Financial Action Task Force, FATF

Fecha de última actualización: 02/10/2024

With more than 70 members, the Financial Action Task Force — FATF — stands as the international body that sets the standards and guidelines to prevent money laundering and terrorist financing. This organization, through its recommendations, significantly influences the legislative framework for preventing money laundering in many current states.

Historical Context

The FATF was established at the 1989 G-7 summit in Paris as a response to the threats posed by money laundering linked to drug trafficking. The G-7 leaders, along with the President of the European Commission, agreed to create this international body to unite efforts in the fight against money laundering.

Initially, the FATF’s scope was limited to combating money laundering. However, following the September 11 attacks on the Twin Towers, its mandate was extended to include the fight against terrorist financing. Additionally, in 2012, its scope was further expanded to address the threat of financing weapons of mass destruction. Other issues tackled by the FATF include combating corruption and, more recently, assessing the risks posed by cryptocurrencies.

Another key date in FATF’s history is April 1990, when the FATF published its first set of 40 Recommendations. Later, in 2001, it added nine recommendations focused on combating terrorist financing. Finally, in 2012, it adopted a unified set of international standards for combating money laundering and the financing of terrorism.

Members and Functioning

The FATF’s internal structure consists of the General Assembly, the Presidency, the Steering Group, and the Secretariat.

General Assembly

The General Assembly is the FATF’s decision-making body, where decisions are made by consensus. These decisions include electing the President, Vice-President, and Steering Group; approving the budget and work program; approving guidelines, standards, or reports; and admitting new members.

The General Assembly is composed of four types of members: Full Members, Associates, Observers, and Observer Organizations.

• Full Members: Includes countries such as Argentina, Brazil, Canada, and Spain, among others, with a total of 37 members. The European Commission and the Gulf Cooperation Council are also included in this category.
• Observer Members: Currently, Indonesia is the only observer member.
• Associate Members: Made up of nine organizations with similar goals to FATF, but operating within specific regional frameworks. Examples include the Caribbean Financial Action Task Force and the Financial Action Task Force of Latin America.
• Observer Organizations: These international organizations hold observer status in the FATF and play specific roles in the fight against money laundering.

Presidency

The President is elected from among the Full Members for a two-year term. The President is the principal external representative of the FATF and is responsible for maintaining relations with other international organizations, particularly the United Nations Security Council. Generally, the President oversees all actions necessary to achieve FATF’s objectives in line with the work plan approved by the General Assembly.

Steering Group

The Steering Group acts as an advisory council, chaired by the FATF President. Its composition is determined by the General Assembly, based on the President’s proposal. The Steering Group advises the President and the FATF as a whole, monitors the organization’s progress, promotes coordination between working groups, and ensures communication among members.

Secretariat

The head of the Secretariat is appointed by the General Assembly upon the recommendation of the President and the Secretariat staff. This body provides material and technical support for the FATF’s work.

FATF’s Functions and Objectives

The primary goals of the FATF are to protect the financial system and the broader economy from the threats of money laundering and the financing or proliferation of terrorism, thus strengthening the integrity of the financial sector and contributing to its security.

To achieve these goals, the FATF undertakes the following tasks, among others:

• Identifying and analyzing money laundering, terrorist financing, and other threats to the financial system, including the methods used, and examining the measures to combat these threats while providing national, regional, and global support against such risks.
• Developing updated international standards to combat money laundering and terrorist financing, known as the FATF Recommendations. It also promotes the effective implementation of these recommendations worldwide.
• Evaluating and supervising its members through peer reviews or mutual evaluations, determining the level of compliance and application of anti-money laundering systems.
• Identifying and cooperating with high-risk jurisdictions, non-cooperative areas, or those with strategic deficiencies in protecting the financial system. The FATF also coordinates measures to protect the rest of the financial systems from the threats posed by these jurisdictions.