Who Sets the Global Standard to Stop Money Laundering and How Is It Implemented?

The Financial Action Task Force (FATF) sets the international standard for fighting money laundering. Formed in 1989 by leaders of countries and organizations around the world, the FATF is an international body of governments that sets standards for stopping money laundering and promotes the implementation of these standards. Because laundering money is one way in which terrorists finance their activities, money laundering and terrorism go hand in hand. The FATF is, therefore, also dedicated to the setting and implementation of standards for fighting terrorist financing and other threats to the international financial system.

The FATF developed a series of recommendations that were adopted in February 2012 to give its 34 member countries and two member organizations a comprehensive set of measures to implement in the fight against money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction. The FATF promotes the implementation of these measures, but the leaders of each member country carry out the measures on a national level. Each country must adopt the measures to make them appropriate for its own circumstances. To assist members in implementing the recommended anti-money-laundering measures, the FATF has also provided them with a set of guidance and best practices.

Another global group of countries that participates in combating money laundering is the International Monetary Fund (IMF). With 188 member countries, the IMF has been expanding its anti-money-laundering efforts since 2000. The events of September 11, 2001, led to an intensification of IMF work in this area and spurred the broadening of its goals to include fighting the financing of terrorism. In 2002, the IMF began assessing the compliance of its member countries with the international standard for combating terrorist financing in place at the time. The FATF has since revised this standard.

The IMF pays special attention to the effects of money laundering and terrorist financing on the economies of its member countries. The IMF points out that people who launder money and finance terrorism target countries with weak legal and institutional structures and use the weaknesses to their advantage to move funds. Ways in which the IMF helps its members stop money laundering and terrorist financing include serving as an international forum for the exchange of information on this topic and helping countries develop common solutions to, and effective policies against, these problems.

In addition, the IMF contributes to the evaluation of each country's compliance with anti-money-laundering measures and to the identification of areas where improvement is needed in this regard. The IMF focuses its work on assessing the strengths and weaknesses of each member's financial sector in complying with the FATF recommendations, providing members with the technical assistance needed to strengthen their legal and financial institutions and offering advice to members in the process of developing policies directed toward compliance with FATF measures.