Extraordinary Session
Special Recommendations

In an extraordinary session held on October 29-30 2001, the Financial Action Task Force (FATF), of which Switzerland is a founding member, adopted new guidelines for combating terrorist financing following the events of September 11 2001. The results of this meeting, combined with a changing attitude towards intergovernmental organizations like FATF and the Organization for Economic Cooperation and Development (OECD), are sure to have repercussions on legitimate business and providers of financial products in the international arena.

Extraordinary Session

The FATF's group mission statement has traditionally focused on international money laundering preventive measures, but since September 11 2001 it has been expanded to include combating the flow of funds intended to support terrorist activities. To this end, the FATF will now focus not only on money laundering and the proceeds of criminal activity, but also on assets that are intended to be used for criminal activity, a much more difficult notion to regulate in practice. This includes funds and assets that in their present form would be entirely legitimate insofar as they are the product of a legitimate business activity or merely personal accumulated assets, and thus in their scope would include in essence all legitimate worldwide assets. This means that the activities of all financial service providers, whether bank or non-bank, will come under heightened scrutiny in terms of international business and non-business activities.

Furthermore, this entire international network of financially related professional practices must be aware of these developments, and therefore be on guard for the onslaught of regulation and monitoring that is likely to follow attempts at regulation of this type.

According to a statement released on October 30 2001 by the FATF Secretariat and the OECD media relations division, the extraordinary session, which included 31 FATF member country representatives and 15 other non-member money laundering abatement organizations, drew up a list of eight Special Recommendations relating specifically to terrorist financing.

The member countries have until December 31 2001 to issue comments and suggestions for amendments to the Special Recommendations. In addition, countries must make a formal commitment to comply with the Special Recommendations by June 2002. Furthermore, the FATF will begin a process to identify jurisdictions that lack appropriate measures to combat terrorist financing, presumably with the intent to create a new blacklist.

The statement goes further by calling for heightened technical assistance and cooperation between the United Nations, the Egmont Group of Financial Intelligence Units, the G-20 and other international organizations, both public and private, to achieve these new international anti-terrorist financing goals.

Special Recommendations

The eight Special Recommendations released by the FATF can be summarized as follows:

  • Ratification and implementation of UN instruments - every country should ratify the 1999 United Nations International Convention on the Suppression of the Financing of Terrorism and all related UN resolutions.

  • Criminalizing the financing of terrorism and associated money laundering - every country should criminalize officially the financing of terrorism.

  • Freezing and confiscating terrorist assets - every country should enact freezing and confiscation procedures consistent with UN treaties and resolutions, and enact measures to allow competent authorities to seize and confiscate property that is intended or used for terrorist financing or for terrorist acts.

  • Reporting suspicious transactions relating to terrorism - every country should legislate or compel its financial institutions or intermediaries to report all suspicious activity to a competent authority.

  • International cooperation - every country should afford another country on the basis of a treaty, arrangement or other mechanism mutual legal assistance or information exchange, and assistance in criminal, civil and investigative inquires and proceedings relating to terrorism and terrorist financing, including provisions relating to prohibitions against granting refuge or asylum to persons involved in terrorist financing activities, as well as enactment of procedures for the extradition of these individuals.

  • Alternative remittance - every country should initiate procedures to ensure that persons, legal entities and other informal methods used for the transfer of money be required to comply with FATF recommendations that apply to both banks and non-banks, and that such persons or entities be required to be registered or licensed by their various jurisdictions.

  • Wire transfers - every country should require that all wire transfers include the name, address and account number of the remitter/originator. Moreover, such information should remain with the transaction until the transfer reaches its destination/is disbursed. In addition, jurisdictions should take measures to monitor and to require reporting of suspicious wire fund transfers.

  • Non-profit organizations and other entities - every country should review its laws and regulations relating to entities that may be used by terrorist organizations. This includes terrorist organizations posing as legitimate entities, the exploitation of legitimate entities as conduits for terrorist funds, and the active clandestine diversion of legitimate funds to terrorist entities and purposes.

In addition to these recommendations, the FATF also agreed to revise its 40 recommendations on money laundering, and to step up its international regulatory and enforcement efforts with regards to corporate vehicles, correspondent banking, identification of beneficial owners of accounts and the regulation of non-bank financial institutions on a worldwide basis.


The October 30 2001 statement by the FATF represents an increased effort to implement the group's long-held anti-money laundering policies on a global basis. With the passage of new anti-terrorist legislation in the United States regarding many of these same topics (See Impact of US Patriot Act on Swiss Financial Institutions), together with what seems to be a changing attitude on the part of the world's governments regarding the global threat of terrorism and the present active international institutional mandates of the FATF and the OECD, there is likely to be vast and sweeping changes in anti-money laundering/anti-terrorist financing laws and regulations in a multiplicity of jurisdictions in the coming months and years. It will be imperative for legitimate businesses and financial product providers to remain well-informed as the implementation of new regulations proceed on an international scale, and all bank and non-bank financial intermediaries will need to plan and prepare for this eventuality.

For further information on this topic please contact David Forbes-Jaeger or John McBrayer at Secretan Troyanov by telephone (+41 22 789 70 00) or by fax (+41 22 789 70 70) or by email ([email protected] or [email protected]). The Secretan Troyanov website can be accessed at www.secretantroyanov.com.