The FATF is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
The FATF is therefore a "policy-making body" which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. The current mandate of the FATF (2012-2020) was adopted at a Ministerial meeting in April 2012.
In collaboration with other international stakeholders, the FATF also works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse. 40 recommendations are in place, originally published in 1990, and re-published on a number of occasions since, most recently in 2012.
They recognise that money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction are serious threats to security and the integrity of the financial system.
The FATF standards were revised to strengthen global safeguards and further protect the integrity of the financial system by providing governments with stronger tools to take action against financial crime. At the same time, these new standards addressed new priority areas such as corruption and tax crimes.
The recommendations are now better targeted - there is more flexibility for simplified measures to be applied in low risk areas. This risk-based approach allows financial institutions and other designated sectors to apply their resources to higher risk areas.
The FATF recommendations are the basis on which all countries should meet the shared objective of tackling money laundering, terrorist financing and the financing of proliferation of weapons.
A more detailed analysis of financial crime, together with specific examples, can be found within the Financial Crime module at www.tradefinance.training