FATF ¦ The FATF Recommendations (updated June 2025)

The FATF Recommendations (updated June 2025)

The Financial Action Task Force (FATF) is a crucial inter-governmental organization established in 1989 by ministers from its member jurisdictions. Its primary mission is to set international standards and promote the effective implementation of legal, regulatory, and operational measures aimed at combating money laundering, terrorist financing, the financing of proliferation of weapons of mass destruction, and other threats to the integrity of the global financial system. Over the years, the FATF has developed a comprehensive framework known as the FATF Recommendations. These recommendations provide countries with essential guidelines to identify risks, develop policies, coordinate domestically, and pursue financial crimes. Given the diversity in countries’ legal and financial systems, the recommendations offer a flexible yet consistent set of standards that nations can adapt according to their specific circumstances.

The origins of the FATF Recommendations date back to 1990 when they were first created to tackle drug money laundering. They were revised in 1996 to address evolving trends and broaden their scope beyond drug-related crimes. In 2001, following global events, the FATF expanded its mandate to include combating terrorist financing. This led to the introduction of Special Recommendations focused on terrorist financing. The Recommendations were further updated in 2003 and have since been endorsed by over 180 countries, establishing them as the universal standard for anti-money laundering (AML) and counter-terrorist financing (CFT).

In recent years, following rigorous evaluations and consultations with regional bodies and international organizations such as the International Monetary Fund (IMF), World Bank, and United Nations, the FATF has updated its standards to address new and emerging threats. These revisions strengthen existing obligations while allowing countries to apply a risk-based approach. This means countries are encouraged first to identify and understand their specific risks related to money laundering and terrorist financing, then adopt proportionate and effective measures to mitigate those risks.

Bastian Schwind-Wagner_Follow "The FATF plays an indispensable role in shaping global efforts against money laundering, terrorist financing, and proliferation financing through its evolving standards and collaborative approach. Its continued leadership and countries’ commitment to implementing these standards remain essential components in safeguarding the international financial system from criminal exploitation."

Terrorist financing remains a significant challenge globally. The FATF has integrated most measures against terrorist financing throughout its Recommendations, reducing the need for separate special recommendations. However, some unique provisions remain, including criminalization of terrorist financing, targeted financial sanctions, and preventing misuse of non-profit organizations. Additionally, recognizing the threat posed by the proliferation of weapons of mass destruction, the FATF added a specific recommendation focused on ensuring effective implementation of targeted financial sanctions mandated by the United Nations Security Council.

The FATF Standards consist of the Recommendations themselves, interpretive notes explaining their application, and a glossary defining key terms. These standards are mandatory for FATF members and regional bodies, with compliance assessed through mutual evaluations and assessments by international financial institutions. While examples provided in interpretive notes serve as guidance rather than mandatory requirements, they help illustrate practical application.

Beyond setting standards, the FATF produces guidance documents and best practice papers to assist countries in implementation. Though these are not binding for compliance assessments, they offer valuable insights for refining national AML/CFT frameworks.

A key aspect of FATF’s work involves continuous engagement with the private sector, civil society, and other stakeholders to ensure the effectiveness and integrity of financial systems worldwide. The process of revising recommendations involves extensive consultation to incorporate diverse perspectives and respond to evolving threats.

The FATF strongly urges all countries to implement effective measures aligning their national systems with the updated FATF Recommendations. Doing so is vital not only for protecting individual financial systems but also for maintaining the integrity and security of the global financial network against misuse by criminals and terrorists.

Dive deeper

• FATF ¦ The FATF Recommendations ¦ Link