Guidance for a risk-based approach: effective supervision and enforcement by AML/CFT supervisors of the financial sector and law enforcement

This guidance document does not reflect revisions to the FATF standards made after its date of publication, including the 2025 revisions to Recommendation 1 on the risk-based approach. A full list of updates to the Recommendations, by date, is included as Annex II of the FATF Recommendations. This guidance should be read alongside more recent Guidance by the FATF on risk assessment and financial inclusion.

The FATF issued guidance on effective supervision and enforcement by AML/CFL supervisors of the financial sector and law enforcement. The financial services sector play a key role in preventing ML/TF related funds from flowing through the international financial system. Supervision of this sector, and the ability to take effective, dissuasive and proportionate enforcement actions in the case of AML/CFT breaches are therefore essential. This guidance describes the features of effective supervision by regulators and supervisors, and also clarifies the interplay with the role of law enforcement agencies.

A range of illustrative case examples are provided which aim to assist jurisdictions in undertaking effective supervision of their financial sector in a manner that is appropriate to the sector’s size and complexity, and the degree of ML/TF risk to which it is exposed.