At the ACAMS Effectiveness webinar held on 16th July, 2025, this topic was discussed from different perspectives in the fight against financial crime including money laundering. Whilst we have explored much in terms of effectiveness, we still don’t have a clear consistent & common purpose for those involved. We are talking about hundreds of thousands of people & maybe more.
Stakeholder effectiveness has been developed, for example by the Wolfsberg Group for Financial Institutions and by the Global Coalition to Fight Financial Crime for Supervisors. FATF has an overall objective supported by 3 intermediate objectives and 11 effectiveness criteria known as immediate outcomes.
The FATF 11 IO criteria are decent but actual results are underwhelming for most countries which reflects the reality that incredible efforts are not being converted into what matters, with a few exceptions for a few countries in a few IO cases.
In 1990, the FATF reported the cost of laundering had been increased from 2-4% to 6-8% as a result of FATF actions. In 1991, the FATF reiterated its purpose targeting the reduction of “harm” from crime [drug trafficking] by taking away their “profits” which would “reduce” crime rates & the “costs” of crime. To do this a multi stakeholder approach was required & the private sector including banks were co opted due to their importance as conduits of illicit funds & as they were then considered as ambivalent at best & adversaries at worst. In 1991, the FATF stated that “Success will provide a decisive contribution to the fight against criminal activities & above all against drug trafficking & will improve the soundness of the international financial system”. This meant reducing profits to reduce harms & prevalence & costs. It also meant the financial system would need to change & step up & help.
In 2024, the cost of money laundering in the USA [according to disclosures related to the TD Bank USA case] was just 2%. In some other cases, for example in the case of so called professional Chinese money laundering costs can even be close to zero. Any reasonable FATF founder would have expected the 6-8% cost level in 1991 to be much higher by 2024.
In 2025, FATF’s main purpose [as it has been since 2013] is that “Financial systems and the broader economy are protected from the threats of money laundering and then financing of terrorism and proliferation thereby strengthening financial sector integrity and contributing to safety and security”. FATF has 3 intermediate objectives which target i) mitigating ML & TF risks, ii) that proceeds of crime & TF are prevented from entering the system (finance and other sectors) & that these are otherwise detected and reported, and iii) ML and TF threats are detected and disrupted.
First of all I would estimate most financial crime fighters (including many leaders and senior FCF’s) are not familiar with FATFs overriding objective, the 3 intermediate objectives and all of the 11 immediate outcomes. Their work is disconnected from these objectives. I believe they are in need of revision and should revert back to reflect those the founders would have recognised, updated to move beyond drug trafficking.
Financial Crime Fighters, in particular in the private sectors are much more influenced by the actions of supervisors. Too many supervisors, take FATF at their word, that “Financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism and proliferation thereby strengthening financial sector integrity”. The truth is that the traditional financial system, with exceptions, whilst not perfect or fully compliant, has changed, has stepped up and is helping, at least in many countries that take these things seriously. Take for example the proliferation of PPPs. In these cases, the integrity of the traditional financial system is not a risk that should dominate the FATF or the Countries objectives. Of course where little PPP progress has been made and or the new non traditional sectors are still on the same journey as those FIs decades ago, supervisors should be increasingly active and uncompromising.
The fact that many supervisors remain focussed on the integrity of the financial system, rather than the reduction in harms, proceeds, prevalence and costs from serious financial crimes, is the reason that the risk that is managed is largely regulatory risk and not actual ML/TF/PF risk. Supervisors can be forgiven for genuinely believing this is the role they should perform but it’s much more nuanced than that. It’s one of their roles with ideally the more important one being whether they and those they supervise are effective in fighting financial crime.
FATF can help solve this by revising their published purpose & articulating the “what’s the point”. Having discussed this with many at FATF & other important leading voices over a number of years, many genuinely agree the purpose is ultimately about reducing the harms from serious financial crimes, but they don’t want to go through a major exercise & revisit what would no doubt be a complex process & instead use their communication platforms to include these aims. I understand & respect this position but I can’t help thinking it’s not enough & that leadership is ultimately about creating a shared vision, a mission, a strategy & set of actions that can make THE difference. Here is my alternative:
Purpose: “reducing the harms from serious financial crimes, (by taking away proceeds of crime, reducing prevalence & reducing costs)
Key Measurements: “increased levels of OC disruption, increasing professional ML convictions, increased asset confiscations and the cost of ML/TF/PF rising. These should be achieved without negatively affecting financial inclusion or other human rights including those such as data privacy & due process. This will require adequate & effective supervision of vulnerable sectors which enable, facilitate & or contribute to financial crime including ML/TF/PF & will require political commitment, adequate funding, and international co operation to achieve these goals”.
