This year, the Financial Action Task Force – the global standard setter in the fight against financial crime – will celebrate its 30th birthday. Given the constant stream of headlines revealing egregious cases of money laundering around the world, Tom Keatinge (Director of the Centre for Financial Crime & Security Studies at RUSI) asks whether FATF remains fit for purpose.
What started in 1989 as a ‘taskforce’ to tackle the laundering of the proceeds of the South American narcotics industry through US banks has experienced extreme mission creep. Following 9/11, its mandate was expanded to embrace terrorist financing; in 2012 it expanded again to cover the implementation of United Nations financial sanctions to counter the proliferation of weapons of mass destruction; and it regularly publishes reports alerting countries and their regulated sectors to different forms and methods of illicit finance including human trafficking, the abuse of beneficial ownership, and the threats posed by vulnerabilities in the charitable sector or the physical transportation of cash. Those present that day in 1989 at the G7 meeting in Paris wondered whether the institution they’d created would last three months, let alone 30 years.
The FATF (comprising 36 mainly rich countries) has driven tremendous – and generally positive – change in the global anti money laundering (AML) landscape. The regular assessment of countries’ implementation of its recommendations (something of a misnomer given the harsh consequences of ignoring them) has raised standards and capabilities around the world; its practice of naming-and-shaming countries that fall short of compliance has spawned a vast industry of consultants, donors and trainers who travel the world helping laggards address their shortcomings.