FATF Recommendation 9

The Financial Action Task Force — FATF — is the global reference supervisor in the prevention of money laundering and terrorist financing. One of FATF’s primary tasks is to establish common reference standards and guidelines for the prevention of money laundering. To achieve this goal effectively, FATF issues its standards under the name of Recommendations, having established a total of 40 Recommendations.

FATF Recommendation 9 states that countries must take the necessary measures to ensure that laws establishing banking secrecy do not hinder the proper implementation of FATF Recommendations. For FATF, it is crucial that this regulatory framework of confidentiality in banking relationships does not become an obstacle to effectively implementing the Recommendations set forth by this entity.

The literal wording of Recommendation 9 states that “countries should ensure that laws regarding the secrecy of financial institutions do not impede the application of the FATF Recommendations.”

Banking secrecy is the obligation of banks and financial institutions to protect the confidentiality of their clients’ financial and, by extension, personal information. In Spanish law, this right derives from Article 18.1 of the Spanish Constitution, which addresses the right to privacy. This right has been primarily defined and shaped by Spanish judicial bodies. In French law, for example, this right is reflected in various articles of the Code monétaire et financier, which obligates any executive or employee of a financial institution to maintain professional secrecy.

To effectively implement this Recommendation, states must ensure that the regulations and procedures protecting and promoting banking secrecy do not obstruct the proper implementation of measures to prevent money laundering and terrorist financing.

Countries such as Algeria, Chad, Democratic Republic of the Congo, and Romania are jurisdictions with low compliance with this Recommendation. Regarding Romania, the mutual evaluation conducted in 2023 indicates that it has not been demonstrated that banking secrecy does not apply when sharing information between national or foreign competent authorities. Algeria’s mutual evaluation rates the country as having a low level of compliance with Recommendation 9, due, among other reasons, to the inability to share information between competent administrative authorities and judicial bodies during a criminal proceeding.

Mutual Evaluations are reports developed within FATF or its continental counterparts that analyze the level of compliance and implementation of the Recommendations. These evaluations are carried out by FATF member countries. For instance, Romania’s report was conducted by officials from Georgia, the Isle of Man, Estonia, Armenia, the Czech Republic, and Guernsey.