Creation and ongoing maintenance Together, the Forty Recommendations on Money Laundering and eight (now nine) Special Recommendations on Terrorism Financing set the international standard for anti-money laundering measures and combating the financing of terrorism and
terrorist acts. They set out the principles for action and allow countries a measure of flexibility in implementing these principles according to their particular circumstances and constitutional frameworks. Both sets of FATF Recommendations are intended to be implemented at the national level through legislation and other legally binding measures. There are multiple groups to organise the Recommendations;
AML/CFT Policies and Coordination, Money Laundering and Confiscation, Terrorist Financing and Financial Proliferation, Preventive Measures, Transparency and Beneficial Ownership of Legal Persons and Arrangements, Powers and Responsibilities of Competent Authorities and other Institutional Measures, and International Cooperation. In February 2012, the FATF codified its recommendations and Interpretive Notes into one document that maintains SR VIII (renamed Recommendation 8), and also includes new rules on weapons of mass destruction, corruption and wire transfers (Recommendation 16, commonly known as the “travel rule”). In October 2018, the FATF updated Recommendation No. 15, expanding its reach to include operations related to virtual assets. It urged its member countries to ensure that providers of virtual asset services are regulated for AML/CFT objectives and licensed or registered. Additionally, they should be under robust systems for supervision assurance and compliant with the FATF recommendations. In June 2019, the FATF released its first guidance on the risk-based approach for virtual assets and virtual asset service providers. This guidance offers recommendations on how member jurisdictions should regulate cryptocurrency businesses, placing anti-money laundering and countering the financing of terrorism (AML/CFT) obligations on VAs and VASPs. It also extended Recommendation 16 to VASPs. This guidance was updated on March 19 and October 2021.
Forty recommendations on money laundering The FATF's Forty Recommendations on Money Laundering of 1990 are the primary policies issued by FATF and the Nine Special Recommendations (SR) on Terrorism Financing (TF). The Recommendations are seen globally as the world standard in anti-money laundering as well many countries have committed to putting the Forty Recommendations in place. The Recommendations cover the criminal justice system and law enforcement, international cooperation, and the financial system and its regulation. The FATF completely revised the Forty Recommendations in 1996 and 2003. following the
September 11 attacks in the United States. Among the measures, Special Recommendation VIII (SR VIII) specifically targeted non-profit organisations. This was followed by the International Best Practices Combating the Abuse of Non-Profit Organisations in 2002, released one month before the U.S. Department of Treasury's Anti-Terrorist Financing Guidelines, and the Interpretive Note for SR VIII in 2006. A ninth Special Recommendation was added later. The 2009 Handbook for Countries and Assessors outlines criteria for evaluating whether FATF standards are achieved in participating countries. FATF evaluates a country's performance based on its assessment methodology that covers: 1. technical compliance, which is about the legal and institutional framework and the powers and procedures of the competent authorities, and 2. effectiveness assessment, which is about the extent to which the legal and institutional framework is producing the expected results. There are many differences between countries dealing with their legal and
financial system, which is taken into consideration by the FATF. There is a set minimum of actions that meet a standard, that all countries can use regarding their own situation. This standard covers all actions that a nation should take within its regulatory systems and its criminal justice systems as well as the preventive measures that should be taken by specified businesses, professions, and institutions. For
non-profit organisations (NPOs) there has been a command for more financial transparency, to make sure that they do not become easier for terrorist organisations to launder money through the organisations. This hypothesis was thought of by intergovernmental organisations. These intergovernmental organisations include the
World Bank, the
Organisation for Economic Co-operation and Development and the
International Monetary Fund. NPOs are put under surveillance, especially when they are associated with "suspect communities" or if they are based or working in zones of conflict. FATF data is a key indicator of the quality of AML/CFT systems in the
Basel AML Index, a money laundering and terrorist financing risk assessment tool developed by the
Basel Institute on Governance. There are still compliance issues in areas that might afford exploitative opportunities for
transnational crime and terrorist networks. This can have detrimental effects on a country's national security through increasing risks of money laundering and financing of terrorism as well as wastage due to the implementation of inappropriate regulatory measures. The objective is to increase mitigation strategies that would enable scarce resources in fighting money laundering and terrorism financing threats. The FATF follows strict criteria to identify potential threats.
Black or greylisting of non-compliant nations In addition to FATF's "Forty plus Nine" Recommendations, in 2000 FATF issued a list of "
Non-Cooperative Countries or Territories" (NCCTs), commonly called the
FATF Blacklist. This was a list of 15 jurisdictions that, for one reason or another, FATF members believed were uncooperative with other jurisdictions in international efforts against money laundering (and, later, terrorism financing). Typically, this lack of cooperation manifested itself as an unwillingness or inability (frequently, a legal inability) to provide foreign law enforcement officials with information relating to bank account and brokerage records, and customer identification and
beneficial owner information relating to such bank and brokerage accounts,
shell corporations, and other financial vehicles commonly used in money laundering. All remaining Non-Cooperative Countries and Territories in the NCCT initiative were delisted in October 2006, however, FATF continues to maintain a "blacklist" of "High Risk" jurisdictions and a "greylist" of "Jurisdictions Under Increased Monitoring", and issues updates as countries on High-risk and non-cooperative jurisdictions list have made significant improvements in standards and cooperation. The FATF also issues updates to identify additional jurisdictions that pose Money Laundering/Terrorist Financing risks. The FATF surveyed 26 jurisdictions to check their ability and willingness to cooperate with other countries in the international fight against money laundering. The review contained the summaries of these surveys. Fifteen jurisdictions were branded "non-cooperative countries or territories", because of the high number of harmful practices identified in these jurisdictions. Countries and territories in the grey list are
Algeria,
Angola,
Bulgaria,
Burkina Faso,
Cameroon,
Côte d'Ivoire,
Croatia,
Democratic Republic of the Congo,
Haiti,
Kenya,
Laos,
Lebanon,
Mali,
Monaco,
Mozambique,
Namibia,
Nepal,
Nigeria,
South Sudan,
Syria,
Tanzania,
Venezuela,
Vietnam, and
Yemen. == Members and affiliate organisations ==