The Complete Guide On FATF – Financial Action Task Force

23 Apr The Complete Guide On FATF – Financial Action Task Force

What is the Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an intergovernmental organisation that designs and promotes policies and standards to combat financial crime.

What are FATF Recommendations

The Financial Action Task Force (FATF) formed a hundred recommendations to target money laundering, terrorist financing, and other threats to the global financial system. The FATF was created in 1989 and is headquartered In Paris.

Why FATF (Financial Action Task Force)

The increase in the global economy and international trade has given rise to financial crimes such as money laundering.

The Financial Action Task Force (FATF) makes recommendations for combating financial crime, reviews members’ policies and procedures and seeks to increase acceptance of anti-money laundering regulations across the globe. Because money launderers and others alter their techniques to avoid apprehension, the FATF updates its recommendations every few years.

The FATF monitors the progress of its members in implementing necessary measures,  reviews money laundering and terrorist financing techniques and counter-measures. The FATF also promotes the adoption and implementation of appropriate measures globally.

FATF has collaborated with other international stakeholders to identify national-level vulnerabilities. The aim is to protect the global financial system from being misused.

The FATF’s decision-making body, the FATF Plenary, meets three times per year.

The 40 Recommendations

The FATF’s primary policies issued Forty Recommendations on money laundering and the Nine Special Recommendations on Terrorism Financing.

The Recommendations are seen globally as the worldwide standard in anti-money laundering.  Many countries have also made a commitment to put the Forty Recommendations in place. The Recommendations cover the criminal justice system and law enforcement, international co-operation, and the financial system and its regulation.

Together, the Forty Recommendations and Special Recommendations on Terrorism Financing set the international standard for anti-money laundering and combating the financing of terrorism and terrorist acts. They set out the principles for action and allowed 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.

Categories of Recommendation

• AML/CFT Policies & Coordination

The first recommendation assesses risks and talks about applying a risk-based approach.

While the second recommendation is about national cooperation and coordination.

• Money Laundering and Confiscation

Recommendation 3 is about money laundering offense and the 4th is about confiscation and provisional measures.

• Terrorist Financing and Financing of Proliferation

Recommendation 5  is on terrorist financing offense, 6 about Targeted financial sanctions related to terrorism and terrorist financing and Recommendation 7 on targeted financial sanctions related to proliferation.

Recommendation 8 talks about Non-profit organisations.

• Preventive Measures

Recommendation 9 is about financial institution secrecy laws. Recommendations 10 & 11 talks about Customer Due Diligence and Record-Keeping.

While Recommendations 13-16 is on Additional Measures for specific customers and activities.

Recommendations 17 to19 are on Relance, control and financial groups.

The recommendations 20 to 22 is about reporting of suspicious transactions. .

Recommendation 23 is about DNFBPs and Other Measures.

• Beneficial Ownership of Legal Persons

Recommendation 24 is about the transparency and beneficial ownership of legal persons.

Recommendation 25 isabout  Transparency and beneficial ownership of legal arrangements .

• Powers and Responsibilities of Competent Authorities

Recommendations 26 to 28  is about Reglation and Supervision.

Recommendations 29 to 32 are Operation and law enforcement.

Recommendations 33 and 34 are General Requirements.

Recommendation 35 ellaborates about Sanctions.

• International Cooperation

Recommendation 36 is about International instruments.

Recommendation 37 talks about Mutual legal assistance.

Recommendation 38 elaborates about Mutual legal assistance: freezing and confiscation.

Recommendation 39 is about Extradition and Recommendation 40 is about Other forms of international cooperation and how countries should ensure that their competent authorities can rapidly, constructively and effectively provide the widest range of international cooperation in relation to money

laundering, associated predicate, and terrorist financing.

For further information on the FATF Recommendations, please visit www.fatf-gafi.org