Financial Action Task Force (FATF)

Organized by the G7 in 1989, the Financial Action Task Force (FATF) is the international standard-setting body for anti-money laundering (AML), countering of the financing of terrorism (CFT), and countering proliferation financing (CPF). It is composed of 39 member countries with nine FATF-Style Regional Bodies that, together with the FATF, can claim almost every country in the world as a member.
 

The international standards   for combatting ML/FT/PF (aka “FATF Recommendations”) are a critical tool that helps prevent terrorists and other illicit actors from abusing domestic and international financial systems.  Strengthening the global AML/CFT/CPF framework through FATF has been a critical part of Treasury’s efforts to increase transparency in the international financial system. 

 

On behalf of Treasury, TFFC leads the U.S. delegation to the FATF, which also includes members from the Departments of State and Justice, and federal financial regulators. Deputy Assistant Secretary Scott Rembrandt is the U.S. Head of Delegation to the FATF.  As head of delegation, DAS Rembrandt and the TFFC team lead efforts to develop U.S. positions, represent the United States at FATF meetings, and works with interagency partners to advance domestic implementation to meet the U.S. commitment to FATF's international AML/CFT/CPF standards.
 

As recently as 2018-2019, Treasury served as President of the FATF and successfully pushed the FATF to 1) adopt a new standard to regulate and supervise virtual currency providers for AML/CFT/CPF; 2) enhance terrorist financing prosecutions and convictions; and 3) expand the standards to better incorporate proliferation financing.
 

TFFC’s work within the FATF includes, but is not limited to:
 

Evaluations and Compliance Group (ECG)

The Evaluations and Compliance Group (ECG) is responsible for assessing the quality of the peer review reports conducted of countries—Mutual Evaluation Reports (MERs) and Follow-Up Reports—prior to these reports’ publication.  TFFC’s efforts in this working group are well-supported by U.S. experts throughout the U.S. interagency community. 


FATF Mutual Evaluations

The FATF organizes international assessment teams to conduct peer reviews of each member on an ongoing basis to assess levels of implementation of the FATF Recommendations, providing an in-depth description and analysis of each country’s system for preventing criminal abuse of the financial system.  TFFC representatives regularly serve on assessor teams around the globe.


International Cooperation Review Group (ICRG)

TFFC represents the U.S. government at the FATF’s International Cooperation Review Group (ICRG), which was established to protect the integrity of the global financial system against the risk posed by certain jurisdictions with strategic deficiencies in their national AML/CFT/CPF regimes. The ICRG’s mandate is to identify and warn the public of the risks, but also engage with these jurisdictions by working with them to address their deficiencies.  The ICRG is one of the most effective tools of the FATF to generate positive AML/CFT/CPF reforms in countries that have strategic AML/CFT/CPF deficiencies. 


Policy Development Group (PDG)

The Policy Development Group develops and enhances the FATF Standards in accordance with its recommendations and produces guidance to aid with effective implementation of the standards. 

Recent publications include:

Public Statement on Revisions to Recommendation 24 (March 2022)

On March 4,  the Financial Action Task Force (FATF) adopted amendments to Recommendation 24 and its Interpretive Note which require countries to prevent the misuse of legal persons for money laundering or terrorist financing and to ensure that there is adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons. This update will significantly strengthen the requirements for beneficial ownership transparency globally, while retaining a degree of flexibility for individual countries to go further in refining individual regimes.

Updated Guidance on Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (October 2021)

This guidance will help countries and virtual asset service providers understand their anti-money laundering and counter-terrorist financing obligations, and effectively implement the FATF’s requirements as they apply to this sector. This guidance follows revisions to the FATF Recommendations in October 2018 and June 2019 in response to the increasing use of virtual assets for money laundering and terrorist financing.

 

Guidance on Risk-Based Supervision (March 2021)

This guidance assists supervisors in improving the effectiveness of their essential role in helping regulated entities increase their awareness and understanding of ML/TF/PF risks.  Supervisors are responsible for enforcing and monitoring that the private sector entities they are overseeing comply with relevant AML/CFT/CPF obligations.  Through a risk-based approach, supervisors can tailor their activities so that relevant private sectors actors are addressing the most relevant ML/TF/PF risks to their businesses, while not placing an unwarranted burden on lower risk sectors, entities, or activities. 


