APG Workshop on Revised FATF Assessment

Methodology and National Risk Assessment

 

Opening Address

 

 

 

 

August 28, 2013

 

 

Financial Services Commission

Chairman

 

Je-Yoon Shin

 

 

 

 

1. Opening

 

Good morning. Ladies and gentlemen.

 

My special thanks to Commissioner 진웅섭 of KoFIU, President 윤용로 of Korea Exchange Bank, Mr. Chan and Ms. Ford from the APG, and distinguished presenters.

 

Welcome to this timely workshop on the "Revised Assessment Methodology and National Risk Assessment."

 

The FATF adopted the new Recommendation in 2012 and then, new assessment methodology in 2013.

 

Their next round of assessments starts in 2014.

 

 

This 2013 Seoul workshop is all about the new Recommendation and assessment Methodology.

 

You are at the right place at the right time.

 

Ladies and gentlemen.

 

The world is becoming more complicated and more trans-national.

 

Finance is becoming more sophisticated and inter-connected.

 

As a consequence, money laundering, terrorist financing, and the financing of proliferation are becoming more complex and global in nature

 

Thus, they demand a collective solution.

 

This is why we hosted this global event.

 

I cordially invite you to fully engage in group discussions planned for the next three days.

 

I hope you will come up with a global solution.

 

 

2. AML/CFT System, the Swiss Army Knife

 

Ladies and gentlemen,

 

A sound AML/CFT system is very important, both for a financial institution and a nation.

 

First question, why having a sound AML/CFT system is crucial for a financial company?

 

As you are all aware, major international financial institutions had to pay record fine

for money laundering offense.

 

It was their damaged reputation that hurt them the most.

 

Reputational risk is the most important risk for a financial institution in this globalized and inter-connected world.

 

A healthy AML/CFT system is a strong shield against reputational risk.

 

In addition, a financial company with a sound AML/CFT system has advantages

in trans-national transactions and in reducing internal operational risks.

 

This is why the AML/CFT system becomes all the more important for financial companies.

 

Second question, why a healthy AML/CFT system is integral for a nation?

 

A sound AML/CFT system will help countries build up a just society with fair tax system and a clean society without corruption and underground economy.

 

Ever since 2008, I have been involved in G20 meetings.

 

In 2010, I chaired the G20 Finance Deputies' Meeting.

Having been involved in G20 for a long time,

I was not surprised

when G20 leaders welcomed progress made by FATF that used AML/CFT tool

in averting tax crimes, and the risks posed by tax havens.

 

Most importantly, AML/CFT was recognized by G20 as an effective tool against the endemic disease of corruption.

 

The new 2012 FATF recommendation specifically strengthened requirements

to be clearer on transparency and tougher on corruption.

 

It incorporated new rules against corruption, including clauses on beneficial ownership and politically exposed persons.

A well-made AML/CFT system also contributes to improving sovereign credit rating.

 

Fitch takes AML/CFT compliance level into account when it evaluates sovereign credit rating.

 

Similarly, IMF and WB's FSAP(Financial Sector Assessment Program) reflects on the quality of each nation's AML/CFT system.

 

As you may have noticed, AML/CFT tool is as useful as a Swiss Army Knife.

 

 

3. Conditions for creating effective AML/CFT System and Korea's Role

 

Ladies and gentlemen,

 

The AML/CFT system is like a boat.

The system does not work if it has a hole.

 

Because of the system's global nature, the AML/CFT boat will not fully function

when a nation lags, or when nations don't cooperate.

 

Every player of the system has a role.

 

In order to create an effective AML/CFT system, each nation should make its own efforts to narrow compliance level gap.

 

Also, nations with capacity and many international organizations like WB, IMF, and APG should play their role by assisting countries when they seek help.

 

An effective AML/CFT system also requires cross-border cooperation.

 

Actively participating in cross-national exchange of financial information;

cross-national investigation;

and sharing knowledge such as best practices are great examples.

 

Building a strong AML/CFT network is the best tool for cross-border cooperation.

 

With a strong AML/CFT network, we will win in the money laundering battle,

the terrorist financing battle, and the proliferation battle.

 

I have no doubt that this workshop will fill in the hole and promote solidarity among crew members in the AML/CFT boat.

 

Let's find global solutions together.

Let's get the answers together.

 

Further workshops, research programs, and cross-border visits should be facilitated.

 

We need to encourage each nation to work and to cooperate towards better implementation.

 

That's why we are promising you another workshop next year.

 

You are all invited to the 2014 workshop, which will be richer, with real cases

from the next round assessment.

 

Distinguished guests,

 

During your short stay in Seoul, please take time to visit downtown Seoul to get a taste of Korean culture.

 

You will love Korea's dynamism.

 

Thank you.