Financial Action Task Force on Money Laundering (FATF)
The first co-operative and global policy response to the threats posed by money laundering was by the G7 group of countries which established the FATF in 1989. The FATF, like the APG, is an inter-governmental body whose objectives include setting standards to combat money laundering, the financing of terrorism and the financing of proliferation of weapons of mass destruction (AML/CFT), and supporting the implementation of these standards.
The core documents of the FATF (referred to as the "FATF standards") include:
- 40 recommendations, including interpretative notes, of 2012;
- Methodology for assessing compliance of 2013; and
- Various best practice guidelines.
The FATF standards require countries, territories and regions to:
- Criminalise money laundering, terrorist financing and proliferation financing in accordance with international law;
- Freeze terrorist assets and confiscate the proceeds of crime;
- Establish a financial intelligence unit to collect, analyse, evaluate and disseminate suspicious transaction reports from financial institutions and other reporting entities;
- Supervise those financial institutions and other reporting entities to ensure compliance with customer due diligence and other requirements contained in the standards; and
- Ensure that comprehensive and effective mechanisms are in place to cooperate effectively on the international level given the growing international dimension to these crimes.
These standards have been accepted internationally as the global policy benchmark for anti-money laundering, anti-terrorist financing and anti-proliferation financing measures by the United Nations, International Monetary Fund, World Bank, Asian Development Bank and many other international organisations and bodies. The key changes to the FATF standards included in the 2012 revised version are as follows:
- Requirement for countries to undertake a national risk assessment;
- Measures relating to proliferation financing;
- Addition of tax crimes as predicate offences to money laundering;
- Measures relating to domestic politically exposed persons;
- Requirement for countries to ratify the UN Convention Against Corruption.