Nov 29, 2022
The Financial Action Task Force (FATF) just released their revised recommendations for combating money laundering and terrorist financing. While the new standard is an improvement over the original, it still has several significant problems. In this post, we'll discuss some of the key issues with the revised FATF standard and what they mean for businesses and individuals alike. Stay tuned for future posts where we'll explore these problems in more detail.
The Financial Action Task Force (FATF) is an intergovernmental body established by the G7 in 1989 to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system. The FATF sets standards for countries worldwide to protect their economies from these risks and promote secure and efficient markets.
The Revised FATF Standard is an upgraded version of the original set of standards, which was adopted in 2012. It provides detailed guidance on measures that countries can take to improve their ability to detect and deter money laundering and terrorist financing. The standard has been revised several times since then, with the most recent revision taking effect in July 2019.
The Problems in the Revised FATF Standard have been a topic of considerable debate since it was first introduced. The main concern is that the standard does not take into account the specific needs of each country, making it difficult to implement effectively across different jurisdictions.
There are concerns about the cost associated with complying with its requirements and whether or not it may be more beneficial for countries to focus their efforts on other regulatory frameworks instead.
The FATF standard also carries with it the risk of unintended consequences, as it could potentially hinder countries from accessing the global financial system. This could lead to a decrease in access to capital and investments, which would in turn inhibit economic growth.
The problems that have been identified in the Revised FATF Standard can be addressed through a variety of measures. These include:
By taking these steps, governments can ensure that they are in full compliance with the FATF Standard and that all countries have access to the same level of protection from financial crimes.
The revised FATF standards have the potential to provide an effective framework for combatting money laundering and terrorist financing, however, it is important to address any problems with the standard before complete implementation.
Problems such as a lack of clear guidance on data sharing may result in lax enforcement measures and undermine efforts to prevent money laundering. If these potential problems are not resolved, the effectiveness of the revised FATF standards will be greatly diminished and could open up avenues for money laundering and other financial crimes.
This could have serious implications for global security and cause further instability in already vulnerable economies.
The Financial Action Task Force (FATF) is an inter-governmental organization that sets standards and promotes the adoption and implementation of legal, regulatory, and operational measures to combat money laundering, terrorism financing, and other related threats.
In June 2019, FATF released a revised version of its global standards to update its 40+9 Recommendations to reflect changes in the international anti-money laundering/counter-terrorist financing (AML/CFT) environment.
However, the revised FATF standard has its problems.
For instance, it fails to address the legal risk of digital assets and cryptocurrency exchanges which are becoming increasingly popular. The new standards also do not provide any guidance on how companies should manage the risk of using digital assets for money laundering and terrorism financing.
FATF stands for the Financial Action Task Force, which is an intergovernmental body that develops and promotes policies to combat money laundering and terrorism financing. The Revised FATF Standard is a set of recommendations issued in June 2012, which aim to strengthen global anti-money laundering and counter-terrorist financing measures.
The FATF standards are a set of 40 Recommendations that provide governments and financial institutions with the tools to help protect the international financial system from money laundering, terrorist financing, and other related threats. These Recommendations include measures such as customer due diligence, identifying suspicious transactions, record keeping, and reporting of suspicious activities.
Problems associated with the Revised FATF Standard include a lack of clarity on how countries should implement it, inconsistencies between jurisdictions on how to interpret and apply it, inadequate resources for implementation, and limited capacity at the national level.
I hope this article has been able to provide a detailed overview of the Revised FATF Standard and the numerous problems that it could pose. Implementing and abiding by these new regulations will pose a major challenge, both for governments and businesses alike. Despite the difficulties, however, it is nonetheless essential that all relevant parties take steps to ensure compliance with the Standard to protect their citizens, customers, and businesses from the risks associated with money laundering and terrorist financing.