The Fight Against Money Laundering and Terrorist Financing

Key points

• The Financial Action Task Force (FATF) fulfills a critical role in international financial governance as the global standards-setter for antimoney laundering and combating the financing of terrorism (AML/CFT).
• Money laundering and terrorist-financing challenges are evolving, particularly as AML/CFT regimes in developed countries become more robust and illicit financial flows move deeper into primarily cash-based informal economies.
• Recent political maneuvering by FATF member states to influence the organization’s decisions and global AML/CFT standards-setting has demonstrated that the FATF and AML/CFT policymaking are vulnerable to individual state interests and that the organization’s political independence needs to be strengthened.
• To more effectively address the above challenges, the FATF should establish an independent oversight function, provide clearer guidance and technical support to countries with deficient AML/CFT regimes, and expand the diversity of its membership.