FATF Recommendation 35 requires that supervisory sanctions for breaches of AML/CFT requirements by institutions be effective, proportionate and dissuasive.
- Effectiveness. Sanctions should have a real impact on the financial institution and its behavior, to serve as a deterrent and send a message to other financial institutions.
- Dissuasiveness. Sanctions should discourage the financial institution from engaging in noncompliant behavior. The cost of noncompliance should outweigh any potential benefit (fines or public disclosure of noncompliant behavior).
- Proportionality. Sanctions should be commensurate with the offense, and should be appropriate to the severity and frequency of the noncompliant behavior. Not too severe, not too lenient. Sanctions must be fair and transparent.
