## 2 Activities of FATF

## (1) Main Activities of FATF

1. Formulation and review of international standards in the "FATF Recommendations" concerning AML/CFT measures

2. Monitoring the status of compliance with the FATF Recommendations in FATF member jurisdictions (Mutual Evaluations)

3. Promotion of compliance with the FATF Recommendations to non-member jurisdictions

4. Study on trends and modi operandi of money laundering and terrorist financing

## (2) The FATF Recommendations

a) FATF 40 Recommendations

In 1990, FATF laid out standards in "the 40 Recommendations", to be applied by each jurisdiction in the field of law enforcement, criminal justice, and financial regulations. In 1996, FATF revised the Recommendations to make the Suspicious Transaction Report obligatory, and for other matters. With cooperation from private sectors, FATF started a re-evaluation process of the Recommendations in 2001 to improve AML/ CFT measures against the worldwide increasing sophistication and complexity of money laundering. The Recommendations was revised again and was publicized in June 2003.

The new "40 Recommendations" contained following additional elements.

○ Clear definition and expansion of scope of money laundering offense

O Undertaking customer due diligence including customer identification

○ Measures to prevent unlawful use of legal persons in relation to ML

○ Application of preventive measures to designated non-financial businesses (real estate agents, dealers in precious metals and stones) and professions (lawyers, accountants and other professionals)

○ National and international cooperation among FIUs, supervisory authorities, law enforcement authorities and other governmental organizations handling issues related to money laundering. In 2009, as a part of preparation for the 4th round of Mutual Evaluations, an expert meeting groups were established, and since then there have been lively discussions on the further review of the "FATF 40 Recommendations."

## b) FATF 9 Special Recommendations

In October 2001, a month after the September 11th US terrorist attacks, FATF held an Emergency Session to discuss countermeasures against terrorist financing. The agreement of the session was reflected in "the Special Recommendations" and was made public. Since FATF added a new recommendation on "cash couriers" to this in October 2004, it is now called "the 9 Special Recommendations on Terrorist Financing." Main components of the 9 Special Recommendations are as follows:

☐ Criminalization of the financing of terrorism

☐ Requiring suspicious transaction reporting related to terrorism

○ Requiring financial institutions to include accurate and meaningful originator information (name, address and account number) on fund transfers, etc.

## (3) Mutual Evaluations

FATF employs a peer review approach to encourage its members to implement the Recommendations. Member jurisdictions are evaluated by other members from various viewpoints such as law, regulation or control regime for anti-money laundering and terrorist financing, and arrest for money laundering crime. Mutual Evaluations of Japan were conducted three times in the past, in 1994, 1998, and 2008 (as for the Third Mutual Evaluation of Japan, See section 4).