Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an intergovernmental policy-making body established in 1989 by the G7 at its Paris summit, originally to address money laundering linked to drug trafficking. Its mandate was expanded after the September 11, 2001 attacks to include terrorist financing, and later extended to cover financing the proliferation of weapons of mass destruction. The FATF Secretariat is hosted at the OECD headquarters in Paris, though FATF is institutionally independent of the OECD.

FATF's core output is the 40 Recommendations (most recently overhauled in 2012 and updated periodically), which form the global benchmark for anti-money laundering (AML) and counter-terrorist financing (CFT) regimes. These cover customer due diligence, beneficial ownership transparency, suspicious transaction reporting, supervision of financial institutions and designated non-financial businesses, and international cooperation.

Compliance is enforced through mutual evaluations: peer reviews assessing both technical compliance with the Recommendations and the effectiveness of national systems. Jurisdictions with strategic deficiencies are placed on one of two public lists:

• The "grey list" (Jurisdictions under Increased Monitoring), which signals deficiencies the country has committed to address.
• The "black list" (High-Risk Jurisdictions subject to a Call for Action), reserved for the most serious cases. As of 2024, this list included the Democratic People's Republic of Korea, Iran, and Myanmar.

FATF has 40 members, including most major economies and the European Commission and Gulf Cooperation Council as regional bodies. It works through a network of nine FATF-Style Regional Bodies (FSRBs) such as MONEYVAL (Council of Europe) and APG (Asia/Pacific Group), which apply the same standards regionally.

Though FATF decisions are not legally binding, listing carries significant reputational and financial consequences: correspondent banks often de-risk listed jurisdictions, raising compliance costs and constraining cross-border flows. Critics argue the process can be politicized and disproportionately burdens low-capacity states.