Information sought for new project on mitigating the unintended consequences of the FATF standards

The Financial Action Task Force (FATF) is asking for input to inform a newly launched project to study and mitigate the unintended consequences – including de-risking, financial exclusion, suppression of non-profit organisations (NPOs) and threats to human rights – resulting from the incorrect implementation of the FATF Standards.

The Mitigating the Unintended Consequences of the FATF Standards project aims to initially draw on the knowledge and experiences of members of the FATF’s global network of 205 jurisdictions, its observers as well as outside stakeholders, before seeking wider perspectives from industry, civil society, academic research and documented instances of unintended consequences.

Possible solutions to prevent or mitigate unintended consequences will then be developed.

Four focus areas

The project will focus on four main areas, including de-risking, or the loss or limitation of access to financial services. This practice has affected NPOs, money value transfer service providers, and correspondent banking relationships, in particular according to the FATF.

It also wants to focus on financial exclusion that bars individuals from the formal financial system and denies access to basic financial services. Another focus is the suppression of NPOs through the non-implementation of the FATF’s risk-based approach;

 The task force is also concerned about threats to fundamental human rights stemming from the misuse of the FATF standards or anti-money laundering and counter financing of terrorism assessment processes to enact, justify, or implement laws, which may violate rights such as due process or the right to a fair trial.

Two phases

Phase one of the project involves research and engagement, with the project team analysing unintended consequences resulting from the misuse of the FATF’s standards on preventing and combating money laundering and the financing of terrorism.

In phase two, possible solutions will be developed that the FATF could consider to prevent and mitigate these unintended consequences.

Call for information

The FATF says it welcomes input to inform this project and while contributions are welcome for its duration, they would be most relevant for phase one if submitted on or before 20 April 2021.

The task force says the project is not an investigative endeavour, but an opportunity to study trends and propose solutions.

More information on FATF’s project, Mitigating the Unintended Consequences of the FATF Standards, can be found here.



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