FATF 40 Recommendations

  • First issued in 1990, revised in 1996, 2003 and 2012.

  • Interpretive notes clarify the application of specific recommendations

  • After September 11 2001 terrorist attacks, they issued 9 recommendations on terrorist financing: 8 were adopted on Oct 31, 2001, and one was Oct 22, 2004.

  • The 2012 version of the 40 recommendations combined the 9 into the 40.

Recommendations cover:

  • Identify risk and develop policies

  • Criminal justice system and law enforcement

  • Financial system and regulation

  • Transparency of legal persons and arrangements

  • International cooperation

2003 revisions expanded the global reach of ways to crack down on illicit funds movements, it also strengthened measures to combat money laundering and terrorist financing. Key changes in 2003:

  • Included terrorist financing

  • Included real estate agents, precious metals dealers, accountants, lawyers, trust services providers

  • Specified procedures on customer identification, due diligence, including extra ID for high risk customers

  • Clear definition of predicate offenses for money laundering

  • Prohibited shell banks, urged transparency over legal persons

  • International cooperation in terrorist financing investigations

2012 revision introduced:

  • The risk assessment as the first step

  • Incorporated the 9 terrorist financing recommendations into the main 40

  • Measures against weapons of mass destruction

  • Domestic PEPs and those with prominent functions in international organizations

  • Identifying risks of new products prior to launch

  • Financial groups should have a group-wide AML/CFT program

  • Include tax crimes within the scope of predicate offenses

Next Topic: Overview of the 40 recommendations

Previous Topic: Compliance Standards for AML and Combating Financing of Terrorism

Get the Book & Pass First Time!

Includes all the study notes, the mock exam and detailed explainations of the answers

Get the AML Book & Pass First Time - Instant PDF Download