Financial Action Task Force Research Articles

Assessment of Conflict between India and Pakistan

The conflict between India and Pakistan is a major source of crisis which must be resolved if peace and development are to prevail in this region. One approach for identifying the costs of conflict and the strategies for minimizing them is the conflict resolution curve model formulated through regret analysis (based on costs). The application of this model in the present context suggests alternative strategies, one being that India should encourage more formal bilateral trade. However, this solution is not feasible given the repeated terrorist attacks on India from Pakistani soil and the suspension of trade ties between the two nations. Another alternative is for India to strengthen its preparedness diplomatically, and this is happening through the Financial Action Task Force and other channels.

Tax Evasion and Money Laundering: A Complete Framework

Purpose: Our objective is to define the fundamental nexus between income tax evasion and money laundering. The G7 Financial Action Task Force (FATF) designates tax evasion as a predicate offense for money laundering. We determine whether this designation is complete from a conceptual standpoint, or whether there is a stronger connection between tax evasion and money laundering. Approach: We apply the FATF definition for money laundering – as well as generally accepted definitions for tax evasion and for a standard predicate offense – to identify the necessary conditions for each crime. We then use these conditions to test opposing hypotheses regarding the nexus between tax evasion and money laundering. Findings: We demonstrate that tax evasion does not meet the conditions for a standard predicate offense, and treating it as if it were a standard predicate could be problematic in practice. Instead, we conclude that the FATF’s predicate label for tax evasion, together with tax evasion methods and objectives, imply that all tax evasion constitutes money laundering. In a single process, tax evasion both generates criminal tax savings and launders those criminal proceeds by concealing or disguising their unlawful origin. Originality: Our analysis demonstrates that tax evasion completely incorporates money laundering as currently defined by the FATF. Practical Application: The FATF could strengthen its framework by explicitly defining all tax evasion as money laundering. This would enable regulatory agencies to draw upon the full combined resources dedicated to either offense.

APPLIED RISK ASSESSMENT IN THE SYSTEM OF SOCIO-ECONOMIC PROCESSES IN CYBERSPACE

In the paper investigated safety of socio-economic processes in the virtual space. Studied the main trends influence on formation of preventive and adaptive mechanisms for ensuring information and cyber security enterprises. Key trends of the modern business and social environment include: globalization, informatization and individualization of consumer needs; mediatization, territorialization and universalization of social phenomena. Presented an original ensuring security model for the virtual information sphere. In this model was invented a conceptual scheme for identifying the information security system: given the identification sequence and risks assessment in cyberspace by stages; risk identification; a description of the threats it poses; identification of vulnerable market segments; analysis and assessment of the risk occurrence probability level; analysis and assessment of the risk manifestation consequences level; score determination of the general rick level; proposal to eliminate the development environment risks of the study object; net risk identification; risks in cyberspace have been identified and assessed in terms of security and financial flows. Among the dominant risks of the external and internal security environment in the information virtual Ukrainian space the following are highlighted: insufficient system security, processes and technologies, disinformation and information asymmetry; high sensitivity of financial flows to the processes of the implementation of shock macroeconomic phenomena (including almost unsignificant currencies devaluation against the pandemic background) in terms of the safety of financial flows; technical, technological and personal vulnerability growth in the information sphere, due to the increasing cybercrime in terms of the information flow security. Among the mitigation measures and neutralization of the general risk level, was proposed the creation of a single protection system. The single data protection system should be based on: data protection progressive principles, tasks to ensure security from information influences, information infrastructure security, information rights, open access to information, publicity of open information, etc.; organizational and right mechanism of data protection. This mechanism is based on the need to streamline the responsibilities of information marked actors; state control over data manipulation; data manipulation standards development; information systems certification for their processing. Construction of database registers, as well as registration of owners and/or data administrators, third parties to whom the data was transferred for further manipulation; an independent coordination center formation for the state policy implementation in terms of monitoring compliance with data protection requirements, etc.; increasing the financial flow transparency, namely risk-oriented monitoring in digital currency exchanges and licensing of transactions in virtual currencies requires support from the Financial Action Task Force on Money Laundering and the Financial Intelligence Unit.

