The Fight Against Money Laundering and Terrorism Financing
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- The Fight Against Money Laundering and Terrorism Financing
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Bibliographic details
- Published: February 7, 2023
Rationale for IMF concern
- The IMF is concerned about the consequences of money laundering, terrorism financing, and proliferation financing (providing funds or financial services for nuclear, chemical, or biological weapons), as well as related crimes that undermine the financial sector and the broader economy.
- Such crimes can make countries less stable, which in turn can weaken law and order, governance, regulatory effectiveness, foreign investments, and international capital flows.
- Money laundering and terrorism financing activity in one country can have serious adverse effects across borders and even globally.
- Countries with weak or ineffective controls are especially attractive for money launderers and financiers of terrorism.
- Criminals exploit the complexity of the global financial system, differences between national laws, and the speed at which money can cross borders to conceal criminal activities.
- The IMF last updated this factsheet in February 2023.
IMF role, activities, and institutional history
- The IMF has decades of experience in anti-money laundering (AML), combating the financing of terrorism (CFT), and counter-proliferation financing.
- The IMF expanded its AML efforts in 2000 and extended them to CFT after the terrorist attacks on September 11, 2001.
- In 2004, the IMF Executive Board agreed to make AML/CFT assessments and capacity development a regular part of IMF work.
- In 2018, as part of its five-year review cycle of policy, the IMF Executive Board reviewed the IMF’s AML/CFT strategy and gave strategic directions for the work ahead.
- The IMF’s bilateral surveillance program evaluates countries’ compliance with the international AML/CFT standards and helps them develop programs to address shortcomings.
- AML/CFT is considered through other IMF work, including:
- the Financial Sector Assessment Program (FSAP),
- incorporation into the Fund’s lending programs in certain cases,
- carrying out AML/CFT assessments and capacity development activities with members.
- The IMF analyzes the impact of developments such as virtual currencies, financial technology (fintech), Islamic finance, costs of and mitigating strategies for corruption, illicit financial flows, and the withdrawal of correspondent banking relationships from a financial integrity perspective.
- In 2009, the IMF launched AMLFT, a donor-supported trust fund—the first in a series of topical trust funds, now referred to as thematic funds, to finance capacity development in AML/CFT.
- The IMF has produced explanatory material, including a video that explains the IMF’s work on AML and CFT.
International coordination and standards
- The Financial Action Task Force on Money Laundering (FATF), an intergovernmental body, has primary responsibility for developing worldwide standards for AML/CFT.
- The FATF works closely with other organizations, including the IMF, the World Bank, the United Nations, and FATF-style regional bodies (FSRBs).
- To help national governments set up effective AML/CFT regimes, the FATF issued recommendations covering:
- the criminal justice system,
- the financial sector,
- certain non-financial businesses and professions,
- transparency,
- mechanisms of international cooperation.
- Together with the FSRBs, the IMF and World Bank, the FATF monitors countries’ compliance with these recommendations.
References