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FATF Recommendations with Interpretive Notes

Recommendation 8 and its interpretive note describe the ways in which countries should counter the financing of terrorism in the nonprofit sector. It should be read in conjunction with Recommendation 1 and its interpretive note, which explains FATF’s risk-based approach to countering money laundering and terrorist financing.

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INTERNATIONAL STANDARDS
ON COMBATING MONEY LAUNDERING
AND THE FINANCING OF
TERRORISM & PROLIFERATION
The FATF Recommendations
Updated June 2019

FINANCIAL ACTION TAS K FORCE

The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and
promotes policies to protect the global financial system against money laundering, terrorist financing
and the financing of proliferation of weapons of mass destruction . The FATF Recommendations are
recognised as the global anti -money laundering (AML) and counter- terrorist financing (CFT) standard.
For more information about the FATF, please visit the website:
www.fatf -gafi.org
This document and/or any map included herein are without prejudice to the status of or sovereignty
over any territory, to the delimitatio n of international frontiers and boundaries and t o the name of any
territory, city or area.
Citing reference:
FATF (2012 -201 9), International Standards on Combating Money Laundering and the Financing of
Terrorism & Proliferation, FATF, Paris, France,
www.fatf -gafi.org/recommendations.html
© 2012-201 9 FATF/OECD. All rights reserved.
No reproduction or translation of this publication may be made without prior written permission.
A pplications for such permission, for all or part of this publication, should be made to
the FATF Secretariat, 2 rue André Pascal 75775 Paris Cedex 16, France
(fax: +33 1 44 30 61 37 or e -mail: contact@fatf -gaf i.org
).

INTERNATIONAL STANDARDS
ON COMBATING MONEY LAUNDERING AND THE FINANCING
OF TERRORISM & PROLIFERATION

THE FATF RECOMMENDATIONS

ADOPTED BY THE FATF PLENARY IN FEBRUARY 2012

Updated June 201 9

THE FATF RECOMMENDATIONS
INTERNATIONAL STANDARDS ON COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM & PROLIFERATION

 2012- 2019 3

CONTENTS

List of the FATF Recommendations 4

Introduction 6

FATF Recommendations 9

Interpretive Notes 29
Note on the legal basis of requirements
on financial institutions and DNFBPs 108

Glossary 110

Table of Acronyms 125

Annex I: FATF Guidance Documents 126

Annex II: Information on updates made
to the FATF Recommendations 127

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4  2012- 2019
THE FATF RECOMMENDATIONS
Number Old Number 1
A ? AML/CFT POLICIES AND COORDINATION
1 – Assessing risks & applying a risk -based approach *
2 R.31 National cooperation and coordination
B ? MONEY LAUNDERING AND CONFISCATION
3 R.1 & R.2 Money laundering offence *
4 R.3 Confiscation and provisional measures *
C ? TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5 SRII Terrorist financing offence *
6 SRIII Targeted financial sanctions related to terrorism & terrorist financing *
7 Targeted financial sanctions related to proliferation *
8 SRVIII Non -profit organisations *
D ? PREVENTIVE MEASURES
9 R.4 Financial institution secrecy laws
Customer due diligence and record keeping
10 R.5 Customer due diligence *
11 R.10 Record keeping
Additional measures for specific customers and activities
12 R.6 Politically exposed persons *
13 R.7 Correspondent banking *
14 SRVI Money or value transfer services *
15 R.8 New technologies
16 SRVII Wire transfers *
Reliance, Controls and Financial Groups
17 R.9 Reliance on third parties *
18 R.15 & R.22 Internal controls and foreign branches and subsidiaries *
19 R.21 Higher -risk countries *
Reporting of suspicious transactions
20 R.13 & SRIV Reporting of suspicious transactions *
21 R.14 Tipping -off and confidentiality
Designated non -financial Businesses and Professions (DNFBPs)
22 R.12 DNFBPs: Customer due diligence *
23 R.16 DNFBPs: Other measures *

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E – TRANSPARENCY AND BENEFICIAL OWNERSHIP
OF LEGAL PERSONS AND ARRANGEMENTS
24 R.33 Transparency and beneficial ownership of legal persons *
25 R.34 Transparency and beneficial ownership of legal arrangements *
F – POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES
AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision
26 R.23 Regulation and supervision of financial institutions *
27 R.29 Powers of supervisors
28 R.24 Regulation and supervision of DNFBPs
Operational and Law Enforcement
29 R.26 Financial intelligence units *
30 R.27 Responsibilities of law enforcement and investigative authorities *
31 R.28 Powers of law enforcement and investigative authorities
32 SRIX Cash couriers *
General Requirements
33 R.32 Statistics
34 R.25 Guidance and feedback
Sanctions
35 R.17 Sanctions
G – INTERNATIONAL COOPERATION
36 R.35 & SRI International instruments
37 R.36 & SRV Mutual legal assistance
38 R.38 Mutual legal assistance: freezing and confiscation *
39 R.39 Extradition
40 R.40 Other forms of international cooperation *

1. The ‘old number’ column refers to the corresponding 2003 FATF Recommendation.
* Recommendations marked with an asterisk have interpretive notes, which should be read in
conjunction with the Recommendation.

Version as adopted on 15 February 2012.

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INTRODUCTION
The Financial Action Task Force (FATF) is an inter -governmental body established in 1989 by the
Ministers of its Member jurisdictions. The mandate of the FATF is to set standards and to promote
effective implementation of legal, regulatory and operational measures for combating money
laundering, terrorist financing and the financing of proliferation, and other related threats to the
integrity of the international financial system. In collaboration with other international
stakeholders, the FATF also works t o identify national-level vulnerabilities with the aim of
protecting the international financial system from misuse.
The FATF Recommendations set out a comprehensive and consistent framework of measures which
countries should implement in order to combat money laundering and terrorist financing, as well as
the financing of proliferation of weapons of mass destruction. Countries have diverse legal,
administrative and operational frameworks and different financial systems, and so cannot all take
identical me asures to counter these threats. The FATF Recommendations, therefore, set an
international standard, which countries should implement through measures adapted to their
particular circumstances. The FATF Recommendations set out the essential measures that c ountries
should have in place to:
 identify the risks, and develop policies and domestic coordination;
 pursue money laundering, terrorist financing and the financing of
proliferation;
 apply preventive measures for the financial sector and other designated
sectors;
 establish powers and responsibilities for the competent authorities (e.g.,
investigative, law enforcement and supervisory authorities) and other
institutional measures;
 enhance the transparency and availability of beneficial ownership
information of legal persons and arrangements; and
 facilitate international cooperation.
The original FATF Forty Recommendations were drawn up in 1990 as an initiative to combat the
misuse of financial systems by persons laundering drug money. In 1996 the Recommendations
were revised for the first time to reflect evolving money laundering trends and techniques, and to
broaden their scope well beyond drug -money laundering. In October 2001 the FATF expanded its
mandate to deal with the issue of the funding of terro rist acts and terrorist organisations, and took
the important step of creating the Eight (later expanded to Nine) Special Recommendations on
Terrorist Financing. The FATF Recommendations were revised a second time in 2003, and these,
together with the Spec ial Recommendations, have been endorsed by over 180 countries, and are
universally recognised as the international standard for anti -money laundering and countering the
financing of terrorism (AML/CFT).

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Following the conclusion of the third round of mutual evaluations of its members, the FATF has
reviewed and updated the FATF Recommendations, in close co -operation with the FATF -Style
Regional Bodies (FSRBs) and the observer organisations, including the International Monetary
Fund, the World Bank and the U nited Nations. The revisions address new and emerging threats,
clarify and strengthen many of the existing obligations, while maintaining the necessary stability
and rigour in the Recommendations.
The FATF Standards have also been revised to strengthen th e requirements for higher risk
situations, and to allow countries to take a more focused approach in areas where high risks remain
or implementation could be enhanced. Countries should first identify, assess and understand the
risks of money laundering and terrorist finance that they face, and then adopt appropriate measures
to mitigate the risk. The risk -based approach allows countries, within the framework of the FATF
requirements, to adopt a more flexible set of measures, in order to target their resourc es more
effectively and apply preventive measures that are commensurate to the nature of risks, in order to
focus their efforts in the most effective way.
Combating terrorist financing is a very significant challenge. An effective AML/CFT system, in
gener al, is important for addressing terrorist financing, and most measures previously focused on
terrorist financing are now integrated throughout the Recommendations, therefore obviating the
need for the Special Recommendations. However, there are some Recomm endations that are unique
to terrorist financing, which are set out in Section C of the FATF Recommendations. These are:
Recommendation 5 (the criminalisation of terrorist financing); Recommendation 6 (targeted
financial sanctions related to terrorism & te rrorist financing); and Recommendation 8 (measures to
prevent the misuse of non -profit organisations). The proliferation of weapons of mass destruction is
also a significant security concern, and in 2008 the FATF’s mandate was expanded to include dealing
w ith the financing of proliferation of weapons of mass destruction. To combat this threat, the FATF
has adopted a new Recommendation (Recommendation 7) aimed at ensuring consistent and
effective implementation of targeted financial sanctions when these are called for by the UN
Security Council.
The FATF Standards comprise the Recommendations themselves and their Interpretive Notes,
together with the applicable definitions in the Glossary. The measures set out in the FATF Standards
should be implemented by a ll members of the FATF and the FSRBs, and their implementation is
assessed rigorously through Mutual Evaluation processes, and through the assessment processes of
the International Monetary Fund and the World Bank – on the basis of the FATF’s common
assessment methodology. Some Interpretive Notes and definitions in the glossary include examples
which illustrate how the requirements could be applied. These examples are not mandatory
elements of the FATF Standards, and are included for guidance only. The exam ples are not intended
to be comprehensive, and although they are considered to be helpful indicators, they may not be
relevant in all circumstances.
The FATF also produces Guidance, Best Practice Papers, and other advice to assist countries with
the implem entation of the FATF standards. These other documents are not mandatory for assessing
compliance with the Standards, but countries may find it valuable to have regard to them when
considering how best to implement the FATF Standards. A list of current FATF Guidance and Best

THE FATF RECOMMENDATIONS
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8  2012- 2019
Practice Papers, which are available on the FATF website, is included as an annex to the
Recommendations.
The FATF is committed to maintaining a close and constructive dialogue with the private sector,
civil society and other intereste d parties, as important partners in ensuring the integrity of the
financial system. The revision of the Recommendations has involved extensive consultation, and
has benefited from comments and suggestions from these stakeholders. Going forward and in
acco rdance with its mandate, the FATF will continue to consider changes to the standards, as
appropriate, in light of new information regarding emerging threats and vulnerabilities to the global
financial system.
The FATF calls upon all countries to implement effective measures to bring their national systems
for combating money laundering, terrorist financing and the financing of proliferation into
compliance with the revised FATF Recommendations.

