Financial Action Task Force (FATF) is an intergovernmental organization that works to ensure the global implementation of standards and measures for combating money laundering, terrorist financing and other related threats. It was established in 1989 by the G7 countries (Canada, France, Germany, Italy, Japan, United Kingdom and United States). Since then it has grown to 39 members which include most major developed countries as well as some developing countries.
The FATF plays a key role in setting international standards for anti-money laundering (AML) and countering terrorism financing (CTF). These standards are applied by both public authorities and private entities such as banks or cryptocurrency exchanges. The main objectives of these standards are:
* To identify activities that can be used to launder money or finance terrorism;
* To protect financial institutions from being abused;
* To promote disclosure requirements so that law enforcement can detect suspicious activity;
* To ensure effective implementation of AML/CFT systems through monitoring compliance with international standards.
To achieve its goals the FATF develops recommendations concerning each aspect of AML/CFT measures as well as providing technical assistance to its member states on their implementation. In addition, it conducts mutual evaluations among its members periodically assessing their progress in implementing the FATF Recommendations. The results of these evaluations are made publicly available on its website.
In 2019 FATF issued guidance on virtual assets which defined several new rules applicable specifically to cryptocurrency exchanges including customer due diligence obligations similar to those imposed traditionally on banks or other financial services providers under existing AML/CFT regime. This means that all cryptocurrency exchanges must now comply with certain minimum requirements when exchanging cryptocurrencies such as identifying customers sufficiently enough before they complete transactions and monitoring ongoing transactions for any suspicious activity after completion using adequate record keeping procedures etc.. Failure to comply may result in severe penalties from regulators depending upon individual jurisdiction’s laws governing digital asset sector operations .
