In today’s global economy, the fight against money laundering and the financing of terrorism (AML/CFT) is more crucial than ever. AML/CFT standards are designed to prevent illegal activities by promoting transparency and accountability in financial transactions. This guide provides an in-depth look at the international standards, methodologies, conventions, and legislative measures shaping the AML/CFT landscape.
At the forefront of setting international AML/CFT standards is the Financial Action Task Force (FATF). The FATF Recommendations, updated in February 2012, serve as the global AML/CFT standard. They are complemented by methodologies for assessing compliance and effectiveness, ensuring that countries and institutions can robustly fight against illicit financial flows. The original 40 Recommendations and the IX Special Recommendations have been periodically refined to address emerging threats and improve implementation.
- International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation : The FATF Recommendations (February 2012)
- Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT Systems (February 2013)
- FATF 40 Recommendations (October 2003, as amended in October 2004)
- FATF IX Special Recommendations (October 2001, as amended in February 2008)
- Methodology for Assessing Compliance with the FATF 40 Recommendations and the FATF 9 Special Recommendations (February 2004, updated in February 2009)
Council of Europe
The Council of Europe has been instrumental in establishing legal frameworks targeting money laundering and terrorism financing. Key conventions include the CETS No. 141 and CETS No. 198, focusing on the laundering, search, seizure, and confiscation of crime proceeds. Additionally, the conventions aim at bolstering efforts in preventing terrorism and its financing, highlighting the Council’s commitment to a secure financial environment.
- Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (CETS No. 141) (1990)
- Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism (CETS No. 198)
- Council of Europe Convention on the Prevention of Terrorism (CETS No. 196)
- Additional Protocol to the Council of Europe Convention on the Prevention of Terrorism
European Union Legislation
The European Union (EU) has enacted a series of directives and regulations to safeguard its financial system. Starting with Directive 2005/60/EC and evolving with Directive (EU) 2015/849, the EU’s legislative framework addresses the evolving nature of money laundering and terrorism financing. These directives, alongside regulations on fund transfers and cash controls, underscore the EU’s proactive approach to AML/CFT.
- Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing
- Commission Directive 2006/70/EC of 1 August 2006 laying down implementing measures for Directive 2005/60/EC of the European Parliament and of the Council as regards the definition of politically exposed person and the technical criteria for simplified customer due diligence procedures and for exemption on grounds of a financial activity conducted on an occasional or very limited basis
- Regulation (EC) no. 1781/2006 on information on the payer accompanying transfer of funds
- Regulation (EC) no. 1889/2005 on controls of cash entering or leaving the Community
- Directive 2007/64/EC of the European Parliament and the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC
- Directive (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC
A plethora of UN conventions and protocols tackle various aspects of international crime and terrorism. From the Vienna Convention’s stance against illicit drug trafficking to the conventions aimed at suppressing terrorism financing and enhancing global cooperation, these international agreements are pivotal in the global fight against money laundering and terrorism financing.
- UN Convention on Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention, 1988)
- UN International Convention for the Suppression of the Financing of Terrorism (1999)
- UN Convention against Transnational Organised Crime (Palermo Convention, 2000)
- UN Convention against Corruption (Merida Convention, 2003)
- Convention for the Suppression of Unlawful Seizure of Aircraft (1970)
- Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1971)
- Convention on the Prevention and Punishment of Crimes against Internationally Protected Persons, including Diplomatic Agents (1973)
- International Convention against the Taking of Hostages (1979)
- Convention on the Physical Protection of Nuclear Material (1980)
- Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation (1988)
- Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (1988)
- Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms located on the Continental Shelf (1988)
- International Convention for the Suppression of Terrorist Bombings (1997)