In the process of mutual evaluations and subsequent follow-ups used by the Financial Action Task Force (FATF) to assess the quality of various jurisdictions' AML controls, the FATF:
A.
imposes economic sanctions on jurisdictions with lax AML controls to force them to strengthen their controls.
B.
conducts on-site inspections of financial institutions in jurisdictions with lax AML controls to identify deficiencies and recommend improvements.
C.
publishes annual reports ranking all member jurisdictions based on their self-assessment of AML controls.
D.
conducts a peer review process whereby member countries assess the AML controls of other jurisdictions and provide recommendations for improvement.
The FATF conducts mutual evaluations—a peer review process—whereby member countries assess each other’s AML/CFT systems. This includes on-site visits and reviews by international experts, with public reports containing recommendations for improvement. The process is not punitive and does not impose sanctions.
“FATF mutual evaluations are peer reviews in which experts from member countries assess another member's AML/CFT system and provide recommendations.”
(CAMS 6th Edition, International AML/CFT Standards; FATF Methodology, Recommendation 40)
[References:, CAMS 6th Edition, FATF Mutual Evaluations, FATF Methodology for Assessing Technical Compliance and Effectiveness, , ]
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