FATF: Financial Action Task Force

The Financial Action Task Force (FATF) is an intergovernmental organization that sets international standards for AML/CFT. FATF's 40 Recommendations form the basis for most national anti-money laundering regulations worldwide.

FATF's 40 Recommendations

Key recommendations for KYB:

10

• Topic: Customer Due Diligence
• Requirement: Verify customers, understand relationships

24

• Topic: Transparency of Legal Persons
• Requirement: Beneficial ownership of companies

25

• Topic: Transparency of Legal Arrangements
• Requirement: Beneficial ownership of trusts

FATF Evaluations

FATF conducts mutual evaluations of member countries' compliance. Countries failing evaluations may be:

• Grey-listed: Jurisdictions with strategic deficiencies—triggers EDD requirements
• Black-listed: High-risk jurisdictions—enhanced countermeasures required

The Risk-Based Approach

FATF mandates the risk-based approach—allocating AML resources based on assessed risk rather than uniform procedures. This principle shapes CDD, EDD, and SDD frameworks.

FATF and KYB

FATF guidance on beneficial ownership transparency directly influences KYB requirements globally. The Corporate Transparency Act and EU AMLD both implement FATF recommendations.

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Related: AML | CFT | Risk-Based Approach