Features of legal nature Financial Action Task Force on Money Laundering FATF

The article is devoted to the peculiarities of the legal nature of FATF, the process of its creation, the legal principles of activity,as well as the speciality of its legal entity. Attention is also devoted to the main Conventions, which were signed on the eve of The FirstWorld War and after The Second World War and shows the main preconditions and reasons for the creation of the intergovernmentalorganization FATF.The ongoing growth of the drug business, the expansion of its geographical boundaries, increasingly sophisticated and dangerousforms of this criminal business, the struggle of states on large-scale crime related to the legalization of criminal proceeds led to the creationof FATF and it achieved important results in this area.FATF cannot be considered by an international organization because it has not been established on the basis of an internationaltreaty and does not have an approved statute. However, despite this, FATF has a decision to establish a group – this is the legal basisfor its activities and is an intergovernmental organization. Analysis of FATF’s activities shows that FATF’s initial priority was to combatlaundering of proceeds from drug trafficking. Today FATF’s activities have three main directions: expanding the actions of its adoptedrecommendations to all continents and regions of the globe; checking how member states are executed and how anti-money launderingmeasures are implemented in other states, based on 40 plus 9 FATF recommendations that are guidance to action; tracking worldwidemethods and schemes of laundering criminally used capital and developing countermeasures. To date, a set of 40 FATF recommendationsand 9 Special Recommendations for Countering The Financing of Terrorism is a set of universal standards that lead to a successfulfight against money laundering. The new version of this document was adopted in 1996, 2003 and 2012. One of FATF activities is todefine so-called non-cooperative countries and territories and make their list, which is called the «blacklist». Although the country’sinclusion in the “blacklist” does not lead to the application of sanctions by the world community, it indicates a degree of trust in it onthe part of foreign investors. Lacking the status of an international legal act, FATF’s recommendations in practice received generalrecognition as universal international standards in the field of anti-money laundering. Successful work on counteracting the launderingof dirty funds should be carried out simultaneously at two levels – at international and national levels. FATF functions – to monitor theprocesses of implementation of such measures, to study ways and techniques of money laundering, to develop preventive and preventivemeasures, to promote the global implementation of anti-money laundering standards. FATF’s recommendations in practice receivedgeneral recognition as universal international standards in the field of anti-money laundering. Every year FATF organizes meetings onthe analysis of methods and trends related to combating the laundering of criminal proceeds and financing of terrorism.

Features of legal nature Financial Action Task Force on Money Laundering FATF

The article is devoted to the peculiarities of the legal nature of FATF, the process of its creation, the legal principles of activity,as well as the speciality of its legal entity. Attention is also devoted to the main Conventions, which were signed on the eve of The FirstWorld War and after The Second World War and shows the main preconditions and reasons for the creation of the intergovernmentalorganization FATF.The ongoing growth of the drug business, the expansion of its geographical boundaries, increasingly sophisticated and dangerousforms of this criminal business, the struggle of states on large-scale crime related to the legalization of criminal proceeds led to the creationof FATF and it achieved important results in this area.FATF cannot be considered by an international organization because it has not been established on the basis of an internationaltreaty and does not have an approved statute. However, despite this, FATF has a decision to establish a group – this is the legal basisfor its activities and is an intergovernmental organization. Analysis of FATF’s activities shows that FATF’s initial priority was to combatlaundering of proceeds from drug trafficking. Today FATF’s activities have three main directions: expanding the actions of its adoptedrecommendations to all continents and regions of the globe; checking how member states are executed and how anti-money launderingmeasures are implemented in other states, based on 40 plus 9 FATF recommendations that are guidance to action; tracking worldwidemethods and schemes of laundering criminally used capital and developing countermeasures. To date, a set of 40 FATF recommendationsand 9 Special Recommendations for Countering The Financing of Terrorism is a set of universal standards that lead to a successfulfight against money laundering. The new version of this document was adopted in 1996, 2003 and 2012. One of FATF activities is todefine so-called non-cooperative countries and territories and make their list, which is called the «blacklist». Although the country’sinclusion in the “blacklist” does not lead to the application of sanctions by the world community, it indicates a degree of trust in it onthe part of foreign investors. Lacking the status of an international legal act, FATF’s recommendations in practice received generalrecognition as universal international standards in the field of anti-money laundering. Successful work on counteracting the launderingof dirty funds should be carried out simultaneously at two levels – at international and national levels. FATF functions – to monitor theprocesses of implementation of such measures, to study ways and techniques of money laundering, to develop preventive and preventivemeasures, to promote the global implementation of anti-money laundering standards. FATF’s recommendations in practice receivedgeneral recognition as universal international standards in the field of anti-money laundering. Every year FATF organizes meetings onthe analysis of methods and trends related to combating the laundering of criminal proceeds and financing of terrorism.

