So what can we expect from the FATF over the coming months?
Looking at the detail further, the FATF has already published a pre-consultation white paper around Recommendation 24, which indicates the areas where there could be some change, particularly around the transparency of beneficial ownership (BO) of 'legal persons'.
Through its white paper and subsequent consultation, the FATF's objective is to strengthen the international standard on beneficial ownership of legal persons to ensure greater transparency about ultimate ownership and control. The aim is to provide competent authorities timely access to adequate, accurate and up-to-date beneficial ownership information and take more effective action to mitigate the risks of misuse.
More specifically, the review will consider measures to improve the understanding of risks posed by all types of legal person created in a country (as currently required) and also to certain foreign-created legal persons; how a multi-pronged approach to the collection of BO information can be achieved; how to ensure adequate, accurate, and up-to-date information is obtained; and who should have access to this information, and finally, how confidentiality and privacy can be safeguarded.
The consultation will run until 20 August 2021. It will undoubtedly attract industry feedback, including clarification that it is common for a company to be owned by a trust or other legal arrangement, and with the ability to have a nexus with a financial intermediary proving to be a significant additional benefit in terms of the gathering of BO information.
Meanwhile, a similar white paper looking at Recommendation 25 - focusing on 'legal entities' - is expected later this year. It is expected to examine the definition of trusts across both common law and civil law jurisdictions, consider complex ownership structures and assess the obligations of other countries. The role of registries will also no doubt come under the spotlight once more.
Following the white paper and consultation exercise, the FATF will then consider the views received and propose revisions to the recommendations for discussion at its October 2021 meetings.
Whilst it may seem to some that these consultations are going over familiar ground, the fact that the FATF is reviewing its approach is a significant development. It reflects that policy in this area rarely stands still and that financial crime will remain at the top of the agenda for the trust and private client sector for the foreseeable future. Professionals in this space will be well-advised to participate in the consultations and to track any resulting change, given the implications for clients are potentially quite profound.