Financial Action Task Force on Money Laundering (FATF)

Background: What is money-laundering?

The aim of most criminal activity is to generate a profit.  Money laundering is the processing of the profits of crime to disguise their illegal origin.  This allows criminals to enjoy their ill-gotten gains without revealing the source of the money, or to re-invest their profits in more criminal activity.

Measures that hinder money laundering can help prevent organised crime by making the profits of such crime more difficult to use.  Additionally, it is often the connections made through financial transaction records that allow criminals and their activities to be detected.

The FATF

The FATF was established in 1989 in response to growing international concerns about money laundering.  The FATF is an inter-governmental organisation that has 33 member countries and organisations, including Australia.  The purpose of the FATF is to develop and promote national and international policies to combat money-laundering.  In 2001, the FATF increased its mandate to include the development of standards to help prevent terrorist financing.

The FATF has developed a set of Forty Recommendations, which were last updated in 2003.  The recommendations set out an anti-money laundering framework which includes domestic and international measures.  Additionally, the FATF has issued the Eight Special Recommendations on Terrorist Financing, which aim to deny terrorists and their supporters access to the international financial system.  In combination, the Forty Recommendations and the Eight Special Recommendations provide a comprehensive and consistent framework of measures for combating money laundering and terrorist financing.  The FATF encourages all countries to implement them.

The FATF is also involved in identifying emerging trends in money laundering.  As well as this, it examines and identifies countries that represent weak spots in the global effort to prevent money laundering and terrorist financing, and facilitates action to assist those countries to address identified deficiencies.

The Attorney-General's Department represents Australia at the FATF, which meets at least three times each year.  Australia is also a member of the Asia/Pacific Group on Money Laundering (APG), an autonomous body that encourages and assists member jurisdictions in the implementation of the FATF recommendations in the Asia/Pacific region.

Australia's Anti-Money Laundering Reforms

Australia is currently reforming its anti-money laundering and counter-terrorist regime to ensure it complies with the FATF recommendations and is in line with international best practice.  The reforms involve the drafting of new legislation and the introduction or expansion of regulatory obligations for a number of industries.  An extensive industry and public consultation process is being undertaken as part of the reforms.  For more information, please refer to www.ag.gov.au/aml.