Financial Action Task Force (FATF)
What FATF is, its 40 Recommendations, and how FATF shapes global anti-money laundering standards.
The Financial Action Task Force (FATF) is an intergovernmental organization that sets international standards for AML/CFT. FATF’s 40 Recommendations form the basis for most national anti-money laundering regulations worldwide.
FATF’s 40 Recommendations
Key recommendations for KYB:
| # | Topic | Requirement |
|---|---|---|
| 10 | Customer Due Diligence | Verify customers, understand relationships |
| 24 | Transparency of Legal Persons | Beneficial ownership of companies |
| 25 | Transparency of Legal Arrangements | Beneficial ownership of trusts |
FATF Evaluations
FATF conducts mutual evaluations of member countries’ compliance. Countries failing evaluations may be:
- Grey-listed: Jurisdictions with strategic deficiencies—triggers EDD requirements
- Black-listed: High-risk jurisdictions—enhanced countermeasures required
The Risk-Based Approach
FATF mandates the risk-based approach—allocating AML resources based on assessed risk rather than uniform procedures. This principle shapes CDD, EDD, and SDD frameworks.
FATF and KYB
FATF guidance on beneficial ownership transparency directly influences KYB requirements globally. The Corporate Transparency Act and EU AMLD both implement FATF recommendations.
Related: AML | CFT | Risk-Based Approach