Financial Action Task Force (FATF), what exactly are their duties?

The Financial Action Task Force (FATF), also known as the Group d'action financière (GAFI), is a global institution aimed at fighting money laundering and the financing of terrorism (AML/CFT).

Founded in 1989 by the G7, it initially had 16 members and has now grown to 39 members in 2021. In 2001, after the 9/11 attacks, the FATF's mandate was expanded to cover terrorism financing.

What Does the Financial Action Task Force (FATF) Do?

The Financial Action Task Force (FATF) functions as a watchdog, closely monitoring money laundering patterns, legislative developments, and law enforcement initiatives at both domestic and international levels. His responsibilities also include analyzing compliance and issuing guidance to effectively combat money laundering.

Setting Global Standards

Central to the FATF's mission are the Forty Recommendations on Money Laundering and Nine Special Recommendations on Terror Financing. These standards establish a universal framework for AML/CFT measures, allowing member states to adapt their implementation according to their unique circumstances and legal structures.

Identify Uncooperative Entities

Since 2010, the FATF has maintained a blacklist, officially called the Non-Cooperative Countries or Territories (NCCT) list. This list highlights jurisdictions that have failed to coordinate in international efforts against money laundering and terrorist financing. Inclusion criteria included being reluctant to share important financial records, withholding information about beneficial ownership, and shell companies commonly used in money laundering schemes.

Adapting to New Challenges

Recognizing the ever-changing landscape of financial crime, the FATF regularly updates its guidance. In June 2019, the FATF introduced a very important guidance document entitled "A Risk-based Approach to Virtual Assets and Virtual Asset Service Providers (VASPs)". These guidelines, which include FATF travel rules, require compliant exchanges to share user information between themselves.

Additionally, with the increasing importance of crypto, the FATF convened in late June 2021 to review its recommendations on crypto assets, reflecting its commitment to staying ahead of emerging threats and technologies.

Overall, the FATF serves as a crutch in the global fight against financial crime. Through strong standards, rigorous oversight and proactive adaptation, the FATF seeks to safeguard the integrity of the international financial system, promoting transparency and accountability across borders.

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