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 2012- 2019 9
THE FATF RECOMMENDATIONS
A. AML/CFT POLICIES AND COORDINATION
1. Assessing risks and applying a risk -based approach *
Countries should identify, assess, and understand the money laundering and terrorist
financing risks for the country, and should take action, including designating an authority or
mechanism to coordinate actions to assess risks, and apply resources, aimed at ensuring the
risks are mitigated effectively. Based on that assessment, countries should apply a risk -based
approach (RBA) to ensure that measures to prevent or mitigate money laundering and
terrorist financing are commensurate with the risks identified . This approach should be an
essential foundation to efficient allocation of resources across the anti -money laundering and
countering the financing of terrorism (AML/CFT) regime and the implementation of risk –
based measures throughout the FATF Recommendat ions. Where countries identify higher
risks, they should ensure that their AML/CFT regime adequately addresses such risks. Where
countries identify lower risks, they may decide to allow simplified measures for some of the
FATF Recommendations under certain conditions.
Countries should require financial institutions and designated non -financial businesses and
professions (DNFBPs) to identify, assess and take effective action to mitigate their money
laundering and terrorist financing risks.
2. National coope ration and coordination
Countries should have national AML/CFT policies, informed by the risks identified, which
should be regularly reviewed, and should designate an authority or have a coordination or
other mechanism that is responsible for such policie s.
Countries should ensure that policy -makers, the financial intelligence unit (FIU), law
enforcement authorities, supervisors and other relevant competent authorities, at the policy –
making and operational levels, have effective mechanisms in place which enable them to
cooperate, and, where appropriate, coordinate and exchange information domestically with
each other concerning the development and implementation of policies and activities to
combat money laundering, terrorist financing and the financing of proliferation of weapons of
mass destruction. This should include cooperation and coordination between relevant
authorities to ensure the compatibility of AML/CFT requirements with Data Protection and
Privacy rules and other similar provisions (e.g. data s ecurity/localisation).

THE FATF RECOMMENDATIONS
INTERNATIONAL STANDARDS ON COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM & PROLIFERATION
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B. MONEY LAUNDERING AND CONFISCATION
3. Money laundering offence *
Countries should criminalise money laundering on the basis of the Vienna Convention and the
Palermo Convention. Countries should apply the crime of money laundering to all serious
offences, with a view to including the widest range of predicate offences.
4. Confis cation and provisional measures *
Countries should adopt measures similar to those set forth in the Vienna Convention, the
Palermo Convention, and the Terrorist Financing Convention, including legislative measures,
to enable their competent authorities to freeze or seize and confiscate the following, without
prejudicing the rights of bona fide third parties: (a) property laundered, (b) proceeds from , or
instrumentalities used in or intended for use in money laundering or predicate offences, (c)
property that is the proceeds of, or used in, or intended or allocated for use in, the financing of
terrorism, terrorist acts or terrorist organisations, or ( d) property of corresponding value.
Such measures should include the authority to: (a) identify, trace and evaluate property that is
subject to confiscation; (b) carry out provisional measures, such as freezing and seizing, to
prevent any dealing, transfer or disposal of such property; (c) take steps that will prevent or
void actions that prejudice the country’s ability to freeze or seize or recover property that is
subject to confiscation; and (d) take any appropriate investigative measures.
Countries shou ld consider adopting measures that allow such proceeds or instrumentalities to
be confiscated without requiring a criminal conviction (non -conviction based confiscation), or
which require an offender to demonstrate the lawful origin of the property alleged to be liable
to confiscation, to the extent that such a requirement is consistent with the principles of their
domestic law.

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C. TERRORIST FINANCI NG AND FINANCING OF PROLIFERATION
5. Terrorist financing offence *
Countries should criminalise terrorist fina ncing on the basis of the Terrorist Financing
Convention, and should criminalise not only the financing of terrorist acts but also the
financing of terrorist organisations and individual terrorists even in the absence of a link to a
specific terrorist act or acts. Countries should ensure that such offences are designated as
money laundering predicate offences.
6. Targeted financial sanctions related to terrorism and terrorist financing *
Countries should implement targeted financial sanctions regimes to comply with United
Nations Security Council resolutions relating to the prevention and suppression of terrorism
and terrorist financing. The resolutions require countries to freeze without delay the funds or
other assets of, and to ensure that no funds or other assets are made available, directly or
indirectly, to or for the benefit of, any person or entity either (i) designated by, or under the
authority of, the United Nations Security Council under Chapter VII of the Charter of the
United Nations, including in accordance with resolution 1267 (1999) and its successor
resolutions; or (ii) designated by that country pursuant to resolution 1373 (2001).
7. Targeted financial sanctions related to proliferation *
Countries should implement targeted financial sanctions to comply with United Nations
Security Council resolutions relating to the prevention, suppression and disruption of
proliferation of weapons of mass destruction and its financing. These resolutions require
countries to freeze without delay the f unds or other assets of, and to ensure that no funds and
other assets are made available, directly or indirectly, to or for the benefit of, any person or
entity designated by, or under the authority of, the United Nations Security Council under
Chapter VII of the Charter of the United Nations.
8. Non -profit organisations *
Countries should review the adequacy of laws and regulations that relate to non -profit
organisations which the country has identified as being vulnerable to terrorist financing
abuse. Cou ntries should apply focused and proportionate measures, in line with the risk –
based approach, to such non -profit organisations to protect them from terrorist financing
abuse, including :
(a) by terrorist organisations posing as legitimate entities;
(b) by exploiting legitimate entities as conduits for terrorist financing, including for the
purpose of escaping asset -freezing measures; and
(c) by concealing or obscuring the clandestine diversion of funds intended for legitimate
purposes to terrorist organis ations.

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D. PREVENTIVE MEASUR ES
9. Financial institution secrecy laws
Countries should ensure that financial institution secrecy laws do not inhibit implementation
of the FATF Recommendations.
CUSTOMER DUE DILIGENCE AND RECORD-KEEPIN G
10. Customer due dili gence *
Financial institutions should be prohibited from keeping anonymous accounts or accounts in
obviously fictitious names.
Financial institutions should be required to undertake customer due diligence (CDD)
measures when:
(i) establishing business rel ations;
(ii) carrying out occasional transactions: (i) above the applicable designated threshold
(USD/EUR 15,000); or (ii) that are wire transfers in the circumstances covered by the
Interpretive Note to Recommendation 16;
(iii) there is a suspicion of money laundering or terrorist financing; or
(iv) the financial institution has doubts about the veracity or adequacy of previously
obtained customer identification data.
The principle that financial institutions should conduct CDD should be set out in law. Each
country may determine how it imposes specific CDD obligations, either through law or
enforceable means.
The CDD measures to be taken are as follows:
(a) Identifying the customer and verifying that customer’s identity using reliable,
independent sourc e documents, data or information.
(b) Identifying the beneficial owner, and taking reasonable measures to verify the identity
of the beneficial owner, such that the financial institution is satisfied that it knows who
the beneficial owner is. For legal per sons and arrangements this should include
financial institutions understanding the ownership and control structure of the
customer.
(c) Understanding and, as appropriate, obtaining information on the purpose and
intended nature of the business relationship .
(d) Conducting ongoing due diligence on the business relationship and scrutiny of
transactions undertaken throughout the course of that relationship to ensure that the
transactions being conducted are consistent with the institution’s knowledge of the
cu stomer, their business and risk profile, including, where necessary, the source of
funds.

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Financial institutions should be required to apply each of the CDD measures under (a) to (d)
above, but should determine the extent of such measures using a risk-base d approach (RBA)
in accordance with the Interpretive Notes to this Recommendation and to R ecommendation 1.
Financial institutions should be required to verify the identity of the customer and beneficial
owner before or during the course of establishing a b usiness relationship or conducting
transactions for occasional customers. Countries may permit financial institutions to complete
the verification as soon as reasonably practicable following the establishment of the
relationship, where the money laundering and terrorist financing risks are effectively
managed and where this is essential not to interrupt the normal conduct of business.
Where the financial institution is unable to comply with the applicable requirements under
paragraphs (a) to (d) above (su bject to appropriate modification of the extent of the measures
on a risk -based approach), it should be required not to open the account, commence business
relations or perform the transaction; or should be required to terminate the business
relationship; and should consider making a suspicious transactions report in relation to the
customer.
These requirements should apply to all new customers, although financial institutions should
also apply this Recommendation to existing customers on the basis of mat eriality and risk,
and should conduct due diligence on such existing relationships at appropriate times.
11. Record -keeping
Financial institutions should be required to maintain, for at least five years, all necessary
records on transactions, both domestic and international, to enable them to comply swiftly
with information requests from the competent authorities. Such records must be sufficient to
permit reconstruction of individual transactions (including the amounts and types of currency
involved, if any) so as to provide, if necessary, evidence for prosecution of criminal activity.
Financial institutions should be required to keep all records obtained through CDD measures
(e.g. copies or records of official identification documents like passports, ident ity cards,
driving licences or similar documents), account files and business correspondence, including
the results of any analysis undertaken (e.g. inquiries to establish the background and purpose
of complex, unusual large transactions), for at least fiv e years after the business relationship is
ended, or after the date of the occasional transaction.
Financial institutions should be required by law to maintain records on transactions and
information obtained through the CDD measures.
The CDD information a nd the transaction records should be available to domestic competent
authorities upon appropriate authority.

