FATF ¦ R.37 Mu­tual Le­gal As­sis­tance

Recommendation 37: Why Mutual Legal Assistance Is Vital To Fighting Financial Crime

The FATF’s Recommendation 37 sits at the heart of cross‑border action against money laundering and terrorist financing. Financial crime rarely respects national borders: funds move instantly, bank accounts are opened in multiple jurisdictions, and corporate structures span continents. Without strong, practical systems for mutual legal assistance (MLA), even the best domestic laws will fail when criminals exploit international gaps. This article explains what Recommendation 37 requires, why it matters in practice, and what both authorities and compliance teams should understand about its expectations.

What Mutual Legal Assistance Really Means

Mutual legal assistance is the formal process through which one country asks another to help with investigations, prosecutions, and related proceedings. In the context of Recommendation 37, this covers:

• Money laundering;
• Predicate offences (the underlying crimes that generate illicit proceeds); and
• Terrorist financing.

The core idea is simple: countries should provide the widest possible range of assistance, in a way that is rapid, constructive, and effective. To do this, they need an adequate legal basis (domestic laws and procedures) and, where appropriate, treaties or other cooperation mechanisms that make it easier to work together.

Removing Unreasonable Obstacles To Assistance

Recommendation 37 makes clear that countries should not build barriers around cooperation. Specifically, they should not:

• Prohibit mutual legal assistance outright in relevant cases; or
• Impose unreasonable or unduly restrictive conditions that make MLA impractical.

In practical terms, this means that a country cannot hide behind overly formalistic requirements or use technicalities to avoid assisting a legitimate investigation. Delays, excessive paperwork, and artificial limitations on what can be shared can all undermine international efforts to combat financial crime, and are inconsistent with the standard.

Efficient Processes And Central Authorities

Speed and predictability are critical. Evidence can be lost, transactions can continue, and suspects can flee if MLA is slow or chaotic. Recommendation 37 calls for clear and efficient processes for prioritising and executing requests. This includes:

• A central authority or another official mechanism dedicated to receiving, transmitting, and executing requests.
• A case management system to monitor the progress of each request.

A central authority serves as the gateway and coordinator. It reduces confusion, avoids duplication, and ensures that foreign requests do not get lost between agencies. The case management system is just as important: it allows tracking of timelines, identification of bottlenecks, and provides transparency on how requests are handled.

No Refusal Just Because Of Tax Elements

Historically, some countries refused international assistance when offences were linked to tax or other fiscal matters, often citing domestic policy or tax secrecy. Recommendation 37 directly addresses this and requires that a request must not be refused solely because the underlying offence involves fiscal issues.

This expectation is critical for fighting:

• Tax fraud and tax evasion;
• Complex schemes mixing tax offences with money laundering;
• Use of offshore structures for tax‑driven financial crime.

By removing this barrier, the standard closes a significant loophole that criminals have exploited for years.

Financial Secrecy Laws Cannot Be A Shield

Another key point is that bank secrecy or confidentiality rules cannot be used as a reason to deny MLA. Countries must not refuse to execute a request just because:

• Financial institutions are subject to secrecy laws; or
• Designated non‑financial businesses and professions (DNFBPs) have confidentiality requirements.

The only exception is where legal professional privilege (or equivalent legal professional secrecy) legitimately applies, such as certain communications between clients and their lawyers.

For financial institutions and DNFBPs, this means that domestic secrecy laws are not absolute. They must be interpreted and applied in a way that allows authorities to comply with valid international requests. Compliance teams should be aware that regulators and law enforcement can – and must – access information for MLA purposes when the legal threshold is met.

Bastian Schwind-Wagner _Follow

"Recommendation 37 is a practical blueprint for turning national AML/CFT frameworks into a truly global enforcement network. By removing unjustified barriers, clarifying dual criminality, and limiting secrecy defences, it ensures that international cooperation is the norm, not the exception.

For financial institutions and authorities alike, the message is clear: cross‑border assistance must be timely, structured, and handled by competent, well‑resourced teams. When applied properly, Recommendation 37 significantly raises the cost and complexity of using the financial system for money laundering, predicate offences, and terrorist financing."

Safeguarding Confidentiality Of Requests

While countries are expected to cooperate, they also have a duty to protect the integrity of investigations. Recommendation 37 requires that MLA requests and the information they contain be kept confidential, subject to fundamental principles of domestic law.

This confidentiality helps to:

• Prevent tipping off suspects;
• Protect sensitive investigation strategies;
• Safeguard witnesses and informants;
• Preserve the value of financial intelligence;

If the requested country cannot uphold the requested level of confidentiality – for example, due to constitutional requirements or court procedures – it must promptly inform the requesting country. This allows the requesting authority to decide whether to adjust the request, limit certain details, or seek alternative approaches.

Assistance Even Without Dual Criminality (Where Possible)

Dual criminality – the principle that an act must be a crime in both countries – is a frequent condition for mutual legal assistance. Recommendation 37 takes a flexible stance where possible. It says that countries should:

• Provide MLA even if dual criminality is absent, as long as the assistance does not involve coercive actions.

Non‑coercive actions can include, for example, the sharing of publicly available records or voluntary information that does not require search, seizure, or compulsion. The recommendation goes further and encourages countries to consider adopting measures that enable them to provide a broad scope of assistance even when dual criminality is not met.

This flexibility is important for emerging offences or areas where national laws develop at different speeds, such as new types of cyber‑enabled financial crime.

