Expert stresses effectiveness in combating money laundering
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Kevin Stephenson, inaugural director of the Financial Action Task Force’s Training and Research Institute, speaks during a press conference at the Press Center in central Seoul, Monday. / Courtesy of Financial Services Commission
By Nam Hyun-woo
The paradigm of combating money laundering is changing from technical compliance to effectiveness in the wake of North Korea’s fifth nuclear test, says Kevin Stephenson, inaugural director of the Financial Action Task Force’s (FATF) Training and Research Institute (TREIN).
The 54-year-old American, a former executive secretary of Egmont Group, has been tapped as the inaugural head of the anti-money-laundering institute which opened in Busan on Tuesday.
FATF is a Paris-headquartered international organization mandated to combat money laundering and financing of terrorism. Currently, it is headed by Juan Manuel Vega-Serrano from Spain who succeeded former Financial Services Commission (FSC) Chairman Shin Je-yoon.
During his term, Shin proposed the idea of establishing a research and training institution and the Korean government funded the establishment of TREIN, which Stephenson described “a timely initiative.”
“The Korean government was astute in recognizing a vacuum in the global network’s capacity to understand and implement the FATF standards and realized the formation of a training and research institute was well overdue,” said Stephenson.
“The Korean government believed in the importance of this initiative at such a high level, that they have agreed to solely fund the institute in its early stages of development and have accepted the need to recruit international experts to work at and with the institute.”
His nomination drew keen interest amid the North’s fifth nuclear test. The FATF named North Korea as a country subjected to a “call for action” along with Iran in June. When asked about the issue, Stephenson refrained from giving a detailed answer, but said there is room for TREIN to do research.
“If you look at the FATF standards, they talk about targeted sanctions and proliferation financing,” he said. “Jurisdictions are struggling a little bit how they can deter their financial institutions being used in proliferation financing. That’s the kind of niche the FATF fits in.”
He stressed that there is a change in FATF’s focus from members’ technical compliance to effectiveness in implementation. “That’s a transition and a challenge (to jurisdictions) so I think the institute can play a significant role in improving jurisdictions’ understanding,” he said.
According to him, his main goal as director would be developing courses to assist jurisdictions in recognizing what essential elements are required in effectively combating money laundering and producing a curriculum to eventually provide a platform for training standards.
When it comes to Korea’s efforts in fighting money laundering and terrorism financing, he said “Korea has done a great job” but needs to upgrade its legal system and put more focus on effectiveness.
“The country should focus on achieving more money laundering convictions and confiscate more proceeds of crime,” he said. “One characteristic of an effective anti-money-laundering and combating the financing of terrorism regime is the well-thought-out utilization of financial intelligence. Korean authorities might consider conducting an assessment on how well financial intelligence is used in combating money laundering and terrorism financing.”