to press, Commonwealth officials were completing a counter-terrorism training manual for publication by the end of August, and it includes large sections on detecting and fighting terror financing. The secretariat has already issued written advice for member countries, a book called 'Combating Money Laundering and Terrorist Financing: A Model of Best Practice for the Financial Sector, the Professions and Other Designated Businesses'. Its first section deals with global issues, strategies and standards; the second with national issues, and in particular, national strategy formulation; and the third with financial and professional sector procedures.

This work is being complemented by five-day CFT training courses in individual member countries, manned by three in-house Commonwealth lawyers, and five or six external terror finance specialists, prosecutors, maybe judges, Interpol representatives and experts in particular terror financing typologies.

Capacity building is of key importance here, both for terror financing and anti-money laundering activities in general. And this is absolutely crucial for the smaller states, some in the Pacific with a population of a few thousand, and whose Financial Investigation Units (FIUs), as previously noted in the MLB, can be as small as one officer. It is for these smaller states in particular, that another new Commonwealth initiative is attempting to tackle, and that is the creation of a network of contact points within all member states. The first meeting of these officials will take place in November, and although they will respond to requests for assistance from Commonwealth countries on all policy matters, Mr Polaine stressed that its value for anti-money laundering and terror finance issues would be strong. Inquiries into asset tracing and recovery, corruption, trans-national organised crime may involve money laundering, he said. The Commonwealth network will also establish relations with similar networks run by FATF-style anti-money laundering regional bodies, he added.

Such an information system and the provision of direct Commonwealth assistance may help tackle concerns that have been voiced by smaller and poorer Commonwealth countries that implementing international anti-money laundering standards, including those required by FATF, are more trouble than they are worth. Without naming names, Mr Polaine said the Commonwealth was researching this problem, and that preliminary findings "showed that there are concerns that the costs may be greater than the benefits". Looking particularly at Pacific island and Caribbean states, there have been complaints about the "costs in human resources, training, legislative design", while the benefits--essentially

"reputational dividends"--are less tangible, and may even accrue to other countries in a region, if they have more developed financial services sectors. Commonwealth criminal law section legal advisor David Fraser said there was a good argument for smaller states to be represented on panels drawing up implantation timetables for such global guidelines. As far as the Commonwealth was concerned, there was a growing realisation that assistance might not just be needed to help set up bodies such as FIU's but also to keep them running afterwards.

Mr Polaine added: "There has been no differential for big or small states". A good example is in available operational models for handling intelligence, which are generally "off the shelf" and of more relevance to big states, he noted, although it is too early to say whether the Commonwealth will draft a small state intelligence manual.

Elsewhere in the organisation, the secretariat's Governance and Institutional Development Division (GIDD) has been staging a series of AML/CFT workshops for Commonwealth countries which are also members of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). The first was staged in Tanzania in May 2005, and the second in Namibia that August. There have also specific CFT workshops this year in Jamaica, Trinidad, Botswana and South Africa. The workshops' aim, said a Commonwealth memorandum, has been to help government officials develop expertise in drawing up AML/CFT national strategies meeting the requirements of FATF's revised 40 Recommendations. Participants are drawn from ministries of finance, justice and legal affairs, law enforcement agencies, central and commercial banks and revenue authorities. They "take back a draft strategy to combat money laundering and terrorist financing that is tailored to the specific needs of their respective countries", said the note. Commonwealth officials have also been advising the ESAAMLG itself, which--as reported in the MLB--has found itself hard-pressed to secure the implementation of FATF recommendations in its region. The secretariat has helped it develop and implement its work programme, as well as securing financial support from other organisations and nations.

Meanwhile, the Commonwealth has also worked with the Economic Community of West African States (ECOWAS) Secretariat and governments in west Africa in advising on the establishment of the Abuja-based Intergovernmental Group of Action against money laundering in West Africa (GIABA) as an FATF-style regional body, similar in scope to its east and southern Africa sister organisation.

And it has provided advice to other better-established FATF-style regional bodies, notably the Asia Pacific Group on Money Laundering and Caribbean Financial Action Task Force.
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Author:Nuthall, Keith
Publication:International News
Date:Jun 1, 2006
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