The FATF (Financial Action Task Force) Global Intra-Governmental AML Watchdog

Origins of the FATF

The FATF (Financial Action Task Force on Money Laundering), founded in 1989 by the G7 group of nations, is an intergovernmental organisation that sets standards and promotes the effective implementation of legal, regulatory and operational measures for combating terrorist financing, money laundering, and other illicit activities that pose a threat to the integrity of the international financial system. Originally composed of 16 member states, the FATF now comprises 39 core members and 2 regional organisations (the European Commission and the Gulf Cooperation Council), as well as 31 international and regional organisations that have either Associate Member or Observer status.

While the GCC (Gulf Cooperation Council) is a fully-fledged FATF member, five of its member nations (Bahrain, Kuwait, Oman, Qatar and the UAE (United Arab Emirates)) are not FATF members. 

Notably, The Channel Islands of Jersey, Guernsey, and the Isle of Man – which are Crown Dependencies of the United Kingdom, which is itself a Member of the FATF – are not FATF Members. 

What is the FATF’s purpose? 

The FATF issues recommendations aimed at setting the standard for anti-money laundering (AML) and countering terrorism financing (CFT). Its famous Forty Recommentations on Money Laundering and eight (now nine) Special Recommendations on Terrorism Financing set out the action principles that permit countries some leeway in implementing said Recommendations within their national and constitutional frameworks. 

What are the FATF’s 40 Recommendations? 

Issued in 1990, the FATF’s Forty Recommendations on money laundering (as well as the Nine Special Recommendations on Terrorism Financing) are regarded as the world standard in AML. These Recommendations were completely revised in 1996 and again in 2003. 

What is FATF Recommendation 8? 

It is a codified list of FATF Recommendations and Interpretive Notes that includes new rules regarding WMDs (weapons of mass destruction), corruption and wire transfers, which comprises Recommendation 16 (below). 

What is FATF Recommendation 16? 

The latter section of Recommendation 8 – pertaining to wire transfers – known as Recommendation 16, is now commonly referred to as the “travel rule”. It provides a framework by which FATF Members create AML and CFT legislature. 

The FATF and Crypto

In 2019, the FATF expanded Recommendation 16 by issuing its first recommendations on how VASPs (Virtual Asset Service Providers) should be regulated within its Member jurisdictions. These recommendations were updated in 2021. 

FATF Greylist and FATF Blacklist

In 2000, the FATF created a list of Non-Cooperative Countries or Territories (NCCTs). This is what’s commonly referred to as the FATF Blacklist. Originally made up of 15 jurisdictions, the FATF blacklist now contains two nations. 

Which nations are on the FATF Blacklist? 

  • Iran
  • North Korea

Which nations are on the FATF Greylist? 

  • Albania
  • Barbados
  • Burkina Faso
  • Cambodia
  • Cayman Islands
  • Jamaica
  • Jordan
  • Haiti
  • Malta
  • Mali
  • Morocco
  • Myanmar (Burma)
  • Nicaragua
  • Pakistan
  • Panama
  • Philippines,
  • Senegal
  • South Sudan
  • Syria
  • Turkey
  • Uganda
  • Yemen
  • Zimbabwe.

Who are the Member States and Member Organisations of the FATF? 

As mentioned above, the FATF is currently made up of 37 member jurisdictions and 2 regional organisations. They are: 

Regional Organisations that are FATF Members: 

  • European Commission
  • Gulf Cooperation Council 

Countries and other Jurisdictions that are FATF Members: 

  • Argentina
  • Australia
  • Austria
  • Belgium
  • Brazil
  • Canada
  • China
  • Denmark
  • Finland
  • France
  • Germany
  • Greece
  • Hong Kong, China (initially joined under the designation British Hong Kong in 1991)
  • Iceland
  • India
  • Ireland
  • Israel
  • Italy
  • Japan
  • Luxembourg
  • Malaysia
  • Mexico
  • Netherlands (including the Netherlands, Aruba, Curacao and Sint Maarten)
  • New Zealand
  • Norway
  • Portugal
  • Russian Federation
  • Saudi Arabia
  • Singapore
  • South Africa
  • South Korea
  • Spain
  • Sweden
  •  Switzerland
  • Turkey
  • United Kingdom
  • United States

The FATF also comprises 28 international organisations and 1 country with FATF Observer status: 

International Organisations that are FATF Members: 

  • African Development Bank
  • Anti-Money Laundering Liaison Committee of the Franc Zone (CLAB)
  • Asian Development Bank
  • Basel Committee on Banking Supervision (BCBS)
  • Camden Asset Recovery Inter-agency Network (CARIN)
  • Egmont Group of Financial Intelligence Units
  • European Bank for Reconstruction and Development (EBRD)
  • Group of International Finance Centre Supervisors
  • IMF (International Monetary Fund)
  • United Nations Office on Drugs and Crime (UNODC)
  • United Nations Counter-Terrorism Committee Executive Directorate (UNCTED)

FATF Observer Country: 

  • Indonesia