The Financial Action Task Force (FATF) has initiated a public consultation process regarding proposed revisions to its Recommendations, specifically aimed at promoting financial inclusion while maintaining effective anti-money laundering and counter-terrorist financing (AML/CFT) measures. These changes are part of FATF’s broader effort to address unintended consequences of existing AML/CFT regulations.
The primary modifications focus on Recommendation 1 and its Interpretive Note, with corresponding adjustments to Recommendations 10 and 15, along with related Glossary definitions. A key proposed change is the replacement of the term “commensurate” with “proportionate” in Recommendation 1, aiming to provide clearer guidance on implementing risk-based approaches. The FATF defines “proportionate” as measures or actions that appropriately correspond to identified risk levels while effectively mitigating those risks.
Another significant proposal involves requiring supervisors to review and consider risk mitigation measures implemented by financial institutions and DNFBPs, addressing concerns about overcompliance due to incomplete risk understanding. The FATF seeks to strengthen the implementation of simplified measures in lower-risk situations by changing the language from permissive (“may decide to allow”) to prescriptive (“should allow and encourage”), thereby promoting a more enabling environment for such measures.
The proposals also address technological advancement in digital identity systems by qualifying the classification of non-face-to-face interactions as higher-risk situations. The new language acknowledges that with appropriate risk mitigation measures, such interactions – which have become standard practice in many countries – may not necessarily pose elevated risks.
Stakeholders are invited to submit their feedback to FATF.Publicconsultation@fatf-gafi.org by December 6, 2024 (18:00 CET). Submissions should include the organization’s name, nature of activity, and contact details. The subject line should follow the format “Comments of [author] on the proposed revisions to R.1/INR.1/INR.10/INR.15.” All submissions will be shared with FATF delegations, and the task force will consider this feedback before finalizing the revisions. The FATF emphasizes that these proposed changes have not yet been approved and that contact information will be used solely for consultation purposes and related engagement.
You may insert any specific drafting proposals directly in this draft text in tracked changes.
