Knowledgebase

The FATF’s role in the prevention of financial crime

FATF

The Financial Action Task Force, or FATF, is one of the most influential and important organizations in regard to combating financial crimes such as money laundering, terrorist financing, and other forms of corruption. The intergovernmental institution, founded in 1989, comprises 37 member countries and is headquartered in Paris.

The Formation of FATF

The FATF was founded due to concern about money laundering and the threat it poses to the world financial system. Initially, the main responsibilities assigned to the Task Force were to analyze money laundering and determine what the most common tactics were, reflect on what was already being done in order to tackle financial crime and make goals for what could be accomplished in the future. After completing this research, the FATF proceeded to generate 40 recommendations that were meant to guide its members through the process of regulating the financial sector and curbing corruption.

FATF and Terrorist Financing

In the early 2000s, and particularly after the September 11th terrorist attacks, world governments became more anxious about the funding of terrorism, as well as other types of financial crime. Because of these growing concerns, the FATF altered their mission and updated the recommendations given to member countries to include measures against terrorist financing. A complete revision of the Task Force’s guide and standards ensued.

In regard to terrorist financing, the FATF compiled extensive research on how terrorists get their funding, where the money comes from, what tactics they use to avoid detection and ways to prevent them from obtaining more money. A recently released document provides detailed information on wire transfers, weapons of mass destruction, and other forms of corruption that can allow terrorists to gain power and financing. The FATF also regulates and defines the notion of politically exposed persons.

FATF’s Recommendations

The FATF’s recommendations require that participating countries not only outlaw money laundering and other forms of corruption but also require their financial institutions to take action against these crimes. All money must be confiscated from money laundering crimes, and authorities must be permitted to enforce this.

The FATF also requires that financial institutions in member countries conduct “know your customer” practices and verify the identities of clients. Records must be kept of all clients that pose a risk of corruption, and suspicious transactions and behavior must always be reported and monitored. Participating countries must have a financial unit that handles these reports and completes investigations, and they must also cooperate at the international level in regard to financial crime. If a crime related to money laundering or terrorist funding takes place across borders, countries must work together to end the criminal activity, prevent it from reoccurring in the future, and prosecute those that are responsible.

Get Started Now

Identify risks before they become threats and protect your business. Screen against the world’s only dynamic global database of Sanctions and Watchlists, PEPs and Adverse Media, in consolidated, structured profiles.

1+

Comments

Share your thoughts and start a conversation.

Leave a Reply

Related articles:

Financial Crimes Enforcement Network FinCen
June 24, 2014

Financial Crimes Enforcement Network (FinCEN)

Why The Financial Crimes Enforcement Network (FinCEN) Is An Important Institution "FinCEN was the first financial…
Read More
Focused image of a globe
June 27, 2014

The United Nations Office on Drugs and Crime (UNODC)

Overview of the United Nations Office on Drugs and Crime (UNODC) The United Nations Office…
Read More
HM Revenue and Customs
July 4, 2014

HM Revenue and Customs (HMRC)

The important role of HM Revenue and Customs It is common knowledge that HM Revenue…
Read More
AUSTRAC
July 13, 2014

Australian Transaction Reports and Analysis Centre (AUSTRAC)

AUSTRAC's Role In The Fight Against Financial Crime What Is The Australian Transaction Reports and Analysis…
Read More
Brazilian flag with high rise buildings in the background
July 13, 2014

Council for Financial Activities Control (COAF)

The Council for Financial Activities Control's (COAF) fight against financial crime What is The Council…
Read More
Wolfsberg Group
July 15, 2014

Wolfsberg Group

Overview of the Wolfsberg Group The Wolfsberg Group, an association of 13 global banks, is…
Read More
Egmont Group Of Financial Intelligence Units
July 15, 2014

Egmont Group

Overview of the Egmont Group Of Financial Intelligence Units The Egmont Group of Financial Intelligence Units…
Read More
Unidad de Inteligencia Financiera
July 15, 2014

Mexican Unidad de Inteligencia Financiera (UIF)

The Mexican Unidad de Inteligencia Financiera (UIF) Created in 2004, the Mexican Unidad de Inteligencia…
Read More
Monetary Authority Singapore
July 10, 2018

Monetary Authority of Singapore (MAS)

The Monetary Authority of Singapore (MAS) What is the Monetary Authority of Singapore (MAS)? The…
Read More
Hong Kong Monetary Authority
July 11, 2018

Hong Kong Monetary Authority (HKMA)

Regulations in Hong Kong: The Hong Kong Monetary Authority What is the Hong Kong Monetary…
Read More
Asia Pacific Group APG
August 17, 2018

Asia Pacific Group

The Asia Pacific Group (APG) What Is The Asia Pacific Group (APG)? The Asia Pacific…
Read More
Financial Industry Regulatory Authority FINRA
August 20, 2018

Financial Industry Regulatory Authority (FINRA)

What Is Financial Industry Regulatory Authority (FINRA)? What Is Financial Industry Regulatory Authority? The Financial…
Read More
Share: