The Asian Bankers Association (ABA) and Fintelekt Advisory Services jointly organised a virtual Masterclass on 19 August 2026 on "Preparing Your Institution for FATF's 5th Round: Expectations, Outcomes and Practical Readiness."
The resource person for the workshop was Edgar Lopez, Financial Crime Advisor & Former Director of Gibraltar Financial Intelligence Unit. He is recognised for his expertise in counter-proliferation financing, contributing to international capacity building and the development of risk-based frameworks and national risk assessments. Arpita Bedekar, Chief Operating Officer, Fintelekt, hosted the workshop.
The session was well attended, with participants from 10 countries from varied sectors including banks, insurance companies, regulators and central banks, non-banking finance companies, money transfer agencies and DNFBPs.
The workshop focused on providing participants with an overview of the evolving expectations under the FATF’s 5th Round Mutual Evaluations and how financial institutions can strengthen the effectiveness of their AML/CFT programmes.
Shift from technical compliance to demonstrable effectiveness
Edgar highlighted the evolving focus of the FATF’s 5th Round Mutual Evaluations, particularly the shift from technical compliance to demonstrable effectiveness. While technical compliance assesses whether laws and institutional frameworks meet FATF requirements, effectiveness examines whether these frameworks actually deliver results against the 11 Immediate Outcomes. He stressed that assessors rely extensively on statistics, case studies, supervisory records and interviews, making evidence of actual outcomes critical.
Consequences of Weak NRAs
A key focus by Edgar was the importance of current, credible and actively used risk assessments. Weak money laundering and terrorist financing National Risk Assessments can have wider implications for supervision, resource allocation, FIU priorities, investigations and asset recovery. He emphasised that institutions should therefore ensure that identified risks clearly drive their controls, resources and decisions, and that weaknesses are addressed at their root cause rather than in isolation.
Key Changes Influencing the 5th Round and Demonstrating Effectiveness
Beneficial Ownership, Asset Recovery and Financial Inclusion were the three areas which Edgar underlined as the most influential areas in the 5th Round of Mutual Evaluation. He cited that institutions must demonstrate outcomes, not just policies and procedures, with the use of evidence, including risk-based decisions, declined transactions, training linked to risks, supervisory remediation and documented control improvements.
Quality of Suspicious Transactions Reports and investigations
Finally, Edgar placed particular emphasis on the quality and intelligence value of Suspicious Transaction Reports (STRs) rather than simply the volume of reports filed. He said that financial intelligence, investigations and asset recovery should be viewed as an interconnected chain, supported by strong reporting and risk-based monitoring.
Overall, he encouraged institutions to maintain robust evidence of risk-based decisions, embed emerging typologies into controls, keep risk assessments current, and prepare staff to clearly demonstrate how their AML/CFT frameworks work in practice.
The workshop also covered emerging areas of scrutiny, including beneficial ownership, asset recovery, financial inclusion and proliferation financing. Greater emphasis is being placed on the accuracy and verification of beneficial ownership information, tracing and recovery of assets, and proportionate risk-based measures.
Key Takeaway
The 5th Round of the Mutual Evaluations by FATF is increasingly about proving that AML/CFT frameworks work in practice. Institutions should therefore focus on demonstrating how identified risks drive controls, decisions and measurable outcomes—not merely showing that policies and procedures exist.