Libra Project: Regulators Act on Global Stablecoins

Governments, regulatory authorities and standard-setting bodies started acting on global stablecoins triggered by the Libra announcement. Among the concerns expressed by the G7 and the G20 are risks to the stability of the financial system. The Financial Stability Board and the Financial Action Task Force have worked on regulatory issues and anti-money laundering ahead of the G20 summit in November 2020. Overall the Libra project has raised many questions on the regulatory front. Facebook had to revise the concept as Libra 2.0 and resubmit it for approval in April 2020. The European Commission announced a new regulation on Markets in Crypto-assets (MiCA) including stablecoins in September 2020 as part of a new Digital Finance Package. This opens the next chapter in a regulatory cat and mouse game.

FATF’s Concerns and Pakistan's Measures for Compliance

Since August 2018, Pakistan has been dealing with the Financial Action Task Force (FATF) to avoid its harsh conditions. The aim of the study was to examine the current position of Pakistan vis-à-vis the conditions laid down by the FATF. A literature review was conducted to assess the situation over 20 months and a comparative analysis was done. Findings of the study showed that the ministry took nine actions. First, it banned two main and eleven affiliated organizations. Second, it froze 976 moveable and immovable assets of the banned organizations. Third, it intervened in the social welfare activities conducted by the banned organization and seized relevant institutes. Fourth, it ministry convicted more than 200 individuals concerned. Fifth, it appropriated funds amounting to Rs 2,400 million. Sixth, it introduced the mutual legal assistance law and contacted about 84 countries to glean information from them. Seventh, it formulated asset-freezing regulations. Eight, it introduced the charity law across the country. Ninth, it tri-furcated the 4th schedule of the Anti-Terrorism Act of 1997 and established procedures for watching the prospective offenders. The result was that, in 20 months, Pakistan formulated policies meant for curbing money laundering and combating terrorism financing.

The Legal Combat of Financial Crimes: A Comparative Assessment of the Enforcement Regimes in Nigeria and South Africa

Abstract Financial crimes are debilitating problems for economies, especially emerging ones. The scourge of financial crimes includes money laundering, fraud, drug and human trafficking, terrorism financing, bribery, embezzlement, market manipulation, tax evasion, identity theft, forgery and cybercrime. These problems are so intractable and potentially destructive that the collective effort to prevent or contain them has gone global. The imperative of enhanced transparency and financial system integrity, not only in national financial systems but also in the international financial order, has become inevitable. This has resulted in the landmark frameworks of the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances and the G7’s Financial Action Task Force. This paper discusses the legal combat of financial crimes in two major African economies: Nigeria and South Africa, with particular emphasis on money laundering and terrorism financing due to their direct negative macro-economic implications for any economy. The focus on the twin problems in those two economies is based on their pre-eminent position in Africa. The paper examines the legal frameworks for the prevention or containment of the scourge in the two countries and interrogates measures that could engender their effective control.

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

PurposeThis 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.

The role of Forensic accounting in combating money laundering - a field study on the Kingdom of Saudi Arabia - in light of its accession to Financial Action Task Force (FATF): دور المحاسبة القضائية في مكافحة غسيل الأموال - دراسة ميدانية على المملكة العربية السعودية- في ظل انضمامها لمنظمة العمل المالي (فاتف)

This research aimed to clarify the role of Forensic accounting in the development of accounting work mechanisms to combat money laundering operations, and how to benefit from the Kingdom of Saudi Arabia joining Financial Action Task Force (FATF) in that, the researchers relied on carrying out this research on the descriptive analytical approach and relied on the statistical packages for science program Statistical Package For Social Science (SPSS / Pc +) in hypothesis testing, sample analysis, data compilation, tabulation and analysis. The research found that there is a direct relationship between Forensic accounting services and its components and the accession of Saudi Arabia to Financial Action Task Force (FATF) and combating money laundering operations The research recommended to increase the activation of Forensic accounting programs in the Saudi Organization for Certified Public Accountants as well as business colleges of King Khalid University to contribute to the elimination of money laundering operations in line with the Kingdom's current status as a permanent member of Financial Action Task Force (FATF).

