Proposal for addressing TOC in the framework of the CSH 2015–2016

1. Proposal for addressing TOC in the framework of the CSH 2015–2016 Regional Overview of Money Laundering and CICAD Initiatives Nelson Mena, Section Chief Ana Álvarez, Legal Specialist Washington, D.C. December 2015

2. I. CURRENT STATUS OF THE ISSUE

3. I.Current status of the issue • “In today's globalized context domestic systems have to react to dysfunctional phenomena according to likewise global criteria” (Fabián Caparros, Combating Money Laundering from the Judicial System, CICAD publication). • This has led countries to become aware of the need to adapt to the standards that currently govern the international financial sector and impact multiple facets of countries' development. As a result, they have submitted to the 40 Recommendations of the Financial Action Task Force (FATF), which introduced international standards on prevention and suppression of money laundering and financing of terrorism. • In February 2012, those recommendations (which date from 2003) were amended to reflect the fact that the entire AML/CFT system should be based on "risk assessment and the application of a risk-based approach.” This means that countries must identify, assess, and understand their ML/FT risks, take steps, and deploy resources to ensure that those risks are effectively mitigated (FATF, Rec. 1).

4. Other important aspects are asset forfeiture, proactive asset investigation in parallel with predicate offenses, and management systems for assets seized from criminals. • FATF Rec. 2 provides that countries should adopt measures, including legislative ones, to allow their competent authorities to freeze, seize and confiscate the object, proceeds, and instrumentalities used in or intended for use in the commission of ML/FT offenses and their predicate offenses • FATF Rec. 38 provides that countries should have an authority to take expeditious action in response to requests by foreign countries to identify, freeze, seize and confiscate ML/FT-related assets, as well as have in place effective mechanisms to manage those assets and establish arrangements for coordinating seizure and confiscation proceedings, which may include the sharing of confiscated assets.

5. II. FATF MUTUAL EVALUATIONS

6. II. FATF Mutual Evaluations • With the aim of reviewing those standards, countries worldwide now face a new round of mutual evaluations and with them new challenges in which the main focus will be on the effectivenessof their implementation. • The mutual evaluations of specialized agencies like the FATF (CFATF, GAFILAT) have had an impact in terms of making ML/FT prevention and suppression systems fairly well developed and of harmonizing domestic laws at the international level, notwithstanding certain modifications that countries need to make to adapt their legal systems to the new standards. • As a result of the mutual evaluations, current statistics suggest that in this regard –effectiveness– there are a number of obstacles and shortcomings to overcome, such as: the low number of convictions in ML/FT cases; operational weaknesses in the area of international cooperation for the recovery of assets and their respective forfeiture; and the absence in some countries of effective systems or mechanisms for managing seized and confiscated assets.

7. II. FATF Mutual Evaluations Consequently, the CICAD Group of Experts to Control Money Laundering, based on its work done at its XXXVII Plenary Meeting in Brasilia in September 2013, and on other recommendations made by the Group in previous years, recommended a number of lines of action to CICAD in areas that, based on the findings of the evaluations and the review of the FATF recommendations, urgently need to be addressed as effective measures that member states might implement to improve their AML/CFT systems.

8. III.RECOMMENDATIONS OF GELAVEX/CICAD FOR IMPROVING • ANTI-MONEY-LAUNDERING SYSTEMS IN THE AMERICAS AND THE CARIBBEAN

9. Recommendations: • 1. Strengthen the capacities of the authorities in charge of combating money laundering and related crimes; • 2. Improve the effectiveness of international cooperation in the area of asset recovery; • 3. Develop and/or strengthen forfeiture systems, including asset investigation, administration of assets derived from crime, and specialized units to address the issue; • 4. Advance the study of methodological instruments to allow each country to develop its analysis of risk factors, in cooperation with specialized international organizations. Included in resolution AG/RES. 2866 (XLIV-O/14) "Reflections and Guidelines to Formulate and Follow up on Comprehensive Policies to Address the World Drug Problem in the Americas" 

10. IV.INITIATIVES OF THE CICAD EXECUTIVE SECRETARIAT:TECHNICAL ASSISTANCE AND TRAINING PROGRAMS

11. Technical assistance and training

12. Group of Experts to Control Money Laundering – Work Plan 2015–2016 Sub-Working Group on International Cooperation and Forfeiture: • Administration of complex assets • Promotion of the development of effective forfeiture laws and their effective implementation in member states. Sub-Working Group on FIUs and Criminal Investigation Agencies: • Study on special investigative techniques • Asset investigation guidelines

13. Training Program for Financial Intelligence Units Objective: Strengthen the operational capacity and analytics of FIUs, providing them with the legal, administrative, and technological tools and human resources necessary for the collection, storage, analysis, and dissemination of information on financial intelligence. Components: Workshops on analysis, linkages and relationships, specialized courses on forensic accounting and analysis of financial intelligence information; workshops on facilitating dialogue between the public and private sectors on AML/CFT; and workshops on strategic analysis.

14. Training on Money Laundering forLaw Enforcement Agencies Objective: Provide training on the application of special investigative techniques as well as strategies for asset investigation that facilitate the seizure and forfeiture of assets and other evidence connected to these criminal activities. Components: Mock investigations

15. International cooperationon asset recovery Objective: Offer tools in order to carry out the identification, location and recovery of assets in an effective manner and conforming with international standards on money laundering and related offenses. Components: • Technical assistance to the GAFILAT (RRAG) Asset Recovery Network • Support for the establishment of an asset recovery network for the Caribbean • Program for International Cooperation in Asset Recovery (REACT)

16. Money Laundering Training Program for the Judiciary • Objective: • Train judges and prosecutors in order to increase the number of urged prosecutions and convictions on the subject of money laundering. • Components: • Mock trials; workshops on special investigative techniques; methodological program to strengthen the management of the chain of custody; and workshops for judges and prosecutors

17. Strengthening national systems for the administration and disposal of seized and forfeited assets Objective: Strengthen the technical capacity of the member states in asset investigation, identification, location, seizure, forfeiture, administration and disposition of assets from money laundering and related crimes. Component: The Latin America Seized and Forfeited Asset Management Project (BIDAL) identifies the weaknesses and strengths, as well as legal gaps and practical difficulties, that exist in Member States’ forfeiture processes and proposes recommendations to achieve efficiency and transparency in all phases.

18. Thank you very much. nmena@oas.org amalvarez@oas.org