What are the international standards for AML/CFT?
The 2012 revised FATF's 40 Recommendations constitute the international standards for anti-money laundering and combating the financing of terrorism.
The first co-operative and global policy response to the threats posed by money laundering was by the G7 group of countries who established the FATF in 1989. Since 1989, the FATF has produced a comprehensive set of international standards against money laundering and terrorist financing. The core documents of the FATF include:
- The 2012 revised FATF 40 Recommendations on Money Laundering, Terrorist Financing and Proliferation Financing (“the standards”) which includes interpretative notes;
- Methodology for assessing compliance with the standards; and
- Best Practice Guidelines for implementation of the standards.
These standards have been accepted internationally as the global policy benchmark for anti-money laundering, anti-terrorist financing and anti-proliferation financing measures by the United Nations, International Monetary Fund, World Bank, Asian Development Bank and many other international organisations and bodies.
What do the FATF Standards Cover?
The 2012 FATF standards contain certain core, or essential, Recommendations including the requirement to:
- Criminalise money laundering, terrorist financing and proliferation financing in accordance with international law;
- Freeze terrorist assets and confiscate the proceeds of crime;
- Establish a financial intelligence unit to collect, analyse, evaluate and disseminate suspicious transaction reports from financial institutions and other reporting entities;
- Supervise those financial institutions and other reporting entities to ensure compliance with customer due diligence and other requirements contained in the standards; and
- Ensure that comprehensive and effective mechanisms are in place to cooperate effectively on the international level given the growing international dimension to these crimes.
The key changes to the FATF standards included in the 2012 revised version are as follows:
- Requirement for countries to undertake a national risk assessment;
- Measures relating to proliferation financing;
- Addition of tax crimes as predicate offences to money laundering;
- Measures relating to domestic politically exposed persons;
- Requirement for countries to ratify the UN Convention Against Corruption.
There are many other changes. For further information about the new standards and the UFA's relationship with the FATF visit the FATF's website at http://www.fatf-gafi.org/