Financial Action Task Force (FATF)
The Financial Action Task Force (FATF) is an international organization that aims to bring global cooperation in the fight against terrorist financing and money laundering. It was established in 1989, by a Group of Seven (G-7) Summit held in Paris. The summit recognized that money laundering posed great threat to the banking system and financial institutions. Thus FATF was established to develop and promote national and international policies, globally, to help eliminate this threat. The FATF’s main responsibility is:
- To ensure global action against money laundering and terrorist financing is pursued.
- To ensure that the financial system is not used to further criminal and terrorist purposes.
- To examine measures and review existing national and international policies to check sufficiency to combat the developing threat.
- To regularly conduct on-site Mutual Evaluation Report examinations on individual jurisdictions, checking the effectiveness of their national policies in dealing with money laundering and terrorist financing
FATF Money Laundering Recommendations
Global efforts to combat money laundering and the financing of terrorism have been tailored to attack criminal and terrorist organizations through their financial operations. The strategy has been aimed at depriving them of the means to act and gain knowledge of how their financial networks and methods work in order to prevent any future operations.
The recommendations suggest,
- The criminalization of money laundering on similar terms to those suggested in the 1988 UN convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the 2000 UN Convention against Transnational Organized Crime, as well as for extended sanctions (civil and regulatory) to be applied to legal persons who fail to adhere to the Directive;
That countries adopting the recommendations should establish a national centre for receiving information about suspected money laundering transactions (a Financial Intelligence Unit or FIU) and ensure that there are designated law enforcement authorities that have responsibility and resources necessary to investigate such transactions