Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) is a joint global initiative that aims to fight terrorism and money laundering, which involves a set of decrees for businesses and organizations to comply in order to prevent serious economic consequences and violence against civilians globally. The AML/CFT initiative is supported by a large number of countries, as well as government organizations and agencies, including the UN, EU, FATF, IMF, etc.

Money laundering is the process of transferring criminally-acquired money, such as those taken from fraudulent transactions, corruption, or bribery. The purpose of making such transfers is to cover up where the money came from and make the acquisition look legitimate. Terrorism financing is the process of funding terrorist networks and organizations. Today, efforts to combat terrorism financing are led by government financial intelligence units (FIU), which are specialized government agencies that share information with each other.

AML/CFT efforts are spearheaded by two major regulatory organizations:

  1. The Financial Action Task Force (FATF) is the de-facto global AML/CFT regulator mandated by the G20 and issues their 40+9 Recommendations, non-binding regulations which their 200+ associated country members must comply with in order to avoid blacklisting.
  2. The Financial Crimes Enforcement Network (FinCEN) is the United States’ primary AML/CFT regulator, mandated by the U.S. Treasury and its Banking Secrecy Act (BSA) of 1970.

Other notable regulators and groups include The Egmont Group of global financial intelligence units (FIUs), the Monetary Authority of Singapore (MAS), the UK’s Financial Conduct Authority (FCA), Japan’s Financial Services Agency (FSA) and South Africa’s Financial Services Conduct Authority (FSCA). The EU Council issues frequent anti-money laundering directives that EU members must transpose into local law, the most recent being AMLD5 and AMLD6.