Russia's military aggression against Ukraine has been met with economic and financial sanctions from the civilized world. Effective enforcement of sanctions policy requires maximum transparency in order to expose hidden finances and prevent the misuse of beneficial ownership to avoid sanctions.[1] This document provides an overview of problematic issues related to money laundering and beneficial ownership in Georgia and presents examples of best practices in this area from across the world.
The Financial Action Task Force (FATF) is an independent inter-governmental body dedicated to promoting policies against money laundering, terrorism, and funding for weapons of mass destruction. To this end, FATF issued recommendations 2012 that have since been recognized as the international standard for combating money laundering and financing of terrorism. The FATF Standard sets out specific requirements for the judiciary, financial intelligence units (FIUs), and law enforcement agencies, as well as the private sector and its supervisors.[2]
There are remaining risks and challenges related to money laundering in Georgia that are being actively discussed at the international and local levels.[3] It is therefore important to assess the extent to which the current system in Georgia is in compliance with the FATF recommendations that have been recognized as the international standard with regard to these issues.
The recommendations of the Financial Action Task Force address issues related to policies and coordination for combating money laundering and terrorism, prosecution, and preventive measures; the powers and responsibilities of relevant bodies; access to and transparency of information about beneficial owners and international cooperation in this area.
According to the report released by the Committee of Experts of the Council of Europe on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) in November 2020, which assessed Georgia's compliance with the recommendations issued by the Financial Action Task Force in 2012, the country has fully implemented six of the 40 recommendations, mostly implemented 21 recommendations, 12 – partially, and 1 recommendation has not been implemented. The latter relates to existing legislation and practices with regard to non-profit organizations in the context of combating the financing of terrorism.
The following overview focuses on the implementation of this latter recommendation. At the same time, it analyses the state of implementation of the recommendation related to beneficial ownership and transparency, which was marked as partially implemented in the 2020 MONEYVAL Mutual Evaluation Report. The document also briefly analyses existing shortcomings in Georgia in relation to other recommendations from the MONEYVAL report.
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[1]Aside from the recommendations that have already been discussed (namely, Recommendations 8 and 24).
[2] See in-depth. IDFI, MONEYVAL Assessment of Georgia on Money Laundering (ML) and Terrorism Financing (TF), p. 4.ons on Russia and how they can be made even more effective, Available at: https://www.atlanticcouncil.org/in-depth-research-reports/report/the-impact-of-western-sanctions-on-russia/#h-effective-sanctions-require-more-transparency-enforcement-and-international-cooperation
[3] IDFI, MONEYVAL Anti-money laundering and counter-terrorist financing measures, Georgia, evaluation report,p. 3, Available at: https://idfi.ge/public/upload/Blog/MONEYVAL%20final%20GEO.pdf, Accessed on: 16.02.2022.
/public/upload/Analysis/Compliance with FATF Recommendations.pdf
This material has been financed by the Swedish International Development Cooperation Agency, Sida. Responsibility for the content rests entirely with the creator. Sida does not necessarily share the expressed views and interpretations.
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