Financial Crime World

Financial Action Task Force (FATF) Methodology and Standards Revisions

The Financial Action Task Force (FATF) has made several revisions to its methodology and standards between 2017 and 2023. These revisions aim to update guidelines on combating money laundering (ML) and terrorist financing (TF). Here is a summary of the main points for each revision:

June 2017: Amendments to the FATF Standards

  • The FATF made amendments to its standards (INR.7 and the Glossary) to reflect changes to UN Security Council Resolutions on proliferation financing since the FATF standards were issued in February 2012.
  • This update ensures that the FATF guidelines remain relevant and effective in combating ML/TF.

November 2017: Revision of Footnote to Recommendation 25

  • The revision provides guidance on identifying other legal arrangements that fall within the scope of R.25 due to characteristics and features similar to express trusts.
  • This clarification ensures a consistent approach across mutual evaluations.

February 2018: Revisions to Recommendations 18 and 21

  • The revisions clarified requirements for sharing information related to unusual or suspicious transactions within financial groups and interaction with tipping-off provisions.
  • These updates enhance the effectiveness of ML/TF prevention measures.

October 2018: Revisions to Recommendation 2 and Immediate Outcome 1

  • The revisions clarify the need for compatibility between AML/CFT requirements and data protection and privacy rules.
  • This update ensures that countries can effectively implement ML/TF prevention measures while protecting sensitive information.

October 2018: Addition of Footnotes in Chapters 5 and 6

  • The footnotes provide guidance on assessing effectiveness under Immediate Outcomes 3 and 4, considering risk, context, and materiality.
  • This clarification helps countries assess their ML/TF prevention efforts more accurately.

February 2019: Revisions to Immediate Outcomes 3 and 4

  • The revisions add notes for assessors and footnotes to provide further guidance on assessing the relative importance of different sectors in financial institutions and DNFBPs.
  • This update helps countries evaluate their ML/TF prevention efforts more comprehensively.

October 2019: Revisions to Recommendation 15 and Immediate Outcomes

  • The revisions incorporate virtual assets and virtual asset service providers, with new guidance on assessing requirements related to these areas.
  • This update ensures that the FATF guidelines remain relevant in the face of emerging technologies and threats.

November 2020: Addition of Footnote

  • The footnote clarifies that Recommendation 17 does not apply to third-party outsourcing and agency relationships, as noted in INR.17.
  • This clarification helps countries understand their obligations under the FATF guidelines.

October 2021: Revision of Glossary Definition

  • The revision updates the definition of ‘designated categories of offences’ to reflect changes in the types of offences that fall within this category.
  • This update ensures that the FATF guidelines remain relevant and effective in combating ML/TF.

June 2023: Revision of Glossary Definition

  • The revision clarifies the distinction between FATF and UNODC IRM assessments regarding environmental crime.
  • This clarification helps countries understand their obligations under the FATF guidelines.

Note: These revisions are subject to change, and it’s always best to consult the official FATF website for the most up-to-date information.