FATF is an inter-governmental body which sets global standards for combating money laundering, terrorist financing, and other threats to the global financial system. They are widely considered the standard-bearer for AML compliance and regulation. While its standards and recommendations are not legally binding, FATF maintains a strong influence on national and transnational AML laws and regulatory oversight.
FATF conducts mutual evaluations, or peer reviews, of individual member FIUs. Mutual evaluations consist of an in-depth analysis of each country’s system for preventing criminal abuse of the financial system. FATF also sends out and analyzes less formal self-assessments of its member FIUs on an annual basis. While possessing no legal authority or sanctioning power, FATF has the ability to apply intense financial pressure indirectly by labeling jurisdictions “high-risk and non-cooperative”.
