🔹 Definition
The Financial Action Task Force (FATF) is an intergovernmental policy-making body established in 1989 to set global standards and promote effective implementation of measures to combat money laundering (ML), terrorist financing (TF), and the financing of proliferation of weapons of mass destruction (PF). FATF develops international guidelines—known as the FATF Recommendations—which are widely adopted by countries and jurisdictions as the foundation for their AML/CFT legal frameworks.
FATF conducts mutual evaluations of member countries to assess their compliance, maintains public lists of high-risk jurisdictions, and drives global regulatory alignment across financial sectors.
🔹 Frequently Asked Questions (FAQs)
Q1: What are the FATF Recommendations?
The FATF has issued 40 Recommendations that form the basis of global AML/CFT regulation. Key topics include:
- Customer due diligence (CDD)
- Politically exposed persons (PEPs)
- Beneficial ownership transparency
- Suspicious transaction reporting (STR)
- International cooperation
- Regulation of virtual asset service providers (VASPs)
These recommendations are updated periodically in response to emerging threats and trends.
Q2: What are FATF’s grey list and black list?
- Grey List: Jurisdictions under increased monitoring for strategic AML/CFT deficiencies (e.g., Myanmar, Nigeria)
- Black List: High-risk jurisdictions subject to a call for action (e.g., North Korea, Iran)
Being listed may result in enhanced due diligence, reputational risk, and restricted access to international financial systems.
Q3: How does FATF impact compliance programs?
Organizations must:
- Align internal AML/CFT policies with FATF-aligned national regulations
- Screen clients and transactions involving high-risk jurisdictions
- Conduct enhanced due diligence (EDD) where applicable
- Monitor FATF updates for regulatory and policy changes
Q4: Is FATF a regulator or enforcer?
No, FATF is not a regulatory body and does not have enforcement power. It relies on its 200+ member countries and observer bodies (e.g., IMF, World Bank, FATCA, regional FATF-style bodies) to implement and enforce its standards locally.
