Financial action task force and the fight against money laundering and the financing of terrorism. Quo vadimus?
| DOI | https://doi.org/10.1108/JFC-09-2019-0124 |
| Published date | 20 January 2020 |
| Date | 20 January 2020 |
| Pages | 765-773 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
| Author | Georgios Pavlidis |
Financial action task force and the
fight against money laundering
and the financing of terrorism
Quo vadimus?
Georgios Pavlidis
School of Law, Neapolis University, Paphos, Cyprus
Abstract
Purpose –Thirty years after its creation, the Financial Action Task Force (FATF) has become a prime
example of a norm-buildingprocess that transcends the traditional avenuesof public international law, while
compelling a high level of compliance and assuring quick adaptation to norms and practices that better
address money laundering and the financingof terrorism in their evolving form. On the occasion of FATF’s
30th anniversary, this paper aims to revisit the unique characteristics of FATF and the factors behind
FATF’s successas standard-setter and as implementation-reviewerin the anti-money laundering (AML)/CFT
context.
Design/methodology/approach –This paper draws on primary sources of law, legal scholarship,
reports and other open source data to analyse the FATF norm-building process and the factors behind its
success.
Findings –Thirty years after its creation, the FATF has established itself as the key standard-setter,
implementation-reviewer and force for reform in the AML/CFT context. Though the FATF norm-building
process has been very successful, owing to its flexibility, adaptability and expansiveness, significant
challengeslay ahead due to the evolving nature of moneylaundering and financing of terrorism.
Originality/value –This is a comprehensive study examining the achievements, impact, strengths and
weaknessesof the FATF norm-building process on the occasion of the organisation’s30th anniversary.
Keywords Money laundering, Financing of terrorism, Soft law, FATF recommendations, FATF,
Mutual evaluations
Paper type Research paper
1. Introduction
The Financial Action Task Force (FATF) has established itself as the leading global
forum for the development and the monitoring of international standards against
money laundering and terrorism financing (AML/CFT). The success of the FATF as
standard-setter and as implementation-reviewer is evidenced by the impact of the
FATF 40 Recommendations and their interpretive notes and guidance on nationallaw,
European Union (EU) law and traditional international law. Given the high level of
compliance with FATF standards, it may be argued that they have assumed a quasi-
hard-law status, blurring the dichotomy between soft law and hard law in the AML/
CFT context.
In this sense, the FATF constitutes a prime example of a norm-building process that
transcends the traditional sourcesand enforcement mechanisms of public international law,
while compelling a high level of complianceand assuring quick adaptation to better address
money laundering and terrorismfinancing. On the occasion of the FATF’s 30th anniversary,
it is worth revisiting the FATF’s norm-building process, with emphasis on its legal nature,
Financial
action task
force
765
Journalof Financial Crime
Vol.28 No. 3, 2021
pp. 765-773
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-09-2019-0124
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