Mitigating Unintended Consequences

The FATF took the initiative in 2021 to launch a major review of the unintended consequences of measures to combat money laundering and terrorist financing, to investigate whether AML/CFT measures are responsible for derisking, financial exclusion, and the suppression of NPOs and Human Rights. 

Following this review the FATF has an ambitious and comprehensive ongoing work programme on these issues. In 2023, revisions were made to Recommendation 8 on NPOs, and guidance updated on good and bad practises. This aims to make sure measures to safeguard the NPO sector against money laundering and terrorist financing are targeted and proportionate, and that governments do not suppress civil society through over-application of the FATF standards. Work is underway to help countries better understand the implications of these changes. This is part of a broad, proactive programme of outreach, monitoring, and coordination with other bodies in the international framework, including those who have a mandate to promote human rights. This includes the UN Special Rapporteurs, UNCTED, UNODC, financial inclusion and NPO stakeholders amongst others.

The FATF also has ongoing work to revise Recommendation 1 to better enable financial inclusion among FATF members. Boosting financial inclusion is a priority under the Mexican Presidency of the FATF. By improving the risk-based approach and supervision, this will enable simplified due diligence in cases where it is needed.  The FATF has also programmed further work this year aimed at preventing overreach and abuse of the FATF standards.

Further work on procedures for handling unintended consequences and abuse of the FATF Standards is ongoing and was highlighted in the 2024 FATF Ministerial Declaration. This will allow the FATF to more effectively respond to the misapplication of the FATF Standards related to the undue targeting of NPOs, as they arise.

The FATF has also created channels for NPOs to provide their input to mutual evaluations, and mutual evaluation teams meet with civil society stakeholders.