What is FATF? Financial Action Task Force Explained
In brief: FATF is the international body that sets AML, counter-terrorist financing, and proliferation financing standards used by countries and supervisors around the world.
Key points
- FATF sets standards; countries implement them through local law.
- FATF lists help firms understand country and jurisdiction risk.
- UK firms should connect FATF signals to client risk assessment and EDD decisions.
What is FATF?
FATF stands for the Financial Action Task Force. It is an inter-governmental body that sets standards for anti-money laundering, counter-terrorist financing, and counter-proliferation financing.
FATF is best known in day-to-day AML work for its Recommendations and its jurisdiction monitoring lists, often called the grey list and black list.
Why FATF matters
FATF shapes how governments and supervisors expect firms to assess risk, perform CDD, understand beneficial ownership, report suspicious activity, and apply enhanced measures to higher-risk situations.
How firms should use FATF information
Use FATF as one input in the risk assessment:
- Country risk.
- Source-of-funds risk.
- Ownership and control complexity.
- Need for enhanced due diligence.
- Review frequency.
Do not make automatic decisions based on FATF alone. Consider the full client and matter context.
This guide is general information for UK regulated firms. Sanctions change quickly, so always check the relevant official list or get specialist advice before making a client decision.