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Financial Action Task Force on Money Laundering

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The Financial Action Task Force (on Money Laundering) (FATF), also known by its
French name, Groupe d'action financière (GAFI), is an intergovernmental organization Financial Action Task Force
founded in 1989 on the initiative of the G7.

The purpose of the FATF is to develop policies to combat money laundering and terrorism
Abbreviation FATF
financing. The FATF Secretariat is housed at the headquarters of the OECD in Paris.
Formation 1989

Type Intergovernmental
Contents organization

Purpose/focus Combat money laundering

1 History of the FATF and terrorism financing
2 The FATF Forty Recommendations and Special Recommendations on Terrorism
Financing Headquarters Paris, France
3 List of Non-Cooperative Countries or Territories Region served Worldwide
4 FATF: 40 Recommendations
5 Members Membership 36
6 FATF Associate Members Official languages English, French
7 Observer members
8 See also President Mr. Giancarlo Del
9 References Bufalo[1]
10 External links Affiliations Asia/Pacific Group on
11 External sources
Money Laundering (APG)
Caribbean Financial
Action Task Force
History of the FATF (CFATF)
The Council of Europe
In response to mounting concern over money laundering, the Financial Action Task Force Committee of Experts on

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on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris
the Evaluation of
in 1989. Recognising the threat posed to the banking system and to financial institutions,
Anti-Money Laundering
the G-7 Heads of State or Government and President of the European Commission
convened the Task Force from the G-7 member States, the European Commission and Measures and the
eight other countries. Financing of Terrorism
(MONEYVAL)
The Task Force was given the responsibility of examining money laundering techniques Financial Action Task
and trends, reviewing the action which had already been taken at a national or international Force on Money
level, and setting out the measures that still needed to be taken to combat money Laundering in South
laundering. In April 1990, less than one year after its creation, the FATF issued a report
America (GAFISUD)
containing a set of Forty Recommendations, which provide a comprehensive plan of action
Middle East and North
needed to fight against money laundering.
Africa Financial Action
In 2001, the development of standards in the fight against terrorism financing was added to Task Force (MENAFATF)
the mission of the FATF. In October 2001 the FATF issued the Eight Special Website http://www.fatf-gafi.org
Recommendations to deal with the issue of terrorism financing. The continued evolution of
money laundering techniques led the FATF to revise the FATF standards comprehensively
in June 2003. In October 2004 the FATF published a Ninth Special Recommendations, further strengthening the agreed international
standards for combating money laundering and terrorism financing - the 40+9 Recommendations. During 1991 and 1992, the FATF
expanded its membership from the original 16 to 28 members. In 2000 the FATF expanded to 31 members, in 2003 to 33 members, in
2007 it expanded to 34 members, in 2009 to 35 members, and in 2010 to its current 36 members.

The FATF Forty Recommendations and Special Recommendations on Terrorism

Financing
The primary policies issued by the FATF are the Forty Recommendations[2] on money laundering and the 9 Special Recommendations
(SR) on Terrorism Financing (TF).[3]

Together, the Forty Recommendation and 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

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legally binding measures.

The FATF issued the Forty Recommendations in 1990 and completely revised them in 1996 and 2003.[2] The current (2003) Forty
Recommendations require states, among other things, to:

implement relevant international conventions

criminalise money laundering and enable authorities to confiscate the proceeds of money laundering
implement customer due diligence (e.g. identity verification), record keeping and suspicious transaction reporting requirements for
financial institutions and designated non-financial businesses and professions
establish a financial intelligence unit to receive and disseminate suspicious transaction reports, and
cooperate internationally in investigating and prosecuting money laundering.

The FATF issued 8 Special Recommendations on Terrorism Financing in October 2001, following the September 11 terrorist attacks in
the United States. The FATF issued a ninth Special Recommendation on Terrorism Financing in October 2004.

The Special Recommendations on Terrorism Financing broadly extend the application of the Forty Recommendations to terrorism
financing and introduce new requirements relating to services such as alternative remittance, wire transfers and cash couriers as well as
non-profit organisations.[citation needed]

List of Non-Cooperative Countries or Territories

Main article: FATF Blacklist

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 company, and other financial vehicles commonly used in money laundering. The
FATF NCCT list is now defunct as the countries on it have made significant improvements in standards and cooperation.

The effect of the FATF Blacklist has been significant, and arguably has proven more important in international efforts against money
laundering than has the FATF Recommendations. While, under international law, the FATF Blacklist carried with it no formal sanction, in

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reality, a jurisdiction placed on the FATF Blacklist often found itself under intense financial pressure.

FATF: 40 Recommendations
Money laundering methods and techniques change in response to developing counter-measures. In recent years, the Financial Action
Task Force (FATF) has noted increasingly sophisticated combinations of techniques, such as the increased use of legal persons to
disguise the true ownership and control of illegal proceeds, and an increased use of professionals to provide advice and assistance in
laundering criminal funds. These factors, combined with the experience gained through the FATF's Non-Cooperative Countries and
Territories process, and a number of national and international initiatives, led the FATF to review and revise the Forty Recommendations
into a new comprehensive framework for combating money laundering and terrorism financing. The FATF now calls upon all countries to
take the necessary steps to bring their national systems for combating money laundering and terrorism financing into compliance with
the new FATF Recommendations, and to effectively implement these measures.