How Dual Criminality Should Be Interpreted

Where dual criminality is required, Recommendation 37 advises against a narrow or overly technical interpretation. The requirement is considered satisfied if:

• Both countries criminalise the underlying conduct, even if:
  • They place it in different categories of offences; or
  • They use different legal terms or labels.

For instance, one country might categorise a crime as “fraud” while another treats the same conduct as “deception” or “obtaining property by false pretences”. What matters is that both criminalise the core behaviour, not that their legal codes use identical terminology.

This approach helps avoid unnecessary refusals and aligns the law with the practical realities of cross‑border cases.

Making Investigative Powers Available For MLA

Recommendation 37 links directly to Recommendation 31, which deals with investigative powers and techniques. Countries must ensure that the powers available to their own authorities can also be used to fulfil MLA requests. In particular:

• All powers related to:
  • Production, search, and seizure of information, documents or evidence (including financial records) from financial institutions or other persons; and
  • Taking witness statements;
• Plus a broad range of other investigative powers and techniques.

These tools should be available not only in domestic cases but also in response to requests from abroad. Where consistent with the domestic framework, they should also be usable in response to direct requests from foreign judicial or law enforcement authorities to their domestic counterparts.

In practical terms, this might include:

• Compelling banks to provide account information and transaction histories;
• Searching premises for documents and digital evidence;
• Freezing or seizing assets;
• Interviewing witnesses and recording their statements for use in foreign proceedings.

For financial institutions and DNFBPs, this underscores that their obligations to respond to domestic investigative powers extend to situations where those powers are being exercised to support foreign cases.

Avoiding Conflicts Of Jurisdiction

Global financial crime often involves conduct that could be prosecuted in more than one country. This creates potential conflicts of jurisdiction, such as:

• Multiple countries wanting to prosecute the same individuals;
• Risk of fragmented cases, inconsistent outcomes, or double jeopardy problems.

Recommendation 37 advises countries to consider mechanisms for determining the best venue for prosecution, in the interests of justice. While it does not dictate a single model, such mechanisms can involve:

• Dialogue between prosecutors from different countries;
• Agreed criteria (such as location of key evidence, nationality of suspects, where most harm occurred, or where the main part of the scheme operated);
• Formal or informal coordination frameworks.

The goal is not to reduce enforcement but to ensure that cases are run efficiently, fairly, and with maximum impact.

Quality Of MLA Requests: Responsibilities Of The Requesting Country

Recommendation 37 does not only impose obligations on the requested country. It also expects requesting countries to make high‑quality, well‑prepared requests. Specifically, when making requests, countries should:

• Make best efforts to provide complete factual and legal information.
• Explain the context and legal basis clearly.
• Indicate any urgency or time sensitivity.
• Use expeditious means to send the requests.

Before sending a request, authorities should make best efforts to understand:

• The legal requirements of the requested country;
• Any formalities needed for evidence to be admissible in that jurisdiction;
• Language or certification requirements;
• Specific information needed to execute measures such as account freezes or searches.

Poorly drafted or incomplete requests generate delays, requests for clarifications, or outright refusals. Good preparation and communication, by contrast, can dramatically speed up execution and improve outcomes.

Resourcing And Professional Standards For MLA Authorities

Even the best legal framework cannot function without well‑resourced institutions. Recommendation 37 therefore stresses that authorities responsible for MLA, typically a central authority, must be given:

• Adequate financial resources;
• Sufficient and qualified human resources;
• Technical resources (case management tools, secure communication channels, IT systems).

In addition, countries should have processes to ensure that staff:

• Maintain high professional standards, including confidentiality;
• Have high integrity and ethical standards;
• Are appropriately skilled (including knowledge of international law, foreign legal systems, and financial crime typologies).

For practitioners, this means that MLA work is not just administrative; it requires specialised expertise, judgement, and discretion.

What This Means For Financial Institutions And Compliance Teams

While Recommendation 37 is addressed to countries, it has direct consequences for private‑sector firms, especially in financial services and DNFBPs. Key takeaways include:

• Secrecy is not absolute: Bank secrecy and confidentiality laws cannot be used to block legitimate requests channelled through competent authorities.
• Expect cross‑border exposure: Transactions and accounts can become the subject of foreign investigations, and domestic authorities may act on foreign MLA requests.
• Documentation matters: Clear records, audit trails, and robust KYC are essential. They support authorities when searching for information and reduce the risk of error or misunderstanding.
• Timely response is critical: Delays in responding to lawful requests can hinder international cases and create regulatory and reputational risks for the institution.

Understanding how MLA works also helps compliance teams anticipate questions from authorities and identify higher‑risk relationships, particularly where customers or structures involve jurisdictions known for weak cooperation.

Why Recommendation 37 Matters For The Global Fight Against Financial Crime

Recommendation 37 is about more than procedure. It is about closing the gaps that criminals rely on when they cross borders, move funds quickly, and exploit differences between legal systems. Without effective mutual legal assistance:

• Investigations stall at borders;
• Evidence stays fragmented;
• Assets remain unrecovered;
• Key actors escape accountability.

By insisting on broad, rapid, and constructive cooperation, limiting the use of bank secrecy and fiscal exceptions, and setting expectations for both requesting and requested countries, Recommendation 37 strengthens the global chain of enforcement.

For policymakers, supervisors, law enforcement, and financial institutions, understanding and implementing this recommendation is indispensable to any serious strategy against money laundering, associated predicate offences, and terrorist financing.

Dive deeper

• FATF ¦ The FATF Recommendations ¦ Link
• FATF ¦ Luxembourg’s measures to combat money laundering and terrorist financing ¦ Link