Emergency Disbursements During COVID-19: Regulatory Tools for Rapid Account Opening and Oversight

More than 100 countries have launched emergency cash disbursement programs to alleviate financial hardships for individuals and households in light of the COVID-19 pandemic. Many of these programs are based in digital payments; however, a lack of official identification, mobile data services and the difficulties in face-to-face interactions restrict potential users from a standard customer due diligence process. Guidance from the Financial Action Task Force (FATF), the global anti-money laundering standards-setting body, encourage the use of innovative solutions for customer onboarding, specifically the risk-based approach and simplified due diligence (SDD). This paper summarizes the range of practice across jurisdictions that have employed a combination of SDD (also known as tiered CDD), licensing of non-bank financial institutions, and digital identification to enroll unbanked individuals into financial accounts so that they could receive COVID-19-related relief cash transfers. As this note concludes, jurisdictions that had adopted such practices were able to quickly ramp-up disbursement programs, bringing tens of millions of beneficiaries into the formal financial system. This report provides an analysis of varied SDD implementations and provides considerations for financial regulators looking to promote appropriate risk mitigation while digitally delivering emergency financial assistance.

Challenges of identifying and monitoring politically exposed persons (PEPs) in Latin America

PurposeThe purpose of this paper is to analyze politically exposed persons (PEPs) according to Financial Action Task Force (FATF) Recommendations and assess the identification process followed by financial institutions to create a harmonized regional model for PEPs identification in Latin America.Design/methodology/approachFATF Recommendation No.12 states that financial institutions should identify PEPs. To do so, the latter uses either an internal identification system or an external database. Within this framework, the purpose of the research work is to determine whether the procedure adopted by the regulated entities complies with the requirements of the regulations. Both analytical and interpretative methods have been used for this purpose.FindingsIn accordance with FATF Recommendation No.12, national and foreign PEPs, as well as officials of relevant international organizations, close relatives and closest associates must be identified. This wide range of people forms an hybrid type of PEPs. Because of the lack of a harmonized identification policy, it is likely that some people who meet these conditions may not be spotted.Originality/valuePEPs control success relies on accurate and prompt identification. Therefore, it is crucial to create an inter-state model of harmonized identification at a regional level in Latin America. It includes not only the participation of the obligated subjects but also the sector entities associated to the concerned economic activity.

Perception versus reality: Iranian banks and international anti-money laundering expectations

PurposeIran has been ranked by the Basel Committee on Banking Supervision and the Financial Action Task Force (FATF) as one of the foremost countries in the world for money laundering. However, Iranian banks claim that they comply with international standards for reporting suspicious activity, risk management and training. This paper aims to investigate this dichotomy between perception and reality.Design/methodology/approachA Wolfsberg-style questionnaire was sent to partners in Iranian accounting firms, which have audited domestic banks over the past five years to investigate the adequacy of risk management systems.FindingsMost Iranian banks have anti-money laundering (AML) systems, which compare favourably with those of international counterparties. Banks take a risk-based approach to potential criminal behaviour. The negative perception of Iranian banks is principally attributable to the government’s unwillingness to accede to “touchstone” international conventions. In spite of having in place AML laws, which are comparable in intent with those of the UK and the United States of America (USA), weak enforcement remains a significant impediment of which the political establishment is aware.Practical implicationsMeasures required to bring Iranian banks into compliance with international standards may be less extensive than perceptions suggest. However, failure of the government to accede to conventions stipulated by the FATF means that banks may remain ostracised by foreign counterparties for the foreseeable future.Originality/valueThis study provides a unique insight into the extent of AML compliance in Iranian banks as verified by external auditors.

Is there a commendable regime for combatting money laundering in international business transactions?

