## 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 modus operandi of money laundering and terrorist financing

## (2) The FATF Recommendations

a) The 40 Recommendations

In 1990, FATF laid out standards in "the 40 Recommendations", to be applied by jurisdiction in the field of law enforcement, criminal justice, and financial regulations. In 1996, FATF revised the Recommendations and, for instance, made the Suspicious Transaction Report obligatory, and required predicate offences to include serious crimes as a whole. With cooperation from private sectors, FATF started a re-evaluation process of the Recommendations in 2001 to improve AML/CFT measures against the increasing sophistication and complexity of money laundering. The re-revision was finalized and publicized in June 2003.

The new "40 Recommendations" contained following additional elements.

○ Clear definition and expansion of scope of money laundering offense

○ Risk sensitive customer due diligence through customer identification

☐ Countermeasures against the misuse of corporation

○ Application of preventive measures to specified 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, there have been lively discussions for further review of “40 Recommendations” in the FATF meetings including those of new expert groups established for the review.

## b) The 9 Special Recommendations on Terrorist Financing

In October 2001, a month after the September 11th US terrorist attacks, FATF held an Emergency Session to discuss countermeasures against terrorism. The agreement of the session was reflected on "8 Special Recommendations" and made public. Since FATF added a new recommendation on "cash couriers" to this in October 2004, it is now called "9 Special Recommendations on Terrorist Financing." Main components of the 9 Special Recommendations are as follows:

☐ Criminalization of terrorist financing

○ Requiring suspicious transaction reporting related to terrorist financing

○ Requiring financial institutions to store and make available to authorities accurate and meaningful originator information (name, address and account number) of wire transfers

## (3) Mutual Evaluations

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