The Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT/CPF Systems

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As amended in April 2024.

The FATF assesses each member’s implementation of the FATF Recommendations and its actions to tackle money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction on an ongoing basis. The Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT/CPF Systems (The FATF Methodology in short) sets out the assessment process which focuses on two distinct areas:

Effectiveness - each assessment will have a significant focus on effectiveness, to ensure that countries are implementing and making use of the laws, regulations and policies that are being passed. 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. There will also be a greater emphasis on the major risks and context. This will ensure that countries, and the assessors reviewing them, focus on the areas where the risks are highest, not just lower-risk areas where it is comparatively easier to launch investigations and secure convictions. The assessment team will look at 11 key areas, or immediate outcomes, to determine the level of effectiveness of a country's efforts.
Technical compliance - each assessment also looks at whether a country has all the necessary laws, regulations and legal instruments in place, in line with the technical requirements of the 40 FATF Recommendations. This legal, regulatory and operational framework forms the basis for an effective system to deprive criminals from the proceeds of their crimes and terrorists from their funding and prevent the harm they can do to our society.

The FATF amended its assessment methodology in 2022. The FATF commenced its 5^th round of evaluations under this methodology in 2024 and FATF-Style Regional Bodies will also progressively use this methodology once they complete their previous round of evaluations.

The 2013 FATF Methodology for assessing compliance with the FATF Recommendations and the effectiveness of AML/CFT systems and the Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluations will continue to apply to countries being evaluated under the previous round of evaluations and related follow-up processes.

FATF Assessment Methodology (2022)

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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. It is a starting point for the country, as it identifies the priority actions that the country must take to strengthen national frameworks and make its AML/CFT/CPF actions more effective. The Recommendations from the mutual evaluation reports will be more results-oriented, focusing on specific actions and timelines to tackle money laundering, terrorist financing and the financing of weapons of mass destruction.

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. The Methodology was adopted in February 2022, and regularly updated (see also 'Information on updates made to the FATF Methodology'). The round of mutual evaluations based on the Methodology adopted in 2022 will be a six-year cycle, significantly shorter than earlier rounds, which lasted 10 years on average.

Revision of the Methodology for Assessing Technical Compliance with the FATF Recommendations and the Effectiveness of AML/CFT/CPF Systems

FATF revised the Assessment Methodology in 2022, following a comprehensive stocktake of the results of its so-called 4th round of mutual evaluation (based on the 2013 Assessment Methodology). This stocktake, the Report on the State of Effectiveness and Compliance with the FATF Standards, looked at what was going well, and the areas where countries needed to improve their performance. Using this information, the FATF made a number of changes to the Methodology and Procedures that will apply to the next round of mutual evaluations, which will start when all members have been assessed against the 2013 Assessment Methodology.

Report on the State of Effectiveness and Compliance with the FATF Standards

19 Apr 2022

This landmark report gives a comprehensive overview of the state of global efforts to tackle money laundering, terrorist and proliferation financing. It is based on data from FATF and FSRB mutual evaluation reports since 2013, which assessed the strengths and weaknesses of national frameworks to tackle these crimes.

Cover of the report on the state of effectivness and compliance with the FATF Standards

In brief

Procedures for the 5th Round Mutual Evaluations, Follow-up and ICRG

The 5th round of mutual evaluations will be sequenced based on risk, with a shorter cycle, greater scrutiny and strong results-oriented follow-up mechanisms.

The revised 5th Round Procedures are published for information only, they are not yet in effect.

Universal Procedures

Mutual Evaluations

The FATF conducts peer reviews of each member on an ongoing basis to assess levels of implementation of the FATF Recommendations, providing an in-depth description and analysis of each country’s system for preventing criminal abuse of the financial system

Assessment calendar

FATF Recommendations

The FATF Recommendations are the internationally endorsed global standards against money laundering and terrorist financing: they increase transparency and enable countries to successfully take action against illicit use of their financial system.

See the FATF Recommendations