Purpose Money laundering and grand business corruption continue to plague the global economy, accounting for 2%-5% of the global gross domestic product. Illicit funds, produced through grand corruption, are laundered using complex layering schemes that cloak them in legitimacy by concealing their origins. Lamentably, weak anti-money laundering (AML) frameworks promote economic instability, unjust commercial advantages and organized crimes. This study aims to highlight the need for comprehensive anti-corruption and AML frameworks by critiquing the exploitable gaps in the global AML regime created by heterogeneous state-level AML regimes to date. Design/methodology/approach This study welcomes the United Nations Convention against Corruption (UNCAC) and the financial action task force (FATF) recommendations but underscores the limitations of their effectiveness by investigating state-level enforcement mechanisms to determine these instruments’ true impact or lack thereof. The mutual evaluation reports (MERs) and state-level AML regimes in the UK, the USA and Canada are analyzed to illustrate the distinct implementation of international soft law in domestic legislation. Findings This study finds that UNCAC and the FATF recommendations are pivotal steps towards the establishment of a global AML regime for international business, albeit, one that remains imperfect because of the inconsistency of state-level AML frameworks. Consequently, international cooperation is needed to navigate and improve the discrepancies in varied AML legislation. Originality/value The author provides an in-depth and balanced analysis of current state-level AML developments and relies upon the recent 2016-2018 MERs to indicate the successes and flaws of various AML legislation. Therefore, this critique may guide stakeholders to construct robust AML frameworks and contributes to academic research in AML.

India and Pakistan at the Financial Action Task Force: finding the middle ground between two competing perspectives

ABSTRACT Ever since the grey-listing of Pakistan by the Financial Action Task Force (FATF) in early 2018, India and Pakistan have been vying for competing goals. According to Indian perspective, Pakistan is still engaged in cross-border terrorist activities in Indian territories. Therefore, Pakistan must be downgraded to black-list. On the other hand, Pakistan insists it has taken ample measures to comply with FATF demands. According to Islamabad, not only has Pakistan started taking actions against domestic militant units, it has been playing vital role in facilitating ‘peace talks’ to end the Afghan war. In contrast, this article argues both of these narratives verge on extremes in their own respects. India’s recent claims about cross-border terrorism are profoundly diluted by domestic resistance it has been facing in Indian-administered Kashmir of late. Moreover, a black-listed Pakistan could pose an even bigger challenge. Similarly, this article argues that getting Pakistan off the grey list would be too early at the present time. The country still needs to implement half of its ‘action plan’ as identified by the FATF. A more realistic option, therefore, would be to take the middle ground and proceed with current FATF supervision of Pakistan’s performance for a further period.

How effective are the current global standards in combating money laundering and terrorist financing?

PurposeThe purpose of this paper is to study the impact of global anti-money laundering and countering the financing of terrorism (AML/CFT) standards on combating money laundering and terrorist financing (ML/TF) efforts. This study will assess the impact of AML/CFT legal framework as well as the effective implementation of the framework on combating crimes.Design/methodology/approachThe author develops an AML/CFT effectiveness index using the results of 11 immediate outcomes in mutual evaluation reports to measure the overall effectiveness of regimes in combating ML/TF. In addition to this index, the AML/CFT compliance index is used to measure the strength of the AML/CFT legal framework of countries. A model was developed and tested to measure the impact of the AML/CFT legal framework and its effective implementation on corruption, bribery, terrorism and crimes.FindingsThe results suggest that the effective implementation of the AML/CFT legal framework is important to combat ML/TF. The existence of a sound AML/CFT legal framework alone will not be sufficient to combat ML/TF. Therefore, countries are required to implement their legal framework effectively to achieve the AML/CFT goals of the country as well as the global policymaker. The empirical results show a significant relationship between the AML/CFT effectiveness index with the proxies the author used to capture corruption, bribes and crimes. Considering the wide range of implications of the crimes, which are related to ML/TF, this study suggests the global policymakers to further strengthen the monitoring mechanism of AML/CFT deficient countries to protect the global financial systems from criminals.Practical implicationsThere is a dearth of studies on the impact of the effectiveness of the AML/CFT regime on combating ML/TF. Therefore, this study will lay the foundation for future studies on measuring the effectiveness of an AML/CFT regime. More appropriate measures will be developed in the future based on this foundation.Originality/valueThis paper is an original work done by the author, which discusses the impact of Financial Action Task Force standards on combating ML/TF. The AML/CFT effectiveness index is the original idea of the author, which can be used as a quantitative measure to capture the effectiveness of the AML/CFT regimes in future studies.

