Financial Action Task Force
The Financial Action Task Force (FATF) is an international policy-making body of 37 member countries established to protect the international financial system. After its inception in 1989, the organisation set out a basic framework for combating money laundering and terrorist financing. This has been emulated by other countries around the world. The FATF makes an ongoing effort to devise measures and update recommendations with the aim of preventing the use of the financial systems by criminals. It has emerged as a global money-laundering and terror financing watchdog.
Role of the FATF
The FATF was originally formed to create the necessary political will for legislative and regulatory reforms to prevent the misuse of financial systems. It set into motion a regulatory mechanism with 40 recommendations that laid the foundations of AML/CTF regulations across the world.
The FATF monitors the progress of member countries in implementing the necessary measures and techniques based on its Recommendations. It lays down the guidelines for financial and non-financial companies, and makes suggestions for best practices of compliance. At the same time, it adopts the role of an umbrella organisation for promotion and implementation of appropriate measures to fight money laundering on a global level. The Task Force collaborates with other international bodies for policy discussions concerning the emergence of new money laundering schemes using new technologies and platforms.
The FATF also works together with the Organisation for Economic Co-operation and Development (OECD) whose prime objective is to stimulate economic progress, world trade, and prevent tax crime. Periodically they arrive at a consensus on Black Lists, to enforce AML/CTF regulatory compliance.
The Task Force reviews its mission every five years, and updates its guidelines based on new business models and financial crime potential.