Research Handbooks in Financial Law series
Edited by Barry Rider
Chapter 42: Anti-money laundering measures and the effectiveness question
Effectiveness is defined by the Financial Action Task Force (FATF) as ‘(t)he extent to which the defined outcomes are achieved’. Universal agreement on what those ‘defined outcomes’ were for the Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) system was absent in the past. During the drafting process of the 2013 Procedures for the 4th Round of Mutual Evaluations the FATF decided to define the outcomes and assess the extent to which countries achieve them. After long internal debate the FATF defined the overall outcome of its measures against money laundering as well as terrorist financing as follows for purposes of its mutual assessment methodology: ‘Financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security.’ This chapter focuses on the effectiveness question relating to AML/CFT measures. It considers the evolution of the effectiveness question from a focus on the FATF itself to a focus on the impact of the implementation of its standards on crime and on the crime risk profiles of countries. The chapter considers some tensions between the defined outcome and the FATF Recommendations and closes with observations regarding questions that are absent from the current focus. The 1980s saw increasing concern over the global drug problem, the extent of criminal internationalisation, and a ‘heightened sensitivity’ to the growing financial power of organised crime syndicates.
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