International regulation of virtual assets under FATF’s new standards

PurposeTo critically examine two significant developments for the regulation and supervision of virtual assets and virtual assets services providers: the amendment of the Financial Action Task Force (FATF) Recommendation No 15 in October 2018 and the adoption of an Interpretative Note in June 2019. We argue that new FATF standards constitute an appropriate response to money laundering and terrorist financing risks associated with virtual assets, but that they must be followed by firm, consistent and effective implementation at the national level.Design/methodology/approachThis paper draws on reports, legislation, legal scholarship and other open source data in order to examine the new FATF standards on virtual assets.FindingsThe amendment of the FATF Recommendation No 15 in October 2018 and the adoption of an Interpretative Note in June 2019 have been necessary and opportune to forge a global approach to mitigate money laundering risks associated with crypto-assets. The new FATF standards on crypto-asset activities need to be implemented firmly, effectively and consistency to reduce the risk of jurisdiction-shopping by money launderers and terrorism financiers.Originality/valueThis is one of the first studies examining two important and recent FATF initiatives, the amendment of the FATF Recommendation No 15 in October 2018 and the adoption of an Interpretative Note in June 2019.

PAKISTAN IN THE FATF GREY-LIST: CHALLENGES, REMEDIES AND INTERNATIONAL RESPONSE

The Financial Action Task Force (FATF) grey-listed Pakistan due to the latter’s non-compliance to the United Nations Security Council Resolution (UNSCR)-1267. The FATF also demands Pakistan to put strict controls on money laundering and financial lifelines of terrorist organizations in Pakistan. The plan of action was reached between Pakistan and FATF to ensure sufficient action to enforce anti-money laundering policies and freeze assets of designated terrorist groups in Pakistan under UNSCR-1267 and UNSCR-1373. The NACTA in collaboration with FBR, State Bank of Pakistan, FIA, and the Securities and Exchange Commission of Pakistan has mounted operations against illegal movement of money within Pakistan. It also has choked financial lifelines of terrorist organizations and curbed Hawala/Hundi methods of laundering money. Pakistan is struggling to stick to the 26-point action plan to address the necessary concerns of FATF. This paper put forth the ramifications for being blacklisted by FATF and also highlights the Trump administration’s tough stance towards Pakistan. This paper also offers concrete recommendations to exclude Pakistan’s name from the FATF grey-list. Bibliography Entry Amin, Musarat, Muhammad Khan , and Rizwan Naseer. 2020. "Pakistan in the FATF Grey-List: Challenges, Remedies and International Response." Margalla Papers 24 (1): 31-43.

Updates on Hong Kong’s anti-money laundering laws 2020

Purpose The purpose of this paper is to discuss the latest developments of anti-money laundering (AML) laws in terms of case law and to give meaningful response in relation to certain key findings (KFs) and recommendations by the financial action task force contained in its mutual evaluation report dated September 2019. Design/methodology/approach In terms of AML case law, the authors analyse the latest judgment from the Hong Kong (HK) court of final appeal. In terms of the evaluation report, the authors outline salient points from the KFs and recommendation, commenting on their likelihood of success. Findings With the developments in AML case law and the KFs identified, HK is expected to maintain its high standard in AML/counter financing of terrorism (CFT) compliance. Originality/value A robust AML/CFT regime is the bedrock of HK’s reputable status as an international financial centre. This study seeks to illicit meaningful interactions amongst all stakeholders.

Role of FATF in spearheading AML and CFT

Purpose This study aims to define the role of the Financial Action Task Force (FATF) and its Style Regional Bodies (FSRBs) that combat money laundering (ML) and terrorist financing (TF) by measuring how well some Arab countries have complied with FATF’s “Forty Recommendations” with respect to the regulatory framework. Design/methodology/approach This study combines the comparative analysis methodology with a descriptive analytical approach to compare three member countries of the Middle East and North Africa Financial Action Task Force (MENAFATF). It uses secondary data sources, namely, theoretical literature on the subject and FATF reports on mutual evaluation reports (MERs). Findings This study examined the variations in compliance with FATF standards among three member countries of MENAFATF: Bahrain, Morocco and Jordan. While Bahrain has almost completely fulfilled these standards, Morocco and Jordan have only partially fulfilled them. These variations in compliance are mainly attributed to the uneven level of readiness in the countries’ commitment to the legislative and regulatory requirements before the process of mutual evaluation. Originality/value Researchers can find several studies on the role of FATF and FSRBs in combating ML and TF. However, no studies have focussed on the application levels of FATF standards, which are relevant to the regulatory frameworks of member countries. This study makes a unique and vital contribution, as it demonstrates the effectiveness of applying the FATF standards.