The Financial Action Task Force (FATF) 40 Recommendations are measures which countries should implement to combat money laundering (ML), terrorist financing (TF), and proliferation financing (PF):
- Identify risks
- Put in preventive measures
- Establish powers and responsabilities
- Enhance transparency and effectiveness
- Facilitate international cooperation
Evaluation:
- Technical assessment. Is the framework in place?
- Effectiveness assessment. Does the framework really work?
The Basel Committee on Banking Supervision (BCBS) is the global standard setter for the regulation of banks. It has 45 members from 28 jurisdictions, consisting of central banks and authorities with formal responsibility for the supervision of banking business. The BCBS has issued the 29 Core Principles for Effective Banking Supervision which are a set of high-level supervisory standards that guide the supervision of banks and banking systems:
- Principles 01 - 13. What supervisors do themselves.
- Principles 14 - 29. What supervisors expect banks to do.
These 29 principles also have:
- Essential criteria: minimum baseline requirements for sound supervisory practices.
- Additional criteria: suggested best practices that countries should aim for.
From an AML/CFT perspective, principle 29 is the most important:
- Abuse of financial services. The supervigor determines that banks have adequate policies and processes, including strict customer due diligence (CDD) rules to promote high ethical and professional standards in the financial sector and prevent the bank from being used, intentionally or unintentionally, for criminal activities.
The International Association of Insurance Supervisors (IAIS) is the international standard setter for the supervision of the insurance sector. It comprises insurance supervisors and regulators from more than 200 jurisdictions. The IAIS Insurance Core Principles (ICP) seek to encourage high standards in member jurisdictions:
- Supervisory principles
- Market principles
- Infrastructure principles
From an AML/CFT perspective, principle 22 is the most important, it requires the supervisor to take effective measures to combat money laundering and terrorist financing, and also requires insurers to have appropriate risk-based policies and procedures in place to prevent, detect, and report.
The International Organization of Securities Commissions (IOSCO) is the global standard setter for the securities sector. Currently, it has more than 230 members. IOSCO’s Objectives set out 38 Principles of securities regulation:
- Protect investors
- Ensure market fairness, transparency and efficiency
- Reduce systemic risk
