The financial system easily transcends national borders and so does dirty money. If one does not want to cut off ones country from the international financial system it is imperative to obtain cooperation from other countries to successfully fight money laundering. Therefore beginning in the late 1980s various organizations started spreading the gospel of the virtues of anti-money laundering the unknowing and/or unwilling.
The first of these were the
United Nations who, in their
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 (Vienna Convention) dealt mostly with the international drug problem at large. But the Convention also included clauses that obliged the parties to outlaw drug money-laundering (though the term itself was not employed) and that stated that banking secrecy may not provide an excuse to deny legal cooperation.
In the following year the G7 convened a
Financial Action Task Force on Money Laundering (FATF) to asses the state of anti-money laundering at that time and to work on a set of recommendations. In 1990, the FATF published its first
Annual Report and a collection of
Forty Recommendations. The
member states - whose number has been constantly expanding since the inauguration of the FATF - decided to continue their cooperation and extended the task force's mandate. The FATF is still active today and is accepted to be the most important international forum dealing with anti-money laundering. The Forty Recommendations have been revised twice so far (in 1996 and in 2003) to adapt to changing circumstances.
The FATF however does not possess any legal powers to enforce its recommendations, it relies on cooperation of the member states. But what about the cooperation of non-members? Since 2000 the FATF publishes annual
Reports on Non-Cooperative Countries and Territories which aim at identifying certain states and territories as being non-cooperative in the fight against money laundering. The pressure exerted by this controversial 'name and shame' initiative so far resulted in more and more of the exposed countries to institute stricter money laundering regulations and laws.
In the aftermath of the terrorist attacks of September 11th, 2001 the FATF assumed responsibility for countering the financing of terror (CFT) as well and to this end formulated Eight Special Recommendations. In October, 2004, an additional Special Recommendation was adopted by the FATF Plenary Meeting. The
Nine Special Recommendations on Terrorist Financing have also been endorsed by the IMF which applies this set of "40+9" Recommendations to conduct regular AML/CFT assessments within the framework of its Financial Sector Assessment Program (FSAP).
Particularly important for the European countries in this context is the
European Union. The EU ensures implementation of the FATF 40+9 Recommendations with regard to financial sector regulation in its member states. To this end, the EU so far adopted three Directives on Anti-Money Laundering - in 1991 (
91/308/EEC), in 2001 (
2001/97/EC), and in 2005 (
2005/60/EC). The Third Directive on the Prevention of the Use of the Financial System for the Purposes of Money Laundering or Terrorist Financing (2005) replaces the 1991 Directive.
