ACAMS International AML/CFT Standards 2 — Questions and Answers
Question 1: What are the FATF '40 Recommendations' and when were they last significantly updated?
- Voluntary guidelines for AML compliance, last updated in 2001
- The international AML/CFT standards that form the global framework for combating money laundering and terrorist financing, last significantly revised in 2012 and supplemented by targeted revisions through 2023 (Correct answer)
- UN Security Council resolutions establishing mandatory AML requirements, adopted in 1989
- EU directives applicable only to European Union member states, last updated in 2018
Correct answer: The international AML/CFT standards that form the global framework for combating money laundering and terrorist financing, last significantly revised in 2012 and supplemented by targeted revisions through 2023
The FATF 40 Recommendations are the recognized global AML/CFT standards applicable to FATF members and evaluated countries. Originally issued in 1990 and significantly revised in 2003 and 2012, they have been supplemented by targeted updates on virtual assets, beneficial ownership, and other areas.
The FATF 40 Recommendations were originally issued in 1990, revised in 1996, substantially updated in 2003, and most recently comprehensively revised in 2012. The 2012 revision: integrated the 9 Special Recommendations on Terrorist Financing into a single set of 40 recommendations; introduced the risk-based approach as a foundational principle; strengthened requirements on beneficial ownership; expanded DNFBP coverage; added provisions on new payment technologies; and enhanced effectiveness measurement through the new evaluation methodology. Since 2012, FATF has issued targeted updates including: R.15 on virtual assets (2019, revised 2021); enhanced transparency of beneficial ownership (2022); and measures to address proliferation financing (2020). The 40 Recommendations cover legal systems, financial system measures, preventive measures, transparency, international cooperation, and institutional measures.
Question 2: What is the Financial Action Task Force's (FATF) mandate and membership structure?
- FATF is a UN agency with 193 member countries that issues binding resolutions
- FATF is an intergovernmental policy-making body established in 1989 with 39 members (37 member jurisdictions plus the European Commission and Gulf Co-operation Council) that sets AML/CFT standards and assesses compliance (Correct answer)
- FATF is a World Bank initiative that provides technical assistance to developing countries on AML compliance
- FATF is an NGO funded by private banks to develop voluntary AML best practices
Correct answer: FATF is an intergovernmental policy-making body established in 1989 with 39 members (37 member jurisdictions plus the European Commission and Gulf Co-operation Council) that sets AML/CFT standards and assesses compliance
FATF is an intergovernmental body established at the G7 Paris Summit in 1989. It has 39 members (37 jurisdictions plus the European Commission and GCC) and sets global AML/CFT standards through its 40 Recommendations.
FATF was established in 1989 by the G7 Summit in Paris to combat money laundering. Its mandate has since been expanded to include terrorist financing (post-9/11) and proliferation financing. Key structural features: 39 members including most major financial centers; 9 FATF-Style Regional Bodies (FSRBs) extend the network to over 200 jurisdictions globally; an observer network of international organizations (IMF, World Bank, UN, Egmont Group, Basel Committee); decisions are made by consensus among members; the FATF President rotates among members; and membership in the FATF network is a de facto requirement for access to international financial markets. FATF's authority derives from political commitment of its members — its standards are not legally binding under international law, but non-compliance results in being listed as high-risk or subject to increased monitoring, with significant market consequences.
Question 3: What is the Egmont Group and how does it support international AML efforts?
- A FATF working group focused on assessing developing country compliance
- A global network of Financial Intelligence Units (FIUs) that facilitates the secure exchange of financial intelligence information between member country FIUs to support AML/CFT investigations (Correct answer)
- An international association of AML compliance officers providing professional certification
- A UN body that coordinates economic sanctions against money laundering havens
Correct answer: A global network of Financial Intelligence Units (FIUs) that facilitates the secure exchange of financial intelligence information between member country FIUs to support AML/CFT investigations
The Egmont Group is a network of over 160 Financial Intelligence Units that enables secure, confidential sharing of financial intelligence between member FIUs — critical for investigating cross-border money laundering and terrorist financing.
The Egmont Group was established in 1995 at the Egmont Palace in Brussels. It currently has over 160 member FIUs. Its key functions include: facilitating the secure exchange of financial intelligence between FIUs through the Egmont Secure Web (ESW) communications platform; promoting the development and enhancement of FIU operational capabilities; providing training and technical assistance; and developing guidance on FIU best practices. FIU-to-FIU information sharing is governed by principles of: reciprocity; confidentiality; use limitation (information may only be used for the purpose requested); and spontaneous exchange when information may be valuable to another FIU. FinCEN is the U.S. FIU and an Egmont member. The Egmont Group is distinct from FATF but closely aligned with FATF's international cooperation standards.
