25 February 2025

Changes to FATF Standards

The Financial Action Task Force (FATF) has today updated its Standards after the February 2025 FATF Plenary approved changes to Recommendation 1 and its Interpretive Note, with corresponding amendments to Interpretive Notes to Recommendations 10 and 15, as well as related Glossary definitions to better support financial inclusion.

The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction.

With approximately 1.4 billion people around the world still without a bank account, the amendments aim to better promote financial inclusion through increased focus on proportionality and simplified measures under the risk-based approach. By incentivising jurisdictions to create a more enabling environment, the amendments will provide greater confidence and assurance to financial institutions when implementing simplified measures, with a view to giving more people access and use of financial services.

The changes are informed by a public consultation which gathered more than 140 responses, including from non-profit organisations, banks, payment providers, insurers, academics, accountants, lawyers and other international organisations.

The changes to the Standards include:

  • Replacement of the term “commensurate” with “proportionate”,  defined as a measure or action that appropriately corresponds to the level of identified risk and effectively mitigates the risks, throughout the Recommendations in order to provide clarity on how the concept should be applied in the context of a risk-based approach and align the FATF’s language more closely with that of financial inclusion stakeholders and frameworks. [R.1 and consequential amendments throughout the Standards]
  • Explicit requirement for countries to allow and encourage simplified measures in lower risk scenarios. This induces clarity in the countries’ obligations in enabling simplified measures in their AML/CFT regimes, and further incentivises countries to be more active in advocating their implementation. [R.1 and consequential amendments throughout the Standards] Correspondingly, financial institutions and Designated Non-Financial Business and Professions (DNFBPs) are also required to consider differentiating their measures depending on the type and level of risks. [INR.1 paragraph 16]
  • Requirement for supervisors to also review and take into account the risk mitigation measures undertaken by financial institutions and DNFBPs to avoid overcompliance resulting from an only partial understanding of associated risks, and to consider proportionality in the engagements with them. [INR.1 paragraph 9]
  • Addition of qualifier to clarify that non-face-to-face business relationships and transactions would be considered as an example of potentially higher-risk situations only where appropriate risk mitigation measures have not been implemented. This amendment recognises that non-face-to-face interactions has become standard business practice in many countries and technological advancements in digital identity systems that may reduce the risks associated. [INR.10 paragraph 15]
  • Further clarity in the requirements related to the application of simplified measures and exemptions in lower and low-risk scenarios respectively. [Throughout R.1 and INR.1]

Consultation on updated guidance on AML/CFT measures and financial inclusion

To embed the changes to the  FATF Standards to support a risk-based approach and financial inclusion, the FATF is updating its Guidance on AML/CFT measures and financial inclusion that will equip policy makers and regulators with practical examples.

Following approval of the Plenary, the FATF has therefore today launched a public consultation inviting views and comments on updated guidance. In particular, to further enrich the Guidance, FATF welcomes case studies on tailored measures to enable provision of financial services in non-lower risk situations such as conflict zones, as well as mitigating measures to address the risks associated with non-face-to-face interactions, including application of artificial intelligence technologies. 

Interested stakeholders are invited to respond to the consultation by Friday, 4 April 2025 (18h00 CET).

The FATF may also publish extracts or summaries of submissions when explaining changes to the guidance. If you would not want your contribution to be made public, please make this clear in your response.

Read the updated FATF Recommendations.

Watch FATF President, Elisa de Anda Madrazo, discussing the changes following conclusion of the February 2025 FATF Plenary.