The FATF Recommendations: from principle to control

The international standard

The FATF Recommendations are the international standard for combating money laundering, terrorist financing and proliferation financing. They cover risk assessment, prevention, transparency, authorities’ powers and international cooperation.

For an individual operator, obligations arise through the applicable legal framework; FATF standards are not, by themselves, a new direct company obligation.

Technical compliance and effectiveness

Rules and procedures alone do not demonstrate that a system works. Effectiveness is seen in the ability to identify risk, apply proportionate measures, produce useful intelligence and correct weaknesses.

What this means for businesses

For an obliged entity, the practical connection runs through risk assessment, governance, CDD/EDD, reporting, retention of evidence, training and control testing. Each element must support the others.

Example: Recommendation 10

Recommendation 10 connects CDD to four concrete elements: customer identification and verification, beneficial-owner identification and understanding of ownership/control, purpose and intended nature of the relationship, and ongoing due diligence consistent with the customer profile and activity.

Operational translation: for a corporate customer, the control is not simply ‘CDD completed’, but a reconstructable chain: independent identity source → ownership/control map → documented purpose → update/monitoring rules. Useful evidence shows who checked what, against which source, what anomaly arose and how it was resolved.