The FATF’s evaluative skills

Under the heading of country risk factors it includes “countries identified by credible sources, such as mutual evaluation...reports”.  Such reports come from the FATF's own investigative teams which visit countries periodically but which are not, in fact, credible at all. As the head of one of the FATF-style regional bodies recently pointed out privately at a conference, the evaluators of a well-known offshore centre “only saw what they were allowed to see”. A senior police officer from that same jurisdiction called the evaluation report “a bit of a whitewash”.

A troubled standard-setter

This disconcerting tendency to insist upon countries and their banks taking FATF pronouncements about countries' law enforcers at face value has been increasing for many years and has become a weighty issue ever since the FATF resurrected its old, disastrously discredited and previously abandoned blacklist of “non-compliant countries” in 2012. At the top of the list, for reasons involving US government pressure, are Iran and North Korea, the two remaining “axis of evil” states. As another FATF delegate once said at a conference, “nothing gets done at the FATF unless it is supported by the Franco-Germans or the Americans”.  For years the international body has been torn between falling into line as an US tool against “rogue states” and the Franco-German objective of tackling conventional career-criminals with money to wash for a wealthy retirement.

The rest of the report consists largely of reminders of the FATF terrorist financing rules, especially recommendation 16 which exhorts countries to outlaw (or apply extra due diligence to) business with any country that the FATF singles out. It enjoins all countries to enforce United Nations sanctions against Al Qaeda, but otherwise the document is vague and often impenetrable.