FATF
Financial Action Task Force
FATF is an intergovernmental organization that sets international standards for combating money laundering and terrorist financing and assesses how countries implement them.
What is FATF (Financial Action Task Force)?
FATF (Financial Action Task Force, also spelled GAFI in Russian) was established in 1989 at the G7 summit in Paris. It is not a regulator and does not directly impose sanctions on companies. FATF recommendations take effect through national governments and regulators, which transpose them into their own laws.
## FATF Recommendations
The core of the framework consists of 40 recommendations. They cover customer due diligence (CDD, essentially KYC), record keeping, reporting of suspicious transactions, work with politically exposed persons (PEPs), financial sanctions, and new technologies, including virtual assets.
## Grey and Black Lists
The grey list (jurisdictions under increased monitoring) means that a country has agreed on an action plan to address identified deficiencies and is under supervision. The black list covers countries to which FATF calls for enhanced due diligence or countermeasures. The lists are updated after plenary meetings. Being on the grey list does not mean a ban on operating, but it raises requirements for banks and payment providers.
## Impact on Fintech, Payments and Crypto
Banks, acquirers and PSPs apply the recommendations through a risk-based approach. Clients from higher-risk jurisdictions are usually asked for more documents, including the source of funds, and delays or refusals happen more often. For virtual assets, Recommendation 15 and its interpretive note require licensing or registration of VASPs and application of the travel rule to transfers.
## Gambling
Casinos are included in the list of designated non-financial businesses and professions (DNFBPs), which are subject to AML/CFT requirements. How they apply to online operators is determined by national regulators and licensing jurisdictions, so requirements vary considerably. An operator processing payments from high-risk countries must take into account both local rules and FATF recommendations.
## Common Mistakes
FAQ
Is FATF a government body?
No, it is an intergovernmental organization whose members are states and regional bodies. It develops recommendations, and national regulators and financial institutions implement them.
What does it mean when a country is on the FATF grey list?
It means the country is under increased monitoring and has committed to fixing identified weaknesses in its AML/CFT system. For businesses, this usually means stricter customer and payment checks.
Does FATF affect cryptocurrencies?
Yes. The recommendations cover virtual assets and virtual asset service providers (VASPs), including licensing requirements and data sharing for transfers under the travel rule.