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ADDITIONAL MEASURES FOR SPECIFIC CUSTOME RS AND ACTIVITIES
12. Politically exposed persons *
Financial institutions should be required, in relation to foreign politically exposed persons
(PEPs) (whether as customer or beneficial owner), in addition to performing normal customer
due diligence measures, to:
(a) have appropriate risk -management systems to determine whether the customer or the
beneficial owner is a politically exposed person;
(b) obtain senior management approval for establishing (or continuing, for existing
customers) such business relationships;
(c) take reasonable measures to establish the source of wealth and source of funds; and
(d) conduct enhanced ongoing monitoring of the business relationship.
Financial institutions should be required to take reasonable measures to determine whether a
customer or beneficial owner is a domestic PEP or a person who is or has been entrusted with
a pr ominent function by an international organisation. In cases of a higher risk business
relationship with such persons, financial institutions should be required to apply the
measures referred to in paragraphs (b), (c) and (d).
The requirements for all types of PEP should also apply to family members or close associates
of such PEPs.
13. Correspondent banking *
Financial institutions should be required, in relation to cross -border correspondent banking
and other similar relationships, in addition to performin g normal customer due diligence
measures, to:
(a) gather sufficient information about a respondent institution to understand fully the
nature of the respondent’s business and to determine from publicly available
information the reputation of the instituti on and the quality of supervision, including
whether it has been subject to a money laundering or terrorist financing investigation
or regulatory action;
(b) assess the respondent institution’s AML/CFT controls;
(c) obtain approval from senior management before establishing new correspondent
relationships;
(d) clearly understand the respective responsibilities of each institution; and
(e) with respect to “payable -through accounts”, be satisfied that the respondent bank has
conducted CDD on the customers h aving direct access to accounts of the
correspondent bank, and that it is able to provide relevant CDD information upon
request to the correspondent bank.

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Financial institutions should be prohibited from entering into, or continuing, a correspondent
banking relationship with shell banks. Financial institutions should be required to satisfy
themselves that respondent institutions do not permit their accounts to be used by shell
banks.
14. Money or value transfer services *
Countries should take measures to ensure that natural or legal persons that provide money or
value transfer services (MVTS) are licensed or registered, and subject to effective systems for
monitoring and ensuring compliance with the relevant measures called for in the FATF
Recommendations. Countries should take action to identify natural or legal persons that carry
out MVTS without a license or registration, and to apply appropriate sanctions.
Any natural or legal person working as an agent should also be licensed or registered by a
compete nt authority, or the MVTS provider should maintain a current list of its agents
accessible by competent authorities in the countries in which the MVTS provider and its
agents operate. Countries should take measures to ensure that MVTS providers that use
ag ents include them in their AML/CFT programmes and monitor them for compliance with
these programmes.
15. New technologies
Countries and financial institutions should identify and assess the money laundering or
terrorist financing risks that may arise in r elation to (a) the development of new products and
new business practices, including new delivery mechanisms, and (b) the use of new or
developing technologies for both new and pre -existing products. In the case of financial
institutions, such a risk asses sment should take place prior to the launch of the new products,
business practices or the use of new or developing technologies. They should take appropriate
measures to manage and mitigate those risks.
To manage and mitigate the risks emerging from virtual assets, countries should ensure that
virtual asset service providers are regulated for AML/CFT purposes, and licensed or
registered and subject to effective systems for monitoring and ensuring compliance with the
relevant measures called for in the FATF Recommendations.
16. Wire transfers *
Countries should ensure that financial institutions include required and accurate originator
information, and required beneficiary information, on wire transfers and related messages,
and that the information remains with the wire transfer or related message throughout the
payment chain.
Countries should ensure that financial institutions monitor wire transfers for the purpose of
detecting those which lack required originator and/or beneficiary information, and take
appropriate measures.

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Countries should e nsure that, in the context of processing wire transfers, financial institutions
take freezing action and should prohibit conducting transactions with designated persons and
entities, as per the obligations set out in the relevant United Nations Security Co uncil
resolutions, such as resolution 1267 (1999) and its successor resolutions, and resolution
1373(2001), relating to the prevention and suppression of terrorism and terrorist financing.
RELIANCE, CONTROLS AND FINANCIAL GROUPS
17. Reliance on third parti es *
Countries may permit financial institutions to rely on third parties to perform elements (a) -(c)
of the CDD measures set out in Recommendation 10 or to introduce business, provided that
the criteria set out below are met. Where such reliance is permit ted, the ultimate
responsibility for CDD measures remains with the financial institution relying on the third
party.
The criteria that should be met are as follows:
(a) A financial institution relying upon a third party should immediately obtain the
necessary information concerning elements (a) -(c) of the CDD measures set out in
Recommendation 10.
(b) Financial institutions should take adequate steps to satisfy themselves that copies of
identification data and other relevant documentation relating to the C DD
requirements will be made available from the third party upon request without delay.
(c) The financial institution should satisfy itself that the third party is regulated,
supervised or monitored for, and has measures in place for compliance with, CDD and
record -keeping requirements in line with Recommendations 10 and 11.
(d) When determining in which countries the third party that meets the conditions can be
based, countries should have regard to information available on the level of country
risk.
When a financial institution relies on a third party that is part of the same financial group, and
(i) that group applies CDD and record -keeping requirements, in line with Recommendations
10, 11 and 12, and programmes against money laundering and terrorist fin ancing, in
accordance with Recommendation 18; and (ii) where the effective implementation of those
CDD and record -keeping requirements and AML/CFT programmes is supervised at a group
level by a competent authority, then relevant competent authorities may c onsider that the
financial institution applies measures under (b) and (c) above through its group programme,
and may decide that (d) is not a necessary precondition to reliance when higher country risk
is adequately mitigated by the group AML/CFT policies.
18. Internal controls and foreign branches and subsidiaries *
Financial institutions should be required to implement programmes against money
laundering and terrorist financing. Financial groups should be required to implement group –

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wide programmes against money laundering and terrorist financing, including policies and
procedures for sharing information within the group for AML/CFT purposes.
Financial institutions should be required to ensure that their foreign branches and majority –
owned subsidiaries ap ply AML/CFT measures consistent with the home country
requirements implementing the FATF Recommendations through the financial groups’
programmes against money laundering and terrorist financing.
19. Higher -risk countries *
Financial institutions should be required to apply enhanced due diligence measures to
business relationships and transactions with natural and legal persons, and financial
institutions, from countries for which this is called for by the FATF. The type of enhanced due
diligence measures a pplied should be effective and proportionate to the risks.
Countries should be able to apply appropriate countermeasures when called upon to do so by
the FATF. Countries should also be able to apply countermeasures independently of any call
by the FATF to do so. Such countermeasures should be effective and proportionate to the
risks.
REPORTING OF SUSPICI OUS TRANSACTIONS
20. Reporting of suspicious transactions *
If a financial institution suspects or has reasonable grounds to suspect that funds are the
proceeds of a criminal activity, or are related to terrorist financing, it should be required, by
law, to report promptly its suspicions to the financial intelligence unit (FIU).
21. Tipping -off and confidentiality
Financial institutions, their directors, officers and employees should be:
(a) protected by law from criminal and civil liability for breach of any restriction on
disclosure of information imposed by contract or by any legislative, regulatory or
administrative provision, if they report their su spicions in good faith to the FIU, even if
they did not know precisely what the underlying criminal activity was, and regardless
of whether illegal activity actually occurred; and
(b) prohibited by law from disclosing (“tipping -off”) the fact that a suspic ious transaction
report (STR) or related information is being filed with the FIU. These provisions are
not intended to inhibit information sharing under Recommendation 18.
DESIGNATED NON-FINAN CIAL BUSINESSES AND PROFESSIONS
22. DNFBPs: customer due dilig ence *
The customer due diligence and record -keeping requirements set out in Recommendations
10, 11, 12, 15, and 17, apply to designated non -financial businesses and professions (DNFBPs)
in the following situations:

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(a) Casinos – when customers engage in financial transactions equal to or above the
applicable designated threshold.
(b) Real estate agents – when they are involved in transactions for their client concerning
the buying and selling of real estate.
(c) Dealers in precious metals and dealers in pr ecious stones – when they engage in any
cash transaction with a customer equal to or above the applicable designated
threshold.
(d) Lawyers, notaries, other independent legal professionals and accountants – when they
prepare for or carry out transactions f or their client concerning the following
activities:
 buying and selling of real estate;
 managing of client money, securities or other assets;
 management of bank, savings or securities accounts;
 organisation of contributions for the creation, operation or management of
companies;
 creation, operation or management of legal persons or arrangements, and
buying and selling of business entities.
(e) Trust and company service providers – when they prepare for or carry out
transactions for a client concerning the following activities:
 acting as a formation agent of legal persons;
 acting as (or arranging for another person to act as) a director or secretary of a
company, a partner of a partnership, or a similar position in relation to other
legal persons;
 providing a registered office, business address or accommodation,
correspondence or administrative address for a company, a partnership or any
other legal person or arrangement;
 acting as (or arranging for another person to act as) a trustee of an express trust
or performing the equivalent function for another form of legal arrangement;
 acting as (or arranging for another person to act as) a nominee shareholder for
another person.
23. DNFBPs: Other measures *
The requirements set out in Recommendations 18 to 21 apply to all designated non -financial
businesses and professions, subject to the following qualifications:
(a) Lawyers, notaries, other independent legal professionals and accountants should be
required to report suspicious transactions when, on behalf of or for a client, they
engage in a financial transaction in relation to the activities described in paragraph (d)

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of Recommendation 22. Countries are strongly encouraged to extend the reporting
requirement to the rest of the professional activities of accountants, including
auditing.
(b) Dealers in precious metals and dealers in precious stones should be required to report
suspicious transactions when they engage in any cash transaction with a customer
equal to or above the applicable designated threshold.
(c) Trust and company service providers should be required to report suspicious
transactions for a client when, on behalf of or for a client, they engage in a transaction
in relation to the activities referred to in paragraph (e) of Recommendation 22.

