The FATF Recommendations (formally the International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation) are the globally recognized framework developed by the Financial Action Task Force (FATF), an inter-governmental body established in 1989 by the G7.

They set out the international standards that countries should implement to combat money laundering (ML), terrorist financing (TF), and the financing of proliferation of weapons of mass destruction.

Originally issued as the "Forty Recommendations" in 1990 to target drug-related money laundering, they have evolved significantly:

• Revised in 1996 and 2003 to cover broader predicate offenses and include terrorist financing. • In 2012, a major update consolidated them into 40 Recommendations (integrating the former 9 Special Recommendations on TF into the main set). • Regularly amended (last major update in October 2025), with specific additions for emerging risks like virtual assets (crypto) via updates to Recommendation 15 in 2018–2019. The Recommendations are not legally binding treaties but carry immense weight: over 200 jurisdictions worldwide commit to them through FATF membership or FATF-Style Regional Bodies (FSRBs). Countries are assessed through mutual evaluations for technical compliance and effectiveness.

Core Purpose and Structure

The FATF Recommendations aim to:

• Identify and mitigate ML/TF risks. • Criminalize relevant offenses and enable asset recovery. • Apply preventive measures (especially in the financial sector). • Ensure transparency (e.g., beneficial ownership). • Facilitate national coordination, competent authorities, and international cooperation.

They are grouped into 7 broad areas:

1. AML/CFT Policies and Coordination (Recommendations 1–2) • Countries must assess ML/TF risks nationally and apply a risk-based approach (RBA): allocate resources proportionally to threats (Rec. 1). • Establish national coordination mechanisms (Rec. 2).

2. Money Laundering and Confiscation (Recommendations 3–4) • Criminalize money laundering for a wide range of predicate offenses (Rec. 3). • Enable provisional measures and confiscation of proceeds (Rec. 4).

3. Terrorist Financing and Financing of Proliferation (Recommendations 5–8) • Criminalize terrorist financing (Rec. 5). • Implement targeted financial sanctions against terrorists and proliferators (Rec. 6–7). • Protect non-profit organizations from abuse (Rec. 8).

4. Preventive Measures

(Recommendations 9–23) This is the largest section, focusing on financial institutions and designated non-financial businesses and professions (DNFBPs, e.g., casinos, real estate, lawyers). Key elements include: • Customer due diligence (CDD)/KYC (Rec. 10): Identify and verify customers, understand business purpose, identify beneficial owners. • Record-keeping (Rec. 11). • Enhanced measures for politically exposed persons (PEPs) (Rec. 12), correspondent banking (Rec. 13), money/value transfer services (Rec. 14), and new technologies (Rec. 15 — critical for virtual assets/VASPs). • Travel Rule (Rec. 16): Require originator/beneficiary information for wire transfers/virtual asset transfers above thresholds (typically USD/EUR 1,000). • Internal controls, reliance on third parties, higher-risk countries, suspicious transaction reporting (STRs), and tipping-off prohibitions (Rec. 17–21). • Apply preventive measures to DNFBPs (Rec. 22–23). 5. Transparency and Beneficial Ownership of Legal Persons and Arrangements (Recommendations 24–25) • Ensure accurate, up-to-date beneficial ownership information for companies and trusts is available to authorities.

6. Powers and Responsibilities of Competent Authorities and Other Institutional Measures (Recommendations 26–35)

• Regulate and supervise financial institutions/DNFBPs (Rec. 26–28). • Establish Financial Intelligence Units (FIUs) to receive/analyze STRs (Rec. 29). • Investigative powers, mutual legal assistance, asset freezing, etc. 7. International Cooperation (Recommendations 36–40) • Mutual legal assistance, extradition, and direct cooperation between authorities. Key Concepts and Modern Relevance • Risk-Based Approach (Rec. 1): The cornerstone — countries and entities assess and mitigate specific risks rather than apply one-size-fits-all rules. • Virtual Assets & VASPs (Rec. 15 + Interpretive Note): Since 2019, explicitly requires countries to regulate virtual asset service providers (VASPs — e.g., exchanges, custodians) like traditional financial institutions. This includes licensing/registration, full preventive measures, Travel Rule for transfers, and risk-based supervision. FATF issues regular targeted updates on global implementation, noting progress but gaps in many jurisdictions. • Effectiveness — Beyond technical compliance, mutual evaluations assess real-world outcomes (e.g., via 11 Immediate Outcomes).

The full text, Interpretive Notes, and Glossary are available on the official FATF website (fatf-gafi.org). Countries like Georgia (under NBG supervision for VASPs) align their AML/CFT laws directly with these standards, as reflected in registration rules, Travel Rule implementation, and risk-based supervision.

These Recommendations form the backbone of global efforts to safeguard the financial system from illicit finance while adapting to innovations like digital assets.