Question 4: What does the Basel Committee's AML guidance (Basel III and CDD Paper) require of internationally active banks?
- Only capital adequacy ratios related to AML fines and penalties
- Consolidated, enterprise-wide AML/CFT programs that apply the highest applicable standards across all subsidiaries, branches, and affiliates globally, with adequate information sharing between group entities (Correct answer)
- Annual FATF Mutual Evaluation Report submission to the Basel Committee
- Mandatory AML insurance coverage for international operations
Correct answer: Consolidated, enterprise-wide AML/CFT programs that apply the highest applicable standards across all subsidiaries, branches, and affiliates globally, with adequate information sharing between group entities
The Basel Committee's CDD paper and related guidance require internationally active banks to implement enterprise-wide AML programs that apply the most stringent applicable standards globally, ensure information flows between group entities, and manage consolidated risk across all affiliates.
The Basel Committee on Banking Supervision (BCBS) has issued several papers relevant to AML: the 2001 Customer Due Diligence paper established principles for customer identification and risk-based approaches; the 2014 Sound Management of Risks Related to Money Laundering and Financing of Terrorism paper consolidated and updated guidance; and subsequent papers on correspondent banking and digital currencies. Key requirements for internationally active banks include: group-wide AML policies and procedures; application of the most stringent AML requirements across the group (home vs. host country); information sharing between parent and subsidiaries for consolidated risk management; senior management accountability at the group level; independent group-level AML audit; and country addenda where local requirements exceed group minimums. The Basel AML Index separately measures country-level ML/TF risk annually.
Question 5: What is the 'Wolfsberg Group' and what is its role in international AML standards?
- An FATF working group responsible for evaluating high-risk jurisdictions
- A group of 13 global financial institutions that develop voluntary AML/CFT guidance, principles, and best practice papers for the private sector, particularly in correspondent banking, private banking, and trade finance (Correct answer)
- A UN committee setting mandatory AML requirements for all member states
- An international association of bank regulators that sets examination standards for AML programs
Correct answer: A group of 13 global financial institutions that develop voluntary AML/CFT guidance, principles, and best practice papers for the private sector, particularly in correspondent banking, private banking, and trade finance
The Wolfsberg Group is a private-sector association of 13 major global banks that develops voluntary AML guidance and principles, particularly influential in areas such as correspondent banking due diligence, private banking, and anti-bribery standards.
The Wolfsberg Group was formed in 2000 at Château Wolfsberg in Switzerland. Its 13 member banks include: Banco Santander, Bank of America, Barclays, Citigroup, Credit Suisse (now UBS), Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan Chase, MUFG, Société Générale, Standard Chartered, and UBS. The Group has published influential guidance on: private banking AML principles (the original Wolfsberg Principles); correspondent banking due diligence; anti-money laundering questionnaire (Wolfsberg AML/KYC Questionnaire used globally for correspondent banking due diligence); trade finance principles; financial crime compliance effectiveness; and payment transparency. While Wolfsberg guidance is voluntary, it is widely adopted and referenced by regulators and financial institutions globally as representing industry best practice.
Question 6: What is the role of a Financial Intelligence Unit (FIU) in the national AML framework?
- FIUs are law enforcement agencies that conduct criminal investigations and make arrests
- FIUs receive, process, analyze, and disseminate financial intelligence (including SAR/STR reports) to competent authorities to support AML/CFT investigations and prosecutions (Correct answer)
- FIUs are regulatory bodies that license and supervise financial institutions
- FIUs set national AML policy and issue binding regulations on financial institutions
Correct answer: FIUs receive, process, analyze, and disseminate financial intelligence (including SAR/STR reports) to competent authorities to support AML/CFT investigations and prosecutions
Financial Intelligence Units are national agencies that collect financial intelligence (SAR/STR filings), analyze it for patterns and connections, and disseminate actionable intelligence to law enforcement, prosecutors, and foreign FIUs to support AML/CFT investigations.
FIUs serve as the central node in national AML/CFT systems, receiving Suspicious Transaction Reports (STRs) or SARs from financial institutions and DNFBPs and analyzing them for patterns that may not be visible to any single reporting institution. FIU functions include: receiving and acknowledging STR/SAR filings; storing and securing financial intelligence; analyzing individual reports and patterns across the reporting population; disseminating intelligence to national law enforcement and prosecutors; exchanging intelligence with foreign FIUs through the Egmont Secure Web; providing feedback to reporting institutions on STR quality and value; and publishing typologies and guidance. FinCEN serves as the U.S. FIU. FATF Recommendation 29 requires all countries to establish a FIU meeting Egmont Group standards. FIUs may be structured as law enforcement (police model), supervisory, administrative, or hybrid organizations.
ACAMS International AML/CFT Standards 2
What are the FATF '40 Recommendations' and when were they last significantly updated?