Role of FATF on financial systems of countries: successes and challenges
| Pages | 232-243 |
| DOI | https://doi.org/10.1108/JMLC-06-2020-0070 |
| Published date | 31 August 2020 |
| Date | 31 August 2020 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Nankpan Moses Nanyun,Alireza Nasiri |
Role of FATF on financial systems
of countries: successes
and challenges
Nankpan Moses Nanyun
Department of Public Finance, Dongbei University of Finance and Economics,
Dalian, China, and
Alireza Nasiri
School of Business, Dongbei University of Finance and Economics, Dalian, China
Abstract
Purpose –This paper aims to examine the extent of successes and challenges of adoption and
implementationof Financial Action Task Force (FATF) codes in member states by highlightingthe influence
of the FATF anti-money laundering policy framework on moneylaundering (ML) and the way forward in
heighteningthe fight against the fast-evolving nature of ML and terroristfinancing activities.
Design/methodology/approach –This paper, based on a purely qualitativedesktop study, is drawn on
historical informationfrom FATF’s recommendations, its periodic reports, publicationsand other secondary
sources suchas books, journal articles on financial systems and scholarlyliterature.
Findings –The challenges found include difficulty in domestic coordination, capacity constraints of
countries, inadequate operational resources and assessment complexities in the implementation of FATF
standards. Nonetheless, FATF has chalked some successes such as the harmonization of legislation and
enforcement efforts through the provision of coordination points. Other successes include flexibility in
response to new threats, adoption of the mutual evaluation process, which advanced peer pressure on
defaulting members, enhancement of the international financial space and the enhancement of the
legitimizationof FATF’s processes.
Originality/value –Thispaper provides a description of thesuccesses and challengesof the FATF’s40þ9
recommendations since its establishment. The outcome would alert countries and players within the
international financialspace to invest morein capacity buildingand the entrenchmentof the recommendations
into their domestic laws.
Keywords FATF, Challenges, FATF recommendations, Financial system, Successes
Paper type Research paper
Introduction
The establishment of FATF in 1989 mandated it to build across borders unanimous
measures to fight the drug trade andusage of banking systems to lounder money across the
globe (FATF, 2019). A year after birth, FATF launched its 40 recommendations to be
adopted by countries that sought to build a rigorous international anti-money laundering
(AML) regime (Nance, 2018). Yearsdown the line, terrorist financing (TF) and technological
sophistication roseintensely as a threat to the integrity of the global bankingsystems. They
caught the attention of the international community. As a result, FATF expanded its
original mandate by adding counterfinancing of terrorism (CFT) to its roles (Gutterman and
Roberge, 2019;Ekwuemeand Bagheri, 2020).
The dawn of the 21st century has witnessed rapid advancement in technology and the
advent of highly sophisticatedcomputer software and systems, which have a significant toll
JMLC
24,2
232
Journalof Money Laundering
Control
Vol.24 No. 2, 2021
pp. 232-243
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2020-0070
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