FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems

Methodology 2013

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The FATF conducts mutual evaluations of its members’ levels of implementation of the FATF Recommendations on an ongoing basis. These are peer reviews, where members from different countries assess another country. The FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems sets out the evaluation process.  

Assessments focus on two areas, effectiveness and technical compliance.  

  • The emphasis of any assessment is on effectiveness.  A country must demonstrate that, in the context of the risks it is exposed to, it has an effective framework to protect the financial system from abuse.   The assessment team will look at 11 key areas, or immediate outcomes, to determine the level of effectiveness of a country's efforts.  
  • The assessment also looks at whether a country has met all the technical requirements of each of the 40 FATF Recommendations in its laws, regulations and other legal instruments to combat money laundering, and the financing of terrorism and proliferation.  

A mutual evaluation report provides an in-depth description and analysis of a country’s system for preventing criminal abuse of the financial system as well as focused recommendations to the country to further strengthen its system.  

The Methodology will be used by the FATF, the FATF-Style Regional Bodies (FSRBs) and other assessment bodies such as the IMF and the World Bank.

  • Methodology 2013 - adopted on 22 February 2013, and regularly updated; the most recent updates: November 2017 (see also 'Information on updates made to the FATF Methodology').

 

Related material

What is an effective system to combat money laundering and terrorist financing?

  

Information on updates made to the FATF Methodology 

Date / FATF Plenary   Type of amendments   Sections subject to amendments
October 2015   Addition of footnote to clarify the interpretation of criterion 29.3.  

R.29 – page 75

To add a footnote to guide the application of the methodology for criterion 29.3 on the FIU’s power to obtain additional information.

February 2016   Revision of R. 5 and IO.9.  

R.5 and IO.9 – pages 30-31 and 115-116

To align the methodology for R.5 and IO.9 with the revised Interpretive Note to Recommendation 5 relating to UNSCR 2178.

February 2016   Addition of footnote on the terminology of different types of ML activity to IO.7.    IO.7 – pages 110-112

To add a footnote clarifying the terminology of different types of ML activity as referred to in the Methodology for IO.7 (core issue 7.3).

October 2016   Revision of R.8 and IO. 10  

R.8 and IO.10 and Glossary - pages 39-41 and 117-119

To align the methodology for R.8 and IO.10 with the revised Recommendation 8 and interpretive Note to Recommendation 8.

October 2016   Addition of footnote on tax and confiscation to IO.8  

IO.8 - pages 113-114

To add a footnote about how tax confiscation figures should be taken into account for the assessment of effectiveness under IO.8 (core issue 8.2)

February 2017   Revision of R.5 and IO.9  

R.5 and IO.9 - pages 30-31 and 115-116

To align the methodology for R.5 and IO.9 with the revised Interpretive Note to Recommendation 5 and the Glossary term "funds or other assets".

November 2017   Revision to Recommendation 7  

R.7 – page 36-38

To amend R.7 to mirror amendments to the FATF Standards (INR.7 and the Glossary) made in June 2017 which reflected changes to the UN Security Council Resolutions on proliferation financing since the FATF standards were issued in February 2012.

November 2017   Revision of footnote to Recommendation 25   R.25 – page 69-70

To amend footnote 55 to the methodology for R.25 to provide guidance on how to identify other legal arrangements that fall within the scope of R.25 and IO.5 because of characteristics and features which are similar to express trusts and could be particularly vulnerable from a ML/TF perspective, and to ensure a consistent approach across mutual evaluations.

      

Additional information