Proliferation Financing Risk Assessment and Mitigation Guidance (June 2021)

This guidance was developed in response to the October 2020 update to Recommendation 1—which requires countries and private sectors to assess and mitigate proliferation financing risk in the same fashion as money laundering and terrorist financing.  It will assist countries and the private sector in understanding their PF risks and how to adopt or improve measures to addresses those risks.


Guidance on Digital Identity (March 2020)

The FATF developed guidance that will help governments, financial institutions, virtual asset service providers and other regulated entities determine whether a digital ID is appropriate for use for customer due diligence. Reliable digital ID can make it easier, cheaper, and more secure to identify individuals in the financial sector and help with transaction monitoring requirements and minimize weaknesses in human control measures.

 

Risk, Trends, and Methods Working Group (RTMG)

The Risk, Trends, and Methods Working Group flags and analyzes money laundering and terrorism funding as well as any threat that could undermine global finance.

FATF Guidance and Typologies

FATF’s typologies and guidance products are essential tools for governments and the private sector to understand emerging illicit finance trends and adapt their AML/CFT/CFP regimes accordingly.  These reports are FATF-member driven, representing the global expertise in improving financial integrity. Recent publications include:

Countering Ransomware Financing (March 2023)

This FATF report analyzes the methods that criminals use to carry out their ransomware attacks and how payments are made and laundered. Ransomware attacks target individuals, businesses, and government agencies, across the world. The impact of these attacks can be devastating for victims and can even disrupt essential infrastructure and services. Ransomware criminals are almost exclusively using virtual assets to demand and launder their illicit proceeds, sometime using virtual asset service providers (VASP) in the process. The report proposes a number of actions that countries can take to more effectively disrupt ransomware-related money laundering, including implementing the FATF recommendations for virtual assets and VASPs, and provides a list of potential risk indicators that can help public and private sector entities identify suspicious activities related to ransomware.

 

Ethnically or Racially Motivated Violent Extremism (June 2021)

This report builds on previous FATF work on CFT, including the July 2019 Terrorist Financing Risk Assessment Guidance and October 2015 Emerging Terrorist Financing Risks report, in order to understand how a variety of actors operating under the umbrella of racially- or ethnically-motivated terrorism finance their activities.  These individuals and groups engage in a range of fundraising activities, both through legal and illegal sources, depending on their specific needs.  This variety poses challenges for operational authorities, who often face legal, regulatory, and information-sharing hurdles to investigate the full range of illicit activity.

 

Trade-Based Money Laundering: Risk Indicators (March 2021)

One of the most complex and widely used money laundering techniques, trade-based money laundering (TBML) helps move billions of dollars in proceeds for criminals around the world. These risk indicators, described in a joint publication of the FATF and the Egmont Group, will identify TBML based on the type of businesses involved in trade activity, risks around trade documents and commodities, and account and transaction irregularities.  This report is a follow-up to the December 2020 report, Trade-based Money Laundering: Trends and Developments.


Update: COVID-19-Related Money Laundering and Terrorist Financing Risks (December 2020)

The COVID-19 pandemic spawned a range of financial crimes, as criminals responded both to the disruption of lockdowns, as well as new opportunities to exploit pandemic relief and recovery efforts around the world.  This guidance, which updated a similar report issued in May 2020, provides case studies of these types of crime and how authorities around the world have investigated them and prosecuted the offenders.
 

Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing (September 2020)

The growing use of virtual assets, which has many benefits for making payments faster and cheaper, has also opened new opportunities for illicit actors to expand their activities.  This report provides the private sector with examples of the kind of virtual asset activity that may suggest it is being exploited by criminals or terrorists.


Money Laundering and the Illegal Wildlife Trade (June 2020)

Transnational criminal organizations generate billions of dollars of proceeds from illegal wildlife trafficking, but many countries have not prioritized addressing it, even as the activity is embraced by a wider circle of illicit actors.  This guidance describes how understanding the financing of organizations engaged in illegal wildlife trafficking can help disrupt this lucrative trade.
 

Treasury Press Releases on FATF Plenaries:

FATF-Style Regional Bodies

TFFC staff participate in each of the nine FSRBs—the independent regional organizations that help the FATF implement its global AML/CFT/PF policies around the world.