FATF Recommendations on the fight against money laundering  and terrorism financing

The Financial Action Task Force (“FATF”) through its recommendations aims to establish and promote standards to fight money laundering, financing of terrorism and proliferation of massive destruction arms, as well as any other threat to the international financing system. Said recommendations are a series of standardized directions that must be implemented according to the characteristics of each jurisdiction so preventive measures are applied on the financial sector, international cooperation becomes easier and the transparency and availability of information on the ownership of persons and legal structures benefits is improved.

The list has 40 recommendations among which it is important to list the following:

• Evaluation of risks and focusing on such risks: Countries must appropriately analyze and identify the internal risks regarding money laundering and terrorism financing and set policies according to such risks. Additionally, they must designate an authority in charge of carrying out all the actions and handle the necessary funds to mitigate the risks.
• National cooperation and coordination: policies implemented according to the risks of each country must be applied nationwide, allowing the cooperation between the authority responsible for the application of such policies and authorities in charge of the public order and the financial sector.
• Classification of the money laundering crime: said classification must follow the parameters set in the Vienna Convention and the Palermo Convention on this matter.
• Classification of the terrorism financing crime: classification must be made taking into consideration the concepts established in the International Conventionfor the Suppression of the Financing of Terrorism.
• Norms on the banking secrecy: these norms must not hinder the compliance of the recommendations.
• Implementation of the Know Your Customer measures (“KYC”) by the financial institutions: financial institutions must not keep anonymous accounts or accounts with fictitious information. Therefore, counties must regulate the KYC policies in their corresponding legal systems. In this sense, financial institutions are asked to request from their clients all information that allows their complete identification.

Image: Stefan Kunze