The Financial Action Task Force (FATF) is an intergovernmental organization founded in 1989 by the Group of Seven (G7) to combat money laundering . Over time, its mandate has expanded to include terrorist financing and the financing of proliferation of weapons of mass destruction .
Key Functions and Objectives:
- Standard Setting: The FATF sets international standards and policies to combat money laundering, terrorist financing, and proliferation financing . These standards, known as the FATF Recommendations, provide a framework for countries to implement legal, regulatory, and operational measures .
- Mutual Evaluations: The FATF assesses its member countries’ anti-money laundering and counter-terrorist financing (AML/CFT) systems through a process of mutual evaluations . These evaluations analyze each country’s laws, regulations, and practices to determine their effectiveness and compliance with FATF standards .
- Identifying Risks: The FATF identifies and analyzes emerging trends and methods in money laundering and terrorist financing . This helps countries to better understand and address the evolving threats to the financial system .
- Jurisdiction Monitoring: The FATF monitors jurisdictions with deficiencies in their AML/CFT systems . It publishes lists of countries that are either subject to a “call for action” (high-risk) or under increased monitoring (grey list) .
- Promoting Financial Inclusion: The FATF works to promote financial inclusion by ensuring that AML/CFT measures do not inadvertently exclude legitimate individuals and businesses from accessing financial services .
- International Cooperation: The FATF fosters international cooperation by working with other international organizations, regional bodies, and individual countries to implement its standards and address global threats .
Recent Updates and Actions:
- Changes to FATF Standards: In February 2025, the FATF updated its standards to better support financial inclusion . These changes include replacing the term “commensurate” with “proportionate” to clarify the application of a risk-based approach and explicitly requiring countries to allow and encourage simplified measures in lower-risk scenarios .
- Jurisdictions Under Increased Monitoring: As of February 2025, the FATF continues to monitor jurisdictions with strategic deficiencies in their AML/CFT regimes . These countries are actively working with the FATF to address these deficiencies .
- Public Consultation: The FATF issued a public consultation in February 2025, inviting comments on its guidance on AML/CFT measures and financial inclusion .
- Member Countries: The FATF has 39 member jurisdictions, including:
- Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Hong Kong (China), Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Portugal, Russian Federation (suspended), Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States .
- The FATF also works with a global network of FATF-style regional bodies (FSRBs) to promote the implementation of its standards worldwide .
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