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E. TRAN SPARENCY AND BENEFIC IAL OWNERSHIP OF LEGAL PERSONS AND
ARRANGEMENTS
24. Transparency and beneficial ownership of legal persons *
Countries should take measures to prevent the misuse of legal persons for money laundering
or terrorist financing. Countries should ensure that there is adequate, accurate and timely
information on the beneficial ownership and control of legal persons that can be obtained or
accessed in a timely fashion by competent authorities. In particular, countries that have legal
persons that are able to issue bearer shares or bearer share warrants, or which allow nominee
shareholders or nominee directors, should take effective measures to ensure that they are not
misused for money laundering or terrorist financing. Countries should conside r measures to
facilitate access to beneficial ownership and control information by financial institutions and
DNFBPs undertaking the requirements set out in Recommendations 10 and 22.
25. Transparency and beneficial ownership of legal arrangements *
Countries should take measures to prevent the misuse of legal arrangements for money
laundering or terrorist financing. In particular, countries should ensure that there is adequate,
accurate and timely information on express trusts, including information on the settlor,
trustee and beneficiaries, that can be obtained or accessed in a timely fashion by competent
authorities. Countries should consider measures to facilitate access to beneficial ownership
and control information by financial institutions and DNFBPs undertaking the requirements
set out in Recommendations 10 and 22.

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F. POWERS AND RESPO NSIBILITIES OF COMPE TENT AUTHORITIES, AN D OTHER
INSTITUTIONAL MEASURES
REGULATION AND SUPERVISION
26. Regulation and supervision of financial institutions *
Countries should ensure that financial institutions are subject to adequate regulation and
supervision and are effectively implementing the FATF Recommendations. Competent
authorities or financial supervisors should take the necessary legal or regulatory measures t o
prevent criminals or their associates from holding, or being the beneficial owner of, a
significant or controlling interest, or holding a management function in, a financial institution.
Countries should not approve the establishment, or continued operat ion, of shell banks.
For financial institutions subject to the Core Principles, the regulatory and supervisory
measures that apply for prudential purposes, and which are also relevant to money
laundering and terrorist financing, should apply in a similar m anner for AML/CFT purposes.
This should include applying consolidated group supervision for AML/CFT purposes.
Other financial institutions should be licensed or registered and adequately regulated, and
subject to supervision or monitoring for AML/CFT purposes, having regard to the risk of
money laundering or terrorist financing in that sector. At a minimum, where financial
institutions provide a service of money or value transfer, or of money or currency changing,
they should be licensed or registered, and subject to effective systems for monitoring and
ensuring compliance with national AML/CFT requirements.
27. Powers of supervisors
Supervisors should have adequate powers to supervise or monitor, and ensure compliance by,
financial institutions with requirements to combat money laundering and terrorist financing,
including the authority to conduct inspections. They should be authorised to compel
production of any information from financial institutions that is relevant to monitoring such
compliance, and to impose sanctions, in line with Recommendation 35, for failure to comply
with such requirements. Supervisors should have powers to impose a range of disciplinary
and financial sanctions, including the power to withdraw, restrict or suspend the financial
in stitution’s license, where applicable.
28. Regula tion and supervision of DNFBPs *
Designated non -financial businesses and professions should be subject to regulatory and
supervisory measures as set out below.
(a) Casinos should be subject to a comprehensiv e regulatory and supervisory regime that
ensures that they have effectively implemented the necessary AML/CFT measures. At
a minimum:
 casinos should be licensed;

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competent authorities should take the necessary legal or regulatory measures to
prevent
criminals or their associates from holding, or being the beneficial owner
of, a significant or controlling interest, holding a management function in, or
being an operator of, a casino; and
 competent authorities should ensure that casinos are effectively supervised for
compliance with AML/CFT requirements.
(b) Countries should ensure that the other categories of DNFBPs are subject to effective
systems for monitoring and ensuring compliance with AML/CFT requirements. This
should be performed on a risk -sensit ive basis. This may be performed by (a) a
supervisor or (b) by an appropriate self -regulatory body (SRB), provided that such a
body can ensure that its members comply with their obligations to combat money
laundering and terrorist financing.
The supervisor or SRB should also (a) take the necessary measures to prevent
criminals or their associates from being professionally accredited, or holding or being
the beneficial owner of a significant or controlling interest or holding a management
function, e.g. thro ugh evaluating persons on the basis of a “fit and proper” test; and (b)
have effective, proportionate, and dissuasive sanctions in line with Recommendation
35 available to deal with failure to comply with AML/CFT requirements.
OPERATIONAL AND LAW ENFORCEMENT
29. Financial intelligence units *
Countries should establish a financial intelligence unit (FIU) that serves as a national centre
for the receipt and analysis of: (a) suspicious transaction reports; and (b) other information
relevant to money laundering, associated predicate offences and terrorist financing, and for
the dissemination of the results of that analysis. The FIU should be able to obtain additional
information from reporting entities, and should have access on a timely basis to the f inancial,
administrative and law enforcement information that it requires to undertake its functions
properly.
30. Responsibilities of law enforcement and investigative authorities *
Countries should ensure that designated law enforcement authorities have responsibility for
money laundering and terrorist financing investigations within the framework of national
AML/CFT policies. At least in all cases related to major proceeds -generating offences, these
designated law enforcement authorities should develop a pro-active parallel financial
investigation when pursuing money laundering, associated predicate offences and terrorist
financing. This should include cases where the associated predicate offence occurs outside
their jurisdictions. Countries should ensure that competent authorities have responsibility for
expeditiously identifying, tracing and initiating actions to freeze and seize property that is, or
may become, subject to confiscation, or is suspected of being proceeds of crime. Countries
should also ma ke use, when necessary, of permanent or temporary multi -disciplinary groups
specialised in financial or asset investigations. Countries should ensure that, when necessary,

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cooperative investigations with appropriate competent authorities in other countries take
place.
31. Powers of law enforcement and investigative authorities
When conducting investigations of money laundering, associated predicate offences and
terrorist financing, competent authorities should be able to obtain access to all necessary
documents and information for use in those investigations, and in prosecutions and related
actions. This should include powers to use compulsory measures for the production of
records held by financial institutions, DNFBPs and other natural or legal persons, f or the
search of persons and premises, for taking witness statements, and for the seizure and
obtaining of evidence.
Countries should ensure that competent authorities conducting investigations are able to use
a wide range of investigative techniques suit able for the investigation of money laundering,
associated predicate offences and terrorist financing. These investigative techniques include:
undercover operations, intercepting communications, accessing computer systems and
controlled delivery. In additi on, countries should have effective mechanisms in place to
identify, in a timely manner, whether natural or legal persons hold or control accounts. They
should also have mechanisms to ensure that competent authorities have a process to identify
assets with out prior notification to the owner. When conducting investigations of money
laundering, associated predicate offences and terrorist financing, competent authorities
should be able to ask for all relevant information held by the FIU.
32. Cash couriers *
Co untries should have measures in place to detect the physical cross -border transportation of
currency and bearer negotiable instruments, including through a declaration system and/or
disclosure system.
Countries should ensure that their competent authoritie s have the legal authority to stop or
restrain currency or bearer negotiable instruments that are suspected to be related to
terrorist financing, money laundering or predicate offences, or that are falsely declared or
disclosed.
Countries should ensure tha t effective, proportionate and dissuasive sanctions are available to
deal with persons who make false declaration(s) or disclosure(s). In cases where the currency
or bearer negotiable instruments are related to terrorist financing, money laundering or
pred icate offences, countries should also adopt measures, including legislative ones consistent
with Recommendation 4, which would enable the confiscation of such currency or
instruments.

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GENERAL REQUIREMENTS
33. Statistics
Countries should maintain comprehensive statistics on matters relevant to the effectiveness
and efficiency of their AML/CFT systems. This should include statistics on the STRs received
and disseminated; on money laundering and terrorist financing investigations, prosecutions
and co nvictions; on property frozen, seized and confiscated; and on mutual legal assistance or
other international requests for cooperation.
34. Guidance and feedback
The competent authorities, supervisors and SRBs should establish guidelines, and provide
feedb ack, which will assist financial institutions and designated non -financial businesses and
professions in applying national measures to combat money laundering and terrorist
financing, and, in particular, in detecting and reporting suspicious transactions.
SANCTIONS
35. Sanctions
Countries should ensure that there is a range of effective, proportionate and dissuasive
sanctions, whether criminal, civil or administrative, available to deal with natural or legal
persons covered by Recommendations 6, and 8 to 23, that fail to comply with AML/CFT
requirements. Sanctions should be applicable not only to financial institutions and DNFBPs,
but also to their directors and senior management.

