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Role of FATF on financial systems of countries: successes and challenges

Role of FATF on financial systems of countries: successes and challenges This paper aims to examine the extent of successes and challenges of adoption and implementation of Financial Action Task Force (FATF) codes in member states by highlighting the influence of the FATF anti-money laundering policy framework on money laundering (ML) and the way forward in heightening the fight against the fast-evolving nature of ML and terrorist financing activities.Design/methodology/approachThis paper, based on a purely qualitative desktop study, is drawn on historical information from FATF’s recommendations, its periodic reports, publications and other secondary sources such as books, journal articles on financial systems and scholarly literature.FindingsThe challenges found include difficulty in domestic coordination, capacity constraints of countries, inadequate operational resources and assessment complexities in the implementation of FATF standards. Nonetheless, FATF has chalked some successes such as the harmonization of legislation and enforcement efforts through the provision of coordination points. Other successes include flexibility in response to new threats, adoption of the mutual evaluation process, which advanced peer pressure on defaulting members, enhancement of the international financial space and the enhancement of the legitimization of FATF’s processes.Originality/valueThis paper provides a description of the successes and challenges of the FATF’s 40 + 9 recommendations since its establishment. The outcome would alert countries and players within the international financial space to invest more in capacity building and the entrenchment of the recommendations into their domestic laws. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Money Laundering Control Emerald Publishing

Role of FATF on financial systems of countries: successes and challenges

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1368-5201
eISSN
1368-5201
DOI
10.1108/jmlc-06-2020-0070
Publisher site
See Article on Publisher Site

Abstract

This paper aims to examine the extent of successes and challenges of adoption and implementation of Financial Action Task Force (FATF) codes in member states by highlighting the influence of the FATF anti-money laundering policy framework on money laundering (ML) and the way forward in heightening the fight against the fast-evolving nature of ML and terrorist financing activities.Design/methodology/approachThis paper, based on a purely qualitative desktop study, is drawn on historical information from FATF’s recommendations, its periodic reports, publications and other secondary sources such as books, journal articles on financial systems and scholarly literature.FindingsThe challenges found include difficulty in domestic coordination, capacity constraints of countries, inadequate operational resources and assessment complexities in the implementation of FATF standards. Nonetheless, FATF has chalked some successes such as the harmonization of legislation and enforcement efforts through the provision of coordination points. Other successes include flexibility in response to new threats, adoption of the mutual evaluation process, which advanced peer pressure on defaulting members, enhancement of the international financial space and the enhancement of the legitimization of FATF’s processes.Originality/valueThis paper provides a description of the successes and challenges of the FATF’s 40 + 9 recommendations since its establishment. The outcome would alert countries and players within the international financial space to invest more in capacity building and the entrenchment of the recommendations into their domestic laws.

Journal

Journal of Money Laundering ControlEmerald Publishing

Published: Jul 31, 2021

Keywords: FATF; Challenges; FATF recommendations; Financial system; Successes

References