FATF ¦ 2013 Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations (updated June 2025)

2013 Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations

The Financial Action Task Force (FATF) has outlined comprehensive procedures for its fourth round of mutual evaluations focused on anti-money laundering (AML) and countering the financing of terrorism (CFT). These procedures, updated as of June 2025, establish a rigorous framework to assess FATF members’ compliance with global AML/CFT standards, which are critical to safeguarding the international financial system. The fourth round evaluations are designed around two main components: technical compliance and effectiveness. The technical compliance aspect assesses whether countries have enacted the necessary laws, regulations, and institutional frameworks to meet the FATF Recommendations. Meanwhile, the effectiveness component evaluates how well these systems function in practice, focusing on a set of defined outcomes related to preventing money laundering (ML) and terrorist financing (TF).

Several guiding principles underpin these evaluations. The process aims to produce objective, accurate, and timely reports that maintain a consistent standard across countries, ensuring fairness and transparency. It also strives to harmonize assessments conducted by FATF and its regional bodies, as well as by international financial institutions like the IMF and World Bank. This coordination reduces duplication and encourages efficient use of resources.

The evaluation process is highly structured and begins with thorough preparation well before the on-site visit. Countries provide detailed information on their AML/CFT systems, including updates on laws, regulations, risk assessments, and institutional arrangements. This information is crucial for assessors to understand the country’s ML/TF risks and to identify areas requiring focused scrutiny during the on-site visit.

Bastian Schwind-Wagner_Follow "The fourth round mutual evaluations represent a robust peer review mechanism that drives global AML/CFT standards forward. By combining detailed technical assessments with real-world effectiveness evaluations and a transparent follow-up regime, FATF seeks to promote stronger national defenses against financial crime, supporting international security and financial integrity."

Assessment teams usually comprise experts in law, finance, and law enforcement, selected to match the legal system and risk profile of the country being evaluated. These teams conduct desk-based reviews ahead of the visit and engage continuously with the assessed country to clarify issues and request additional information. The on-site phase typically lasts about two weeks and involves extensive meetings with government authorities, financial institutions, designated non-financial businesses and professions (DNFBPs), and sometimes private sector representatives. This phase is essential for verifying information and assessing effectiveness in real-time.

Following the on-site visit, the assessment team drafts the Mutual Evaluation Report (MER) and Executive Summary. These drafts undergo multiple rounds of review, including feedback from the assessed country and independent reviewers to ensure quality and consistency. A face-to-face meeting between assessors and country representatives helps resolve outstanding disagreements before the report is finalized.

The final MER is discussed and adopted during a FATF Plenary session, where priority issues are debated. If necessary, the report may be revised further based on Plenary feedback before publication. Post-adoption quality reviews safeguard against significant errors or inconsistencies that could undermine FATF’s credibility.

Countries are then subject to a structured follow-up process. Based on the MER findings, they enter either regular or enhanced follow-up. Enhanced follow-up applies to countries with significant deficiencies in technical compliance or effectiveness, requiring more intensive monitoring and reporting over several years. This process supports continuous improvement by encouraging countries to address identified gaps through legislative changes, improved enforcement, or other measures.

Importantly, FATF coordinates these evaluations with the Financial Sector Assessment Programme (FSAP) conducted by the IMF and World Bank to integrate AML/CFT findings into broader financial sector assessments. Joint evaluations with FATF-Style Regional Bodies also ensure regional cooperation and consistency.

The procedures further include mechanisms to handle unintended consequences of AML/CFT measures—particularly concerning non-profit organizations—to prevent undue disruption of legitimate activities.

Dive deeper

• FATF ¦ 2013 Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations ¦ Link