Compliance Standards for AML and Combating Financing of Terrorism
was launched in 1989 by the G7, and is based at the OECD
(Organization for Economic Cooperation and Development) in Paris.
are 38 members, comprised of 36 jurisdictions, and 2 regions (GCC,
Gulf Cooperation Council, and EU). There are 29 regional and
international organizations that are associate members or observers,
and participate in the work of the FATF.
Argentina, Australia, Austria, Belgium, Brazil, Canada, China,
Denmark, Finland, France,
Germany, Greece, Hong Kong (China), Iceland, India, Ireland, Italy,
Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway,
Portugal, the Russian Federation, Singapore, South
Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the United
Kingdom, and the United States.
Although the GCC is a member, the individual member countries of the
GCC are not members, this is Bahrain, Kuwait, Oman, Qatar, Saudi
Arabia and the United Arab Emirates.
To be a member, the jurisdiction must be strategically important (by
GDP, size of banking sector, or impact to the global financial
system), and lead to a more balanced geographic spread of members.
It also should provide political commitment to the 40
recommendations, and AML/CFT, agree to implement all 40
recommendations within 3 years, be assessed for compliance
periodically, and actively participate in FATF. The country should
also be a member of the regional FATF member.
The compliance criteria must be met in relation to:
and terrorist financing offenses
diligence (although there is some flexibility in this requirement)
Objectives of FATF:
implementation of recommendations by members (annual self
assessment, plus periodic visit from another member)
laundering trends/countermeasures (the ‘typologies’ exercise)
FATF cannot impose
fines or other penalties, if members do not comply it applies a
graduated approach of enhanced peer pressure, including putting the
jurisdiction on a watch list, and ultimately rejecting the member.
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