Financial Action Task Force On Money Laundering - The FATF Forty Recommendations and Special Recommendations On Terrorism Financing

The FATF Forty Recommendations and Special Recommendations On Terrorism Financing

The primary policies issued by the FATF are the Forty Recommendations on money laundering and the 9 Special Recommendations (SR) on Terrorism Financing (TF).

Together, the Forty Recommendation and Special Recommendations on Terrorism Financing set the international standard for anti-money laundering measures and combating the financing of terrorism and terrorist acts. They set out the principles for action and allow countries a measure of flexibility in implementing these principles according to their particular circumstances and constitutional frameworks. Both sets of FATF Recommendations are intended to be implemented at the national level through legislation and other legally binding measures.

The FATF issued the Forty Recommendations in 1990 and completely revised them in 1996 and 2003. The current (2003) Forty Recommendations require states, among other things, to:

• implement relevant international conventions
• criminalise money laundering and enable authorities to confiscate the proceeds of money laundering
• implement customer due diligence (e.g. identity verification), record keeping and suspicious transaction reporting requirements for financial institutions and designated non-financial businesses and professions
• establish a financial intelligence unit to receive and disseminate suspicious transaction reports, and
• cooperate internationally in investigating and prosecuting money laundering.

The FATF issued 8 Special Recommendations on Terrorism Financing in October 2001, following the September 11 terrorist attacks in the United States. The FATF issued a ninth Special Recommendation on Terrorism Financing in October 2004.

Since 9/11 the FATF has expanded its efforts to combat terrorist financing. FATF created eight additional “Special Recommendations” on terrorist financing in October 2001. Among the measures, “Special Recommendation VIII” (SR VIII) was targeted specifically at nonprofit organizations. This was followed by the International Best Practices Combating the Abuse of Non-Profit Organizations in 2002, released one month before the U.S. Department of Treasury’s Anti-Terrorist Financing Guidelines, and the Interpretive Note for SR VIII in 2006. In February 2008 the FATF published a report on terrorist financing typologies “to provide a contemporary snapshot of the ways in which terrorists raise, move and use funds,” but it misrepresents the nonprofit sector as “compromised or complicit” with terrorist activities. The 2009 Handbook for Countries and Assessors outlines criteria for evaluating whether FATF standards are achieved in participating countries.

In February 2012, the FATF codified its recommendations and Interpretive Notes into one document that maintains SR VIII (renamed “Recommendation 8”), and also includes new rules on weapons of mass destruction, corruption and wire transfers (“Recommendation 16”).