FATF – What is an effective system to combat money laundering and terrorist financing.

The purpose of implementing anti-money laundering and counter-terrorist financing (AML/CFT) measures is to stop criminals and terrorists from abusing the financial system. Through effective implementation of these measures, countries can help trace and stop the financial flows linked to serious crime and terrorism, and make society safer.

A country's efforts in developing sound laws and regulations and implementing and enforcing them should focus on one goal, the high-level objective of an effective AML/CFT framework:

Effectiveness - High-Level Objective title - https://www.fatf-gafi.org/content/dam/fatf-gafi/images/illustrations/Methodology-HL-OBJ-title.gif

Financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security.

This objective can only be achieved if the components of a country’s AML/CFT framework are operating well together.

The intermediate outcomes below represent the thematic goals of an AML/CFT system that is effectively protecting financial sector integrity and contributing to safety and security.

‌Effectiveness - Intermediate outcomes = https://www.fatf-gafi.org/content/dam/fatf-gafi/images/illustrations/Effectiveness-IntO.gif

To achieve these intermediate outcomes, the FATF has identified 11 key goals that an effective AML/CFT framework should achieve.  These key goals or ‘immediate outcomes’ are organised by thematic goal.

During its mutual evaluations, the FATF will assess the effectiveness of a country’s efforts against each of these 11 immediate outcomes.

The extent to which a country implements the technical requirements of each of the FATF Recommendations remains important, they are after all the building blocks for an effective framework to protect the financial system.

But, adopting compliant laws and regulations is not sufficient.  Each country must enforce these measures, and ensure that the operational, law enforcement and legal components of an AML/CFT system work together effectively to deliver results: the 11 immediate outcomes.

During an assessment, the FATF will look for evidence that demonstrates how well all these components are working together in the context of the risks that the country is exposed to.

‌Effectiveness - Immediate outcomes = https://www.fatf-gafi.org/content/dam/fatf-gafi/images/illustrations/Effectiveness-IO.gif

Read more:

• Mutual Evaluations = https://www.fatf-gafi.org/en/publications/Mutualevaluations/More-about-mutual-evaluations.html
• FATF issues new Mechanism to Strengthen Money Laundering and Terrorist Financing Compliance = https://www.fatf-gafi.org/en/publications/Mutualevaluations/Fatfissuesnewmechanismtostrengthenmoneylaunderingandterroristfinancingcompliance.html
• The FATF Recommendations = https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Fatf-recommendations.html

SOURCE

• https://www.fatf-gafi.org/en/publications/Fatfgeneral/Effectiveness.html