FATF ¦ Horizontal Review of Gatekeepers’ Technical Compliance Related to Corruption

FATF Horizontal Review Reveals Gaps in Gatekeepers’ Compliance to Combat Corruption

The Financial Action Task Force (FATF) has long identified non-financial professionals such as lawyers, accountants, trust and company service providers (TCSPs), and real estate agents as critical gatekeepers in the fight against money laundering and corruption. These professionals can either unwittingly or knowingly facilitate illicit financial flows by enabling corrupt actors to launder proceeds from bribery, embezzlement, and other corrupt practices. Due to their unique access to the financial system and ability to create complex legal and corporate structures, gatekeepers hold a frontline responsibility in preventing financial crimes.

Scope and Purpose of the FATF Horizontal Review

In June 2022, the FATF initiated a Horizontal Review focusing on members’ technical compliance with specific FATF Recommendations (22, 23, and 28) related to gatekeepers’ regulatory obligations. This review analyzed how well countries have implemented preventive measures such as customer due diligence (CDD), internal controls, and effective supervision over gatekeeper sectors. The aim was to identify compliance gaps that could expose jurisdictions to risks of corruption-related money laundering and to encourage improvements.

Key Findings: Compliance Levels and Sectoral Insights

The review found that while over half of FATF members scored above 80% compliance with the relevant standards, seven members — representing more than half of the world’s GDP — fell below 50%. This disparity signals significant vulnerabilities within major economies, which could undermine global efforts to curb corruption and money laundering.

Interestingly, compliance levels across the four gatekeeper sectors — lawyers, accountants, TCSPs, and real estate agents — showed little variation. Contrary to the belief that legal professionals face fewer AML/CFT requirements due to solicitor-client privilege, the review demonstrated that when jurisdictions apply these rules to gatekeepers, lawyers are generally subject to similar obligations as other sectors.

However, notable weaknesses were evident in key preventive measures. Compliance with customer due diligence and internal controls was lower than expected. Internal controls, including compliance programs and employee training, had the weakest scores overall, exposing gatekeepers to exploitation by corrupt actors.

Supervisory Challenges: Powers and Risk-Based Approaches

Supervision is crucial to ensuring gatekeepers fulfill their AML/CFT responsibilities. The FATF report highlighted significant deficiencies in supervisory powers across jurisdictions. Many supervisors lack adequate authority to impose meaningful penalties for non-compliance, reducing deterrence against misconduct.

Moreover, risk-based supervision — a strategic approach focusing resources on higher-risk entities — is not widely implemented. Given the large number of gatekeepers in many countries, failing to adopt risk-based mechanisms means that many high-risk gatekeepers may remain unsupervised for extended periods, increasing vulnerability.

Bastian Schwind-Wagner_Follow "Luxembourg demonstrates exemplary compliance with FATF standards, achieving a 100% score in regulating gatekeepers such as lawyers, accountants, TCSPs, and real estate agents. The country has implemented comprehensive preventive measures and maintains strong supervisory powers, effectively minimizing corruption and money laundering risks within these sectors."

Country-Level Performance: Progress and Areas for Improvement

Several countries like Luxembourg, Malaysia, Portugal, and Saudi Arabia achieved near-perfect compliance scores by effectively covering all gatekeeper sectors with robust preventive measures and supervision.

Conversely, major jurisdictions including the United States, China, Brazil, Israel, and South Korea showed poor compliance scores. For example, the United States and China scored 0%, indicating a lack of preventive AML/CFT obligations for gatekeepers and absence of supervisory powers in these sectors.

Countries such as Indonesia, Mexico, Canada, and Switzerland displayed intermediate compliance but still require improvements related to supervisory powers and comprehensive coverage of AML/CFT obligations across all gatekeeper sectors.

Call for Enhanced Regulation and Enforcement

The FATF stresses that despite two decades of international standards requiring gatekeeper regulation, significant gaps persist globally. These gaps allow corrupt officials and criminals to misuse professional services to conceal illicit wealth and undermine governance. Closing these loopholes is essential not only for protecting individual professions but for safeguarding the integrity of national and global financial systems.

The report urges jurisdictions lagging behind to urgently implement comprehensive AML/CFT frameworks covering all gatekeeper sectors. This includes enforcing customer due diligence, internal controls, effective supervision with adequate powers, and adopting risk-based approaches. Collaborating with industry bodies and civil society will be key to raising awareness among professionals and ensuring robust compliance.

Conclusion: Strengthening Gatekeepers is Key to Fighting Corruption

Gatekeepers act as critical defenders against financial crime. The FATF’s Horizontal Review highlights both progress made and significant work ahead in ensuring that lawyers, accountants, TCSPs, and real estate agents effectively detect and prevent money laundering linked to corruption. Stronger regulation, supervision, and enforcement will reduce opportunities for abuse by corrupt actors and help rebuild trust in legal and financial systems worldwide.

Dive deeper

• FATF ¦ Horizontal Review of Gatekeepers’ Technical Compliance Related to Corruption ¦ Link