28 June 2005

The Financial Action Task Force on Money Laundering Q'FATF") was established by the G-7 Summit that was held in Paris in 1989. FATF is an inter-governmental body whose purpose is to develop and promote national and international policies and standards to combat money laundering and terrorist financing. FAIF was created in response to mounting concern over money laundering and in recognition of the threat posed to banking systems and financial institutions worldwide.

FAIF issued its first set of anti-money laundering (AML) policies and standards in 1990, these were called the Forty Recommendations. The recommendations provide a complete set of norms, practices and counter-measures against money laundering covering the criminal justice system and law enforcement, the financial system and its regulation, and international co-operation. The Recommendations were revised in 1996, and more recently in 2003. At an extraordinary Plenary meeting held in Washington D.C. on October 29 and 30 2001 FAIF extended its mission to include the combating of terrorist financing. As a result, FAIF has issued Nine Special Recommendations to combat the financing of terrorism (CFT).

The FATF 40+9 Recommendations are designed for universal application worldwide. The Recommendations are addressed to countries, which must take them into account, however they are not a binding international convention. Members of the FATF have committed themselves to implementing these recommendations through express political commitment to this end.

Assessment of compliance by countries' AML/CFT regimes with the FAIF 40+9 Recommendations is conducted among its members on a peer-review basis called a "Mutual Evaluation' exercise. Both the World Bank and IMF use the mutual evaluation methodology when conducting the AML/CFI component of their Financial Sector Assessment Programme (FSAP) of countries. The FATF can discipline member countries not in compliance with the 40+9 Recommendations which may include expulsion from the organisatlon. In addition, both member and non-member countries can be placed on a Non-Co-operating Countries and Territories (NCCT) list. A consequence of placement on the list is that FAIF will advise financial institutions to exercise special attention to business relationships and transactions with such a country because of its lack of basic AML and CFT frameworks

The FATF membership is currently made up of thity-one countries and territories and two regional organisations. South Africa became a member in 2003. Organisations with observer status at FATF include the United Nations Office on Drugs and Crime (UNODC), the African Development Bank (ADB), the European Central Bank, the International Monetary Fund (IMF) and Interpol, among others. FATF meets three times a year, in a plenary session where all members and observers are represented.

FATF is recognized as the global leader in the combating of money laundering and terrorist financing. The body has three major tasks:

  1. Spreading the message of combating money laundering and terrorist financing;

(2) Monitoring implementation of the FATF 40 + 9 Recommendations by its members, and

(3) Reviewing trends in money laundering and devising countermeasures (the 'typologies" exercise).

FATF-Style Regional Bodies (FSRBs) have increasingly become important to the spreading of the anti-money laundering message, and the effective implementation of the 40 + 9 Recommendations by countries all over the world Existing FSRBs include:

- Asia Pacific Group (APG) covering Australasia, the Pacific Islands and South East Asia; Canada and the United States.

- Caribbean FATF (CFATF) - covering the Caribbean islands, the northern parts of South America, Panama and Mexico.

- Euro-Asia Group (EAG) - covering Eastern Europe and Asia, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) - which is our regional body of which South Africa has been a member since August 2002. The ESAAMLG Secretariat is based in Dar-es-Salaam, Tanzania.


The twenty-nine FATF member countries and governments are: Argentina; Australia; Austria; Belgium; Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong, China; Iceland; Ireland; Italy; Japan; Luxembourg; Mexico; Kingdom of the Netherlands; New Zealand; Norway; Portugal; Russian Federation; Singapore; South Africa; Spain; Sweden; Switzerland; Turkey; United Kingdom; and United States. The two international organisations are: European Commission, and the Gulf Co-operation Council.