The review process for revising the Forty Recommendations was an extensive one, open to FATF members, non-members, observers,
financial and other affected sectors and interested parties. This consultation process provided a wide range of input, all of which was
considered in the review process.

The revised Forty Recommendations now apply not only to money laundering but also to terrorism financing, and when combined with
the Eight Special Recommendations on Terrorism Financing provide an enhanced, comprehensive and consistent framework of
measures for combating money laundering and terrorism financing. The FATF recognises that countries have diverse legal and financial
systems and so all cannot take identical measures to achieve the common objective, especially over matters of detail. The
Recommendations therefore set minimum standards for action for countries to implement the detail according to their particular
circumstances and constitutional frameworks. The Recommendations cover all the measures that national systems should have in place
within their criminal justice and regulatory systems; the preventive measures to be taken by financial institutions and certain other
businesses and professions; and international co-operation. The original FATF Forty Recommendations were drawn up in 1990 as an
initiative to combat the misuse of financial systems by persons laundering drug money. In 1996 the Recommendations were revised for
the first time to reflect evolving money laundering typologies. The 1996 Forty Recommendations have been endorsed by more than 130
countries and are the international anti-money laundering standard.

In October 2001 the FATF expanded its mandate to deal with the issue of the financing of terrorism, and took the important step of
creating the Eight Special Recommendations on Terrorism Financing. These Recommendations contain a set of measures aimed at
combating the funding of terrorist acts and terrorist organisations, and are complementary to the Forty Recommendations2. A key
element in the fight against money laundering and the financing of terrorism is the need for countries systems to be monitored and

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evaluated, with respect to these international standards. The mutual evaluations conducted by the FATF and FATF-style regional bodies,
as well as the assessments conducted by the IMF and World Bank, are a vital mechanism for ensuring that the FATF Recommendations
are effectively implemented by all countries

Members
The FATF membership is currently made up of 34 countries and territories and 2 regional organisations. The FATF also works in close
co-operation with a number of international and regional bodies involved in combating money laundering and terrorism financing.[4]

1. Argentina
2. Australia
3. Austria
4. Belgium
5. Brazil
6. Canada
7. China
8. Denmark
9. European Commission
10. Finland
11. France
12. Germany
13. Greece
14. Gulf Co-operation Council
15. Hong Kong, China
16. Iceland
17. India
18. Ireland
19. Italy
20. Japan
21. Kingdom of the Netherlands*: Netherlands, Aruba, Curacao and Sint Maarten.
22. Luxembourg
23. Mexico
24. New Zealand

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25. Norway
26. Portugal
27. Republic of Korea
28. Russian Federation
29. Singapore
30. South Africa
31. Spain
32. Sweden
33. Switzerland
34. Turkey
35. United Kingdom
36. United States

FATF Associate Members

The Asia/Pacific Group on Money Laundering (APG)
Caribbean Financial Action Task Force (CFATF)
The Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Landering Measures (MONEYVAL)(formerly
PC-R-EV)[5]
The Financial Action Task Force on Money Laundering in South America (GAFISUD)[6]
Middle East and North Africa Financial Action Task Force (MENAFATF)[7]
Eurasia Group (EAG)[8]
Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)[9]
Intergovernmental Action Group against Money-Laundering in Africa (GIABA)[10]

Observer members
Several international organisations including the International Monetary Fund and the World Bank

See also

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White collar crime

References
1. ^ fatf-gafi.org (http://www.fatf-gafi.org/document/62/0,3746,en_32250379_32236879_46734142_1_1_1_1,00.html)
2. ^ a b fatf-gafi.org (http://www.fatf-gafi.org/document/28/0,2340,en_32250379_32236930_33658140_1_1_1_1,00.html)
3. ^ fatf-gafi.org (http://www.fatf-gafi.org/document/9/0,2340,en_32250379_32236920_34032073_1_1_1_1,00.html)
4. ^ fatf-gafi.org (http://www.fatf-gafi.org/pages/0,3417,en_32250379_32236869_1_1_1_1_1,00.html)
5. ^ coe.int (http://www.coe.int/t/dghl/monitoring/moneyval/)
6. ^ fatf-gafi (http://www.fatf-gafi.org/document/35/0,3343,en_32250379_32236869_34355875_1_1_1_1,00.html)
7. ^ menafatf.org (http://www.menafatf.org/)
8. ^ eurasiangroup.org (http://www.eurasiangroup.org/)
9. ^ esaamig.org (http://www.esaamlg.org/)
10. ^ giaba.org (http://www.giaba.org/)

External links
Official website (http://www.fatf-gafi.org)
A review of the FATF Principles - 'The Global Standard' from Rohanbedi.com (http://www.rohanbedi.com/FATF40.pdf)
FATF-Style Regional Bodies (http://www.eurasiangroup.org/en/fsrb.html)
Analysis and comparison of FATF / similar bodies provisions (http://www.socamlpro.org/) - for members of The Society of Anti
Money Laundering Professionals
Financial Action Task Force (FATF) guidelines defines PEPs (http://www.worldcompliance.com/global-pep-list.html)
International cooperation on money laundering and FATF (http://finance.vsoni.com)

External sources
Hawala, An Informal Payment System and Its Use to Finance Terrorism by Sebastian R. Müller, December 2006, VDM Verlag, ISBN:
ISBN 3865506569, ISBN 978-3865506566

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