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G. INTERNATIONAL COO PERATION
36. International instruments
Countries should take immediate steps to become party to and implement fully the Vienna
Convention, 1988; the Palermo Convention, 2000; the United Nations Convention against
Corruption, 2003; and the Terrorist Financing Convention, 1999. Where applicable, countries
are also encouraged to ratify and implement other relevant international conventions, such as
the Council of Europe Convention on Cybercrime, 2001; the Inter -American Convention
against Terrorism, 2002; and the Council of Europe Convention on Laundering, Search ,
Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, 2005.
37. Mutual legal assistance
Countries should rapidly, constructively and effectively provide the widest possible range of
mutual legal assistance in relation to money laundering, associated predicate offences and
terrorist financing investigations, prosecutions, and related proceedings. Countries should
have an adequate legal basis for providing assistance and, where appropriate, should have in
place treaties, ar rangements or other mechanisms to enhance cooperation. In particular,
countries should:
(a) Not prohibit, or place unreasonable or unduly restrictive condition s on, the provision
of mutual legal assistance.
(b) Ensure that they have clear and efficient pro cesses for the timely prioritisation and
execution of mutual legal assistance requests. Countries should use a central authority,
or another established official mechanism, for effective transmission and execution of
requests. To monitor progress on reques ts, a case management system should be
maintained.
(c) Not refuse to execute a request for mutual legal assistance on the sole ground that the
offence is also considered to involve fiscal matters.
(d) Not refuse to execute a request for mutual legal assist ance on the grounds that laws
require financial institutions or DNFBPs to maintain secrecy or confidentiality (except
where the relevant information that is sought is held in circumstances where legal
professional privilege or legal professional secrecy ap plies).
(e) Maintain the confidentiality of mutual legal assistance requests they receive and the
information contained in them, subject to fundamental principles of domestic law, in
order to protect the integrity of the investigation or inquiry. If the requested country
cannot comply with the requirement of confidentiality, it should promptly inform the
requesting country.
Countries should render mutual legal assistance, notwithstanding the absence of dual
criminality, if the assistance does not involve coercive actions. Countries should consider
adopting such measures as may be necessary to enable them to provide a wide scope of
assistance in the absence of dual criminality.

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Where dual criminality is required for mutual legal assistance, that requirement should be
deemed to be satisfied regardless of whether both countries place the offence within the same
category of offence, or denominate the offence by the same terminology, provided that both
countries criminalise the conduct underlying the offence.
Co untries should ensure that, of the powers and investigative techniques required under
Recommendation 31, and any other powers and investigative techniques available to their
competent authorities:
(a) all those relating to the production, search and seizure of information, documents or
evidence (including financial records) from financial institutions or other persons, and
the taking of witness statements; and
(b) a broad range of other powers and investigative techniques;
are also available for use in response to requests for mutual legal assistance, and, if consistent
with their domestic framework, in response to direct requests from foreign judicial or law
enforcement authorities to domestic counterparts.
To avoid conflicts of jurisdiction, considerat ion should be given to devising and applying
mechanisms for determining the best venue for prosecution of defendants in the interests of
justice in cases that are subject to prosecution in more than one country.
Countries should, when making mutual legal assistance requests, make best efforts to provide
complete factual and legal information that will allow for timely and efficient execution of
requests, including any need for urgency, and should send requests using expeditious means.
Countries should, before sending requests, make best efforts to ascertain the legal
requirements and formalities to obtain assistance.
The authorities responsible for mutual legal assistance (e.g. a Central Authority) should be
provided with adequate financial, human and techni cal resources. Countries should have in
place processes to ensure that the staff of such authorities maintain high professional
standards, including standards concerning confidentiality, and should be of high integrity and
be appropriately skilled.
38. Mu tual legal assistance: freezing and confiscation *
Countries should ensure that they have the authority to take expeditious action in response to
requests by foreign countries to identify, freeze, seize and confiscate property laundered;
proceeds from mone y laundering, predicate offences and terrorist financing; instrumentalities
used in, or intended for use in, the commission of these offences; or property of corresponding
value. This authority should include being able to respond to requests made on the b asis of
non- conviction -based confiscation proceedings and related provisional measures, unless this
is inconsistent with fundamental principles of their domestic law. Countries should also have
effective mechanisms for managing such property, instrumentalities or property of
corresponding value, and arrangements for coordinating seizure and confiscation
proceedings, which should include the sharing of confiscated assets.

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39. Extradition
Countries should constructively and effectively execute extradition re quests in relation to
money laundering and terrorist financing, without undue delay. Countries should also take all
possible measures to ensure that they do not provide safe havens for individuals charged with
the financing of terrorism, terrorist acts or terrorist organisations. In particular, countries
should:
(a) ensure money laundering and terrorist financing are extraditable offences;
(b) ensure that they have clear and efficient processes for the timely execution of
extradition requests including prio ritisation where appropriate. To monitor progress
of requests a case management system should be maintained;
(c) not place unreasonable or unduly restrictive conditions on the execution of requests;
and
(d) ensure they have an adequate legal framework for extradition.
Each country should either extradite its own nationals, or, where a country does not do so
solely on the grounds of nationality, that country should, at the request of the country seeking
extradition, submit the case, without undue delay, to i ts competent authorities for the purpose
of prosecution of the offences set forth in the request. Those authorities should take their
decision and conduct their proceedings in the same manner as in the case of any other offence
of a serious nature under th e domestic law of that country. The countries concerned should
cooperate with each other, in particular on procedural and evidentiary aspects, to ensure the
efficiency of such prosecutions.
Where dual criminality is required for extradition, that requirem ent should be deemed to be
satisfied regardless of whether both countries place the offence within the same category of
offence, or denominate the offence by the same terminology, provided that both countries
criminalise the conduct underlying the offence.
Consistent with fundamental principles of domestic law, countries should have simplified
extradition mechanisms, such as allowing direct transmission of requests for provisional
arrests between appropriate authorities, extraditing persons based only on warrants of
arrests or judgments, or introducing a simplified extradition of consenting persons who waive
formal extradition proceedings. The authorities responsible for extradition should be
provided with adequate financial, human and technical resources. C ountries should have in
place processes to ensure that the staff of such authorities maintain high professional
standards, including standards concerning confidentiality, and should be of high integrity and
be appropriately skilled.
40. Other forms of international cooperation *
Countries should ensure that their competent authorities can rapidly, constructively and
effectively provide the widest range of international cooperation in relation to money
laundering, associated predicate offences and terro rist financing. Countries should do so both
spontaneously and upon request, and there should be a lawful basis for providing

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cooperation. Countries should authorise their competent authorities to use the most efficient
means to cooperate. Should a competen t authority need bilateral or multilateral agreements
or arrangements, such as a Memorandum of Understanding (MOU), these should be
negotiated and signed in a timely way with the widest range of foreign counterparts.
Competent authorities should use clear channels or mechanisms for the effective transmission
and execution of requests for information or other types of assistance. Competent authorities
should have clear and efficient processes for the prioritisation and timely execution of
requests, and for s afeguarding the information received.

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INTERPRETIVE NOTES TO THE FATF RECOMMENDATIONS
INTERPRETIVE NOTE TO RECOMMENDATION 1
(ASSESSING RISKS AND APPLYING A RISK -BAS ED APPROACH)
1. The risk -based approach (RBA) is an effective way to combat money launderi ng and terrorist
financing. In determining how the RBA should be implemented in a sector, countries should
consider the capacity and anti -money laundering/countering the financing of terrorism
(AML/CFT) experience of the relevant sector. Countries should u nderstand that the discretion
afforded, and responsibility imposed on, financial institutions and designated non -financial
bodies and professions (DNFBPs) by the RBA is more appropriate in sectors with greater
AML/CFT capacity and experience. This should n ot exempt financial institutions and DNFBPs
from the requirement to apply enhanced measures when they identify higher risk scenarios.
By adopting a risk -based approach, competent authorities, financial institutions and DNFBPs
should be able to ensure that measures to prevent or mitigate money laundering and terrorist
financing are commensurate with the risks identified, and would enable them to make
decisions on how to allocate their own resources in the most effective way.
2. In implementing a RBA, financial institutions and DNFBPs should have in place processes to
identify, assess, monitor, manage and mitigate money laundering and terrorist financing risks.
The general principle of a RBA is that, where there are higher risks, countries should require
financial institutions and DNFBPs to take enhanced measures to manage and mitigate those
risks; and that, correspondingly, where the risks are lower, simplified measures may be
permitted. Simplified measures should not be permitted whenever there is a suspicion of
money laundering or terrorist financing. Specific Recommendations set out more precisely
how this general principle applies to particular requirements. Countries may also, in strictly
limited circumstances and where there is a proven low risk of money laundering and terrorist
financing, decide not to apply certain Recommendations to a particular type of financial
institution or activity, or DNFBP (see below). Equally, if countries determine through their
risk assessments th at there are types of institutions, activities, businesses or professions that
are at risk of abuse from money laundering and terrorist financing, and which do not fall
under the definition of financial institution or DNFBP, they should consider applying
A ML/CFT requirements to such sectors.

