The Financial Action Task Force (FATF) is an intergovernmental organization established in 1989 with the aim of combatting money laundering, terrorist financing, and other threats to the integrity of the international financial system. FATF sets standards and promotes effective implementation of legal, regulatory, and operational measures to prevent illicit activities globally.
FATF operates as a policy-making body that designs and guides efforts to combat money laundering and terrorist financing. It develops and updates recommendations which are considered as the global anti-money laundering (AML) and counter-terrorist financing (CTF) standards. These recommendations provide a framework for countries to develop their own legal, regulatory, and operational measures to combat financial crimes.
The FATF framework consists of 40 recommendations and nine special recommendations, covering a wide range of issues including customer due diligence, record-keeping, suspicious transaction reporting, international cooperation, and asset freezing, among others. These recommendations are regularly reviewed and updated to keep pace with emerging money laundering and terrorist financing threats.
FATF also conducts mutual evaluations to assess how effectively countries are implementing the recommendations. Based on these evaluations, countries are grouped into different levels of compliance. Those who fail to comply may face reputational damage and potential economic consequences, as well as the risk of being labeled as non-cooperative jurisdictions.
Overall, the FATF plays a crucial role in promoting global financial integrity and stability by setting standards and facilitating international cooperation in combating money laundering, terrorist financing, and other illicit activities.
