Mutual Evaluation Process and Reports

Reports

The mutual evaluation process represents a central pillar of the work of the FATF.  Through this process, the FATF has monitored the implementation of the FATF Recommendations and has assessed the effectiveness of the anti-money laundering and counter-terrorist financing systems in FATF member jurisdictions.

The FATF started a third round of mutual evaluations for its members in January 2005.  These evaluations are based on the Forty Recommendations 2003 and the Nine Special Recommendations 2001 and use the Anti-Money Laundering/Combating Terrorist Financing (AML/CFT) Methodology 2004.

The scope of these evaluations is to assess whether the necessary laws, regulations or other measures required under the new standards are in force and effect, that there has been a full and proper implementation of all necessary measures and that the system in place is effective.

The evaluations are conducted by a team of experts (from the financial, legal and law
enforcement areas) and the FATF Secretariat.  A key feature of the process is an on-site visit to the jurisdiction and comprehensive meetings with government officials and the private sector over a two week period.  The FATF has developed comprehensive and detailed procedures to conduct its mutual evaluations, and these help to ensure fair, proper and consistent evaluations.  The “Handbook for Countries and Assessors” lays out the necessary instructions and guidance for all countries and bodies that are conducting assessments.

The findings of the FATF assessment team are compiled in a Mutual Evaluation Report, which describes in detail the system in place and assesses and rates its effectiveness.  A summary of each Report is published on the FATF website and FATF members have agreed in principle to make public the full mutual evaluation reports (with the ultimate decision being left to each FATF member for its own report).  The FATF intends to provide comprehensive information on its members’ actions in combating money laundering and terrorist financing.

Belgium, Norway, Australia and Switzerland were the first FATF countries to be evaluated in the third round of mutual evaluations. On-site visits to these countries took place the first semester of 2005.  The FATF discussed and agreed the reports on Belgium and Norway in June 2005, the reports on Australia and Switzerland in October 2005.  Also in 2005, the IMF completed its assessment of Italy.  In 2006 the FATF agreed the reports on Denmark, Iceland, Ireland, Portugal, Spain, Sweden and the United States.  In 2007 the FATF agreed the reports on Turkey, China, Greece and Finland.  In 2008 the FATF has agreed the reports on Canada and Singapore.  The FATF is promoting increased transparency and cooperation through the open distribution of the reports to all FATF members and observers and the discussion of the reports in open session in the FATF Plenary.

The FATF is also encouraging wider dissemination and sharing of evaluation and assessment reports by all bodies and organisations responsible for compiling them (i.e. the FSRBs, the OGBS, the IMF and the World Bank).  To ensure global consistency, the FATF has agreed similar or common processes, documents and procedures with all the bodies and organisations that produce assessment reports based on the FATF Recommendations and the 2004 AML/CFT Methodology.  The FATF carries out these important functions in close cooperation with its main partners, i.e. the FSRBs, the IMF and the World Bank, in the assessment process.