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A. Obligations and decisions for countries
3. Assessing risk – Countries 1 should take appropriate steps to identify and assess the money
laundering and terrorist financing risks for the country, on an ongoing basis and in order to:
(i) inform potential changes to the country’s AML/CFT regime, including changes to laws,
regulations and other measures; (ii) assist in the allocation and prioritisation of AML/CFT
resources by competent authorities; and (iii) make information available for AML/CFT risk
assessments conducted by financial institutions and DNFBPs. Countries should keep the
assessments up -to -date, and should have mechanisms to provide appropriate information on
the results to all relevant competent authorities and self -regulatory bodies (SRBs), financial
institutions and DNFBPs.
4.
Higher risk – Where countries identify higher risks, they should ensure that their AML/CFT
regime addresses these higher risks, and, without prejudice to any other measures taken by
countries to mitigate these higher risks, either prescribe that financial institutions and
DNFBPs take enhanced measures to manage and mitigate the risks, or ensure that this
information is incorporated into risk assessments carried out by financial instit utions and
DNFBPs, in order to manage and mitigate risks appropriately. Where the FATF
Recommendations identify higher risk activities for which enhanced or specific measures are
required, all such measures must be applied, although the extent of such meas ures may vary
according to the specific level of risk.
5.
Lower risk – Countries may decide to allow simplified measures for some of the FATF
Recommendations requiring financial institutions or DNFBPs to take certain actions, provided
that a lower risk has been identified, and this is consistent with the country’s assessment of its
money laundering and terrorist financing risks, as referred to in paragraph 3.
Independent of any decision to specify certain lower risk categories in line with the previous
paragraph, countries may also allow financial institutions and DNFBPs to apply simplified
customer due diligence (CDD) measures, provided that the requirements set out in section B
below (“Obligations and decisions for financial institutions and DNFBPs”), and in paragraph 7
below, are met.
6.
Exemptions – Countries may decide not to apply some of the FATF Recommendations
requiring financial institutions or DNFBPs to take certain actions, provided:
(a) there is a proven low risk of money laundering and terror ist financing; this occurs in
strictly limited and justified circumstances; and it relates to a particular type of
financial institution or activity, or DNFBP; or
(b) a financial activity (other than the transferring of money or value) is carried out by a
natural or legal person on an occasional or very limited basis (having regard to
quantitative and absolute criteria), such that there is low risk of money laundering and
terrorist financing.
1 Where appropriate, AML/CFT risk assessments at a supra -national level should be taken into account
when considering whether this obligation is satisfied.

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While the information gathered may vary according to the level of risk, the requirements of
Recommendation 11 to retain information should apply to whatever information is gathered.
7.
Supervision and monitoring of risk – Supervisors (or SRBs for relevant DNFBPs sectors)
should ensure that financial institutions and DN FBPs are effectively implementing the
obligations set out below. When carrying out this function, supervisors and SRBs should, as
and when required in accordance with the Interpretive Notes to Recommendations 26 and 28,
review the money laundering and terr orist financing risk profiles and risk assessments
prepared by financial institutions and DNFBPs, and take the result of this review into
consideration.
B. Obligations and decisions for financial institutions and DNFBPs
8. Assessing risk – Financial institutions and DNFBPs should be required to take appropriate
steps to identify and assess their money laundering and terrorist financing risks (for
customers, countries or geographic areas; and products, services, transactions or delivery
ch annels). They should document those assessments in order to be able to demonstrate their
basis, keep these assessments up to date, and have appropriate mechanisms to provide risk
assessment information to competent authorities and SRBs. The nature and extent of any
assessment of money laundering and terrorist financing risks should be appropriate to the
nature and size of the business. Financial institutions and DNFBPs should always understand
their money laundering and terrorist financing risks, but compet ent authorities or SRBs may
determine that individual documented risk assessments are not required, if the specific risks
inherent to the sector are clearly identified and understood.
9.
Risk management and mitigation – Financial institutions and DNFBPs sh ould be required to
have policies, controls and procedures that enable them to manage and mitigate effectively
the risks that have been identified (either by the country or by the financial institution or
DNFBP). They should be required to monitor the impl ementation of those controls and to
enhance them, if necessary. The policies, controls and procedures should be approved by
senior management, and the measures taken to manage and mitigate the risks (whether
higher or lower) should be consistent with natio nal requirements and with guidance from
competent authorities and SRBs.
10.
Higher risk – Where higher risks are identified financial institutions and DNFBPs should be
required to take enhanced measures to manage and mitigate the risks.
11.
Lower risk – W here lower risks are identified, countries may allow financial institutions and
DNFBPs to take simplified measures to manage and mitigate those risks.
12. When assessing risk, financial institutions and DNFBPs should consider all the relevant risk
factors before determining what is the level of overall risk and the appropriate level of
mitigation to be applied. Financial institutions and DNFBPs may differentiate the extent of
measures, depending on the type and level of risk for the various risk factors (e.g. in a
particular situation, they could apply normal CDD for customer acceptance measures, but
enhanced CDD for ongoing monitoring, or vice versa).

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INTERPRETIVE NOTE TO RECOMMENDATION 3
( MONEY LAUNDERING OFF ENCE)
1. Countries should criminalise money l aundering on the basis of the United Nations Convention
against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 (the Vienna
Convention) and the United Nations Convention against Transnational Organized Crime, 2000
(the Palermo Conventio n).
2. Countries should apply the crime of money laundering to all serious offences, with a view to
including the widest range of predicate offences. Predicate offences may be described by
reference to all offences; or to a threshold linked either to a cat egory of serious offences; or to
the penalty of imprisonment applicable to the predicate offence (threshold approach); or to a
list of predicate offences; or a combination of these approaches.
3. Where countries apply a threshold approach, predicate offen ces should, at a minimum,
comprise all offences that fall within the category of serious offences under their national law,
or should include offences that are punishable by a maximum penalty of more than one year’s
imprisonment, or, for those countries th at have a minimum threshold for offences in their
legal system, predicate offences should comprise all offences that are punished by a minimum
penalty of more than six months imprisonment.
4. Whichever approach is adopted, each country should, at a minimum , include a range of
offences within each of the designated categories of offences. The offence of money laundering
should extend to any type of property, regardless of its value, that directly or indirectly
represents the proceeds of crime. When proving t hat property is the proceeds of crime, it
should not be necessary that a person be convicted of a predicate offence.
5. Predicate offences for money laundering should extend to conduct that occurred in another
country, which constitutes an offence in that country, and which would have constituted a
predicate offence had it occurred domestically. Countries may provide that the only
prerequisite is that the conduct would have constituted a predicate offence, had it occurred
domestically.
6. Countries may pro vide that the offence of money laundering does not apply to persons who
committed the predicate offence, where this is required by fundamental principles of their
domestic law.
7. Countries should ensure that:
(a) The intent and knowledge required to prov e the offence of money laundering may be
inferred from objective factual circumstances.
(b) Effective, proportionate and dissuasive criminal sanctions should apply to natural
persons convicted of money laundering.
(c) Criminal liability and sanctions, and, where that is not possible (due to fundamental
principles of domestic law), civil or administrative liability and sanctions, should apply
to legal persons. This should not preclude parallel criminal, civil or administrative
proceedings with respect to leg al persons in countries in which more than one form of

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liability is available. Such measures should be without prejudice to the criminal
liability of natural persons. All sanctions should be effective, proportionate and
dissuasive .
(d) There should be appr opriate ancillary offences to the offence of money laundering,
including participation in, association with or conspiracy to commit, attempt, aiding
and abetting, facilitating, and counselling the commission, unless this is not permitted
by fundamental pri nciples of domestic law.

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INTERPRETIVE NOTE TO RECOMMENDATIONS 4 A ND 38
(CONFISCATION AND PROVISIONAL MEASURES)
Countries should establish mechanisms that will enable their competent authorities to effectively
manage and, when necessary, dispose of, property that is frozen or seized, or has been confiscated.
These mechanisms should be applicable both in the context of domestic proceedings, and pursuant
to requests by foreign countries.

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INTERPRETIVE NOTE TO REC OMMENDATION 5
(TERRORIST FINANCING OFFENCE)
A. Objectives
1. Recommendation 5 was developed with the objective of ensuring that countries have the legal
capacity to prosecute and apply criminal sanctions to persons that finance terrorism. Given
the close connection between international terrorism and, inter alia , money laundering,
another objective of Recommendation 5 is to emphasise this link by obligating countries to
include terrorist financing offences as predicate offences for money laundering.
B. Characteristics of the terrorist financing offence
2. Terror ist financing offences should extend to any person who wilfully provides or collects
funds or other assets by any means, directly or indirectly, with the unlawful intention that
they should be used, or in the knowledge that they are to be used, in full or in part: (a) to carry
out a terrorist act(s); (b) by a terrorist organisation; or (c) by an individual terrorist.
3. Terrorist financing includes financing the travel of individuals who travel to a State other than
their States of residence or nationality for the purpose of the perpetration, planning, or
preparation of, or participation in, terrorist acts or the providing or receiving of terrorist
training .
4. Criminalising terrorist financing solely on the basis of aiding and abetting, attempt, or
conspiracy is not sufficient to comply with this Recommendation.
5. Terrorist financing offences should extend to any funds or other assets , whether from a
legitimate or illegitimate source.
6. Terrorist financing offences should not require that the fu nds or other assets : (a) were
actually used to carry out or attempt a terrorist act(s); or (b) be linked to a specific terrorist
act(s).
7. Countries should ensure that the intent and knowledge required to prove the offence of
terrorist financing may be i nferred from objective factual circumstances.
8. Effective, proportionate and dissuasive criminal sanctions should apply to natural persons
convicted of terrorist financing.
9. Criminal liability and sanctions, and, where that is not possible (due to funda mental principles
of domestic law), civil or administrative liability and sanctions, should apply to legal persons.
This should not preclude parallel criminal, civil or administrative proceedings with respect to
legal persons in countries in which more tha n one form of liability is available. Such measures
should be without prejudice to the criminal liability of natural persons. All sanctions should be
effective, proportionate and dissuasive.
10 . It should also be an offence to attempt to commit the offenc e of terrorist financing.
11. It should also be an offence to engage in any of the following types of conduct:
(a) Participating as an accomplice in an offence, as set forth in paragraphs 2 or 9 of this
Interpretive Note;

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(b) Organising or directing o thers to commit an offence, as set forth in paragraphs 2 or 9 of
this Interpretive Note;
(c) Contributing to the commission of one or more offence(s), as set forth in paragraphs 2
or 9 of this Interpretive Note, by a group of persons acting with a common purpose.
Such contribution shall be intentional and shall either: (i) be made with the aim of
furthering the criminal activity or criminal purpose of the group, where such activity
or purpose involves the commission of a terrorist financing offence; or (i i) be made in
the knowledge of the intention of the group to commit a terrorist financing offence.
12. Terrorist financing offences should apply, regardless of whether the person alleged to have
committed the offence(s) is in the same country or a differ ent country from the one in which
the terrorist(s)/terrorist organisation(s) is located or the terrorist act(s) occurred/will occur.

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INTERPRETIVE NOTE TO RECOMMENDATION 6
(TARGETED FINANCIAL SANCTIONS RELATED TO TERRORISM
AND TERRORIST FINANCING)

A. OBJECTIVE
1. Recommendation 6 requires each country to implement targeted financial sanctions to
comply with the United Nations Security Council resolutions that require countries to freeze,
without delay, the funds or other assets, and to ensure that no funds and other assets are
made available to or for the benefit of: (i) any person
2 or entity designated by the United
Nations Security Council (the Security Council) under Chapter VII of the Charter of the United
Nations, as required by Security Council r esolution 1267 (1999) and its successor
resolutions
3; or (ii) any person or entity designated by that country pursuant to Security
Council resolution 1373 (2001).
2. It should be stressed that none of the obligations in Recommendation 6 is intended to rep lace
other measures or obligations that may already be in place for dealing with funds or other
assets in the context of a criminal, civil or administrative investigation or proceeding, as is
required by Recommendation 4 (confiscation and provisional measu res)
4. Measures under
Recommendation 6 may complement criminal proceedings against a designated person or
entity, and be adopted by a competent authority or a court, but are not conditional upon the
existence of such proceedings. Instead, the focus of Reco mmendation 6 is on the preventive
measures that are necessary and unique in the context of stopping the flow of funds or other
assets to terrorist groups; and the use of funds or other assets by terrorist groups. In
determining the limits of, or fostering widespread support for, an effective counter -terrorist
financing regime, countries must also respect human rights, respect the rule of law, and
recognise the rights of innocent third parties.
2 Natural or legal person.
3 Recommendation 6 is applicable to all current and future successor resolutions to resolution 1267(1999)
and any future UNSCRs which impose targeted financial sanctions in the terrorist financing context. At
the time of issuance of this Interpretive Note, (February 2012), the successor resolutions to resolution
1267 (1999) are resolutions: 1333 (2000), 1363 (2001), 1390 (2002), 1452 (2002), 1455 (2003), 1526
(2004), 1617 (2005), 1730 (2006), 1735 (2006), 1822 (2008), 1904 (2009), 1988 (2011), and 1989
(2011).
4 Based on requirements set, for instance, in the United Nations Convention against Illicit Traffic in Narcotic
Drugs and Psychotropic Substances (1988)(the Vienna Convention) and the United Nations Convention
against Transnational Organised Crime (2000) (the Palermo Convention), which contain obligations
regarding freezing, seizure and confiscation in the context of combating transnational crime.
Additionally, the International Convention for the Suppression of the Financing of Terrorism (1999)(the
Terrorist Financing Convention) contains obligations regarding freezing, seizure and confiscation in the
context of combating terrorist financing. Those obligations exist separately and apart from the
obligations set forth in Recommendation 6 and the United Nations Security Council Resol utions related
to terrorist financing.

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B. IDENTIFYING AND D ESIGNATING PERSONS A ND ENTITIES FINANCING
OR SUPPORTING TERRORIST ACTIVITIES
3. For resolution 1267 (1999) and its successor resolutions, designations relating to Al- Qaida
are made by the 1267 Committee, and designations pertaining to the Taliban and related
threats to Afghanistan are made by the 1988 Committee, with both Committees acting under
the authority of Chapter VII of the Charter of the United Nations . For resolution 1373 (2001),
designations are made, at the national or supranational level, by a country or countries acting
on their own m otion, or at the request of another country, if the country receiving the request
is satisfied, according to applicable legal principles, that a requested designation is supported
by reasonable grounds, or a reasonable basis, to suspect or believe that the proposed designee
meets the criteria for designation in resolution 1373 (2001), as set forth in Section E.
4. Countries need to have the authority, and effective procedures or mechanisms, to identify and
initiate proposals for designations of persons and entities targeted by resolution 1267 (1999)
and its successor resolutions, consistent with the obligations set out in those Security Council
resolutions
5. Such authority and procedures or mechanisms are essential to propose persons
and entities to the Sec urity Council for designation in accordance with Security Council list –
based programmes, pursuant to those Security Council resolutions . Countries also need to
have the authority and effective procedures or mechanisms to identify and initiate
designations of persons and entities pursuant to S/RES/1373 (2001), consistent with the
obligations set out in that Security Council resolution. Such authority and procedures or
mechanisms are essential to identify persons and entities who meet the criteria identified in
resolution 1373 (2001), described in Section E. A country’s regime to implement resolution
1267 (1999) and its successor resolutions, and resolution 1373 (2001), should include the
following necessary elements:
(a) Countries should identify a competent authority or a court as having responsibility for:
(i) proposing to the 1267 Committee, for designation as appropriate, persons or
entities that meet the specific criteria for designation, as set forth in Security
Council resolution 1989 (2011) (on Al-Qaida) and related resolutions, if that
authority decides to do so and believes that it has sufficient evidence to support
the designation criteria;
(ii) proposing to the 1988 Committee, for designation as appropriate, persons or
entities that meet the specific criteria for designation, as set forth in Security
Council resolution 1988 (2011) (on the Taliban and those associated with the
Taliban in constituting a threat to the peace, stability and security of
Afghanistan) and related resolutions, if that authority decides to do so and
believes that it has sufficient evidence to support the designation criteria; and
5 The relevant Security Council resolutions do not require countries to identify persons or entities and
submit these to the relevant United Nations Committees, but to have the authority and effective
procedures and mechanisms in place to be able to do so.

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(iii) designating persons or entities that meet the specific criteria for designation, as
set forth in resolution 1373 (2001), as put forw ard either on the country’s own
motion or, after examining and giving effect to, if appropriate, the request of
another country, if the country receiving the request is satisfied, according to
applicable legal principles, that a requested designation is su pported by
reasonable grounds, or a reasonable basis, to suspect or believe that the
proposed designee meets the criteria for designation in resolution 1373 (2001),
as set forth in Section E.
(b) Countries should have a mechanism(s) for identifying target s for designation, based on
the designation criteria set out in resolution 1988 (2011) and resolution 1989 (2011)
and related resolutions, and resolution 1373 (2001) (see Section E for the specific
designation criteria of relevant Security Council resolutions). This includes having
authority and effective procedures or mechanisms to examine and give effect to, if
appropriate, the actions initiated under the freezing mechanisms of other countries
pursuant to resolution 1373 (2001). To ensure that effective c ooperation is developed
among countries, countries should ensure that, when receiving a request, they make a
prompt determination whether they are satisfied, according to applicable (supra -)
national principles, that the request is supported by reasonable grounds, or a
reasonable basis, to suspect or believe that the proposed designee meets the criteria
for designation in resolution 1373 (2011), as set forth in Section E.
(c) The competent authority(ies) should have appropriate legal authorities and
procedu res or mechanisms to collect or solicit as much information as possible from
all relevant sources to identify persons and entities that, based on reasonable grounds,
or a reasonable basis to suspect or believe, meet the criteria for designation in the
rele vant Security Council resolutions.
(d) When deciding whether or not to make a (proposal for) designation, countries should
apply an evidentiary standard of proof of “reasonable grounds” or “reasonable basis”.
For designations under resolutions 1373 (2001) , the competent authority of each
country will apply the legal standard of its own legal system regarding the kind and
quantum of evidence for the determination that “reasonable grounds” or “reasonable
basis” exist for a decision to designate a person or entity, and thus initiate an action
under a freezing mechanism. This is the case irrespective of whether the proposed
designation is being put forward on the relevant country’s own motion or at the
request of another country. Such (proposals for) designatio ns should not be
conditional upon the existence of a criminal proceeding.
(e) When proposing names to the 1267 Committee for inclusion on the Al- Qaida Sanctions
List, pursuant to resolution 1267 (1999) and its successor resolutions, countries
should:
(i) follow the procedures and standard forms for listing, as adopted by the 1267
Committee;

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(ii) provide as much relevant information as possible on the proposed name, in
particular, sufficient identifying information to allow for the accurate and
positive identification of individuals, groups, undertakings, and entities, and to
the extent possible, the information required by Interpol to issue a Special
Notice;
(iii) provide a statement of case which contains as much detail as possible on the
basis for the listing, including: specific information supporting a determination
that the person or entity meets the relevant criteria for designation (see Section
E for the specific designation criteria of relevant Security Council resolutions);
the nature of the information; supporting information or documents that can be
provided; and details of any connection between the proposed designee and any
currently designated person or entity. This statement of case should be
releasable, upon request, except for the part s a Member State identifies as being
confidential to the 1267 Committee; and
(iv) specify whether their status as a designating state may be made known.
(f) When proposing names to the 1988 Committee for inclusion on the Taliban Sanctions
List, pursuant to resolution 1988 (2011) and its successor resolutions, countries
should:
(i) follow the procedures for listing, as adopted by the 1988 Committee;
(ii) provide as much relevant information as possible on the proposed name, in
particular, sufficient ident ifying information to allow for the accurate and
positive identification of individuals, groups, undertakings, and entities, and to
the extent possible, the information required by Interpol to issue a Special
Notice; and
(iii) provide a statement of case which contains as much detail as possible on the
basis for the listing, including: specific information supporting a determination
that the person or entity meets the relevant designation (see Section E for the
specific designation criteria of relevant Se curity Council resolutions); the nature
of the information; supporting information or documents that can be provided;
and details of any connection between the proposed designee and any currently
designated person or entity. This statement of case should b e releasable, upon
request, except for the parts a Member State identifies as being confidential to
the 1988 Committee.
(g) When requesting another country to give effect to the actions initiated under the
freezing mechanisms that have been implemented pu rsuant to resolution 1373
(2001), the initiating country should provide as much detail as possible on: the
proposed name, in particular, sufficient identifying information to allow for the
accurate and positive identification of persons and entities; and specific information
supporting a determination that the person or entity meets the relevant criteria for
designation (see Section E for the specific designation criteria of relevant Security
Council resolutions).

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(h) Countries should have procedures to be able to operate ex parte against a person or
entity who has been identified and whose (proposal for) designation is being
considered.
C. FREEZING AND PROH IBITING DEALING IN F UNDS OR OTHER ASSETS OF DESIGNATED
PERSONS AND ENTITIES
5. There is an obligation for countries to implement targeted financial sanctions without delay
against persons and entities designated by the 1267 Committee and 1988 Committee (in the
case of resolution 1267 (1999) and its successor resolutions), when these Committees are
acting u nder the authority of Chapter VII of the Charter of the United Nations . For resolution
1373 (2001) , the obligation for countries to take freezing action and prohibit the dealing in
funds or other assets of designated persons and entities, without delay, is triggered by a
designation at the (supra -)national level, as put forward either on the country’s own motion
or at the request of another country, if the country receiving the request is satisfied, according
to applicable legal principles, that a requested designation is supported by reasonable
grounds, or a reasonable basis, to suspect or believe that the proposed designee meets the
criteria for designation in resolution 1373 (2001), as set forth in Section E.
6. Countries should establish the necessary le gal authority and identify domestic competent
authorities responsible for implementing and enforcing targeted financial sanctions, in
accordance with the following standards and procedures:
(a) Countries
6 should require all natural and legal persons with in the country to freeze,
without delay and without prior notice, the funds or other assets of designated
persons and entities. This obligation should extend to: all funds or other assets that
are owned or controlled by the designated person or entity, and not just those that can
be tied to a particular terrorist act, plot or threat; those funds or other assets that are
wholly or jointly owned or controlled, directly or indirectly, by designated persons or
entities; and the funds or other assets derived or generated from funds or other assets
owned or controlled directly or indirectly by designated persons or entities, as well as
funds or other assets of persons and entities acting on behalf of, or at the direction of,
designated persons or entities.
(b) Countries should prohibit their nationals, or any persons and entities within their
jurisdiction, from making any funds or other assets, economic resources, or financial
or other related services, available, directly or indirectly, wholly or jointly, for th e
benefit of designated persons and entities; entities owned or controlled, directly or
indirectly, by designated persons or entities; and persons and entities acting on behalf
of, or at the direction of, designated persons or entities, unless licensed, au thorised or
6 In the case of the European Union (EU), which is a supra -national jurisdiction under Recommendation 6,
the EU law applies as follows. The assets of designated persons and entities are frozen by the EU
regulations and their amendments. EU member states may have to take additional measures to
implement the freeze, and all natural and legal persons within the EU have to respect the freeze and not
make funds available to designated persons and entities.

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otherwise notified in accordance with the relevant Security Council resolutions (see
Section E below).
(c) Countries should have mechanisms for communicating designations to the financial
sector and the DNFBPs immediately upon taking such acti on, and providing clear
guidance, particularly to financial institutions and other persons or entities, including
DNFBPs, that may be holding targeted funds or other assets, on their obligations in
taking action under freezing mechanisms.
(d) Countries sho uld require financial institutions and DNFBPs
7 to report to competent
authorities any assets frozen or actions taken in compliance with the prohibition
requirements of the relevant Security Council resolutions, including attempted
transactions, and ensure that such information is effectively utilised by the competent
authorities.
(e) Countries should adopt effective measures which protect the rights of bona fide third
parties acting in good faith when implementing the obligations under
Recommendation 6.
D. DE-LISTING, UNFREEZ ING AND PROVIDING AC CESS TO FROZEN FUNDS OR OTHER ASSETS
7. Countries should develop and implement publicly known procedures to submit de -listing
requests to the Security Council in the case of persons and entities designated pursuant t o
resolution 1267(1999) and its successor resolutions that, in the view of the country, do not or
no longer meet the criteria for designation. In the event that the 1267 Committee or 1988
Committee has de -listed a person or entity, the obligation to freeze no longer exists. In the
case of de- listing requests related to Al -Qaida, such procedures and criteria should be in
accordance with procedures adopted by the 1267 Committee under Security Council
resolutions 1730 (2006), 1735 (2006), 1822 (2008), 1904 (20 09), 1989 (2011), and any
successor resolutions. In the case of de -listing requests related to the Taliban and related
threats to the peace, security and stability of Afghanistan, such procedures and criteria should
be in accordance with procedures adopted by the 1988 Committee under Security Council
resolutions 1730 (2006), 1735 (2006), 1822 (2008), 1904 (2009), 1988 (2011), and any
successor resolutions.
8. For persons and entities designated pursuant to resolution 1373 (2001), countries should
have appro priate legal authorities and procedures or mechanisms to delist and unfreeze the
funds or other assets of persons and entities that no longer meet the criteria for designation.
Countries should also have procedures in place to allow, upon request, review o f the
designation decision before a court or other independent competent authority.
9. For persons or entities with the same or similar name as designated persons or entities, who
are inadvertently affected by a freezing mechanism (i.e. a false positive), countries should
develop and implement publicly known procedures to unfreeze the funds or other assets of
7 Security Co uncil resolution s apply to all natural and legal persons within the country.

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such persons or entities in a timely manner, upon verification that the person or entity
involved is not a designated person or entity.
10. Where countries have determined that funds or other assets of persons and entities
designated by the Security Council, or one of its relevant sanctions committees, are necessary
for basic expenses, for the payment of certain types of fees, expenses and ser vice charges, or
for extraordinary expenses, countries should authorise access to such funds or other assets in
accordance with the procedures set out in Security Council resolution 1452 (2002) and any
successor resolutions. On the same grounds, countries should authorise access to funds or
other assets, if freezing measures are applied to persons and entities designated by a
(supra -)national country pursuant to resolution 1373 (2001) and as set out in resolution
1963 (2010).
11. Countries should provide f or a mechanism through which a designated person or entity can
challenge their designation, with a view to having it reviewed by a competent authority or a
court. With respect to designations on the Al -Qaida Sanctions List, countries should inform
designat ed persons and entities of the availability of the United Nations Office of the
Ombudsperson, pursuant to resolution 1904 (2009), to accept de -listing petitions.
12. Countries should have mechanisms for communicating de -listings and unfreezings to the
fi nancial sector and the DNFBPs immediately upon taking such action, and providing adequate
guidance, particularly to financial institutions and other persons or entities, including
DNFBPs, that may be holding targeted funds or other assets, on their obligat ions to respect a
de -listing or unfreezing action.
E. UNITED NATIONS DE SIGNATION CRITERIA
13. The criteria for designation as specified in the relevant United Nations Security Council
resolutions are:
(a)
Security Council resolutions 1267 (1999), 1989 (2011) and their successor
resolutions
8:
( i) any person or entity participating in the financing, planning, facilitating,
preparing, or perpetrating of acts or activities by, in conjunction with, under the
name of, on behalf of, or in support of; supplyi ng, selling or transferring arms
and related materiel to; recruiting for; or otherwise supporting acts or activities
of Al -Qaida, or any cell, affiliate, splinter group or derivative thereof
9; or
8 Recommendation 6 is applicable to all current and future successor resolutions to resolution
1267(1999). At the time of issuance of this Interpretive Note, (February 2012) , th e successor resolutions
to resolution 1267 (1999) are: resolutions 1333 (2000), 1367 (2001), 1390 (2002), 1455 (2003), 1526
(2004), 1617 (2005), 1735 (2006), 1822 (2008), 1904 (2009), 1988 (2011), and 1989 (2011).
9 OP2 of resolution 1617 (2005) furthe r defines the criteria for being “associated with” Al -Qaida or Usama bin
Laden.

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(ii) any undertaking owned or controlled, directly or indir ectly, by any person or
entity designated under subsection 13(a)(i), or by persons acting on their behalf
or at their direction.
(b)
Security Council resolutions 1267 (1999), 1988 (2011) and their successor
resolutions
:
(i) any person or entity particip ating in the financing, planning, facilitating,
preparing, or perpetrating of acts or activities by, in conjunction with, under the
name of, on behalf of, or in support of; supplying, selling or transferring arms
and related materiel to; recruiting for; or otherwise supporting acts or activities
of those designated and other individuals, groups, undertakings and entities
associated with the Taliban in constituting a threat to the peace, stability and
security of Afghanistan; or
(ii) any undertaking owned o r controlled, directly or indirectly, by any person or
entity designated under subsection 13(b)(i) of this subparagraph, or by persons
acting on their behalf or at their direction.
(c)
Security Council resolution 1373 (2001) :
(i) any person or entity who commits or attempts to commit terrorist acts, or who
participates in or facilitates the commission of terrorist acts;
(ii) any entity owned or controlled, directly or indirectly, by any person or entity
designated under subsection 13(c) (i) of this subp aragraph; or
(iii) any person or entity acting on behalf of, or at the direction of, any person or
entity designated under subsection 13(c) (i) of this subparagraph.

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INTERPRETIVE NOTE TO RECOMMENDATION 7
(TARGETED FINANCIAL SANCTIONS RELATED TO PR OLIFERATION)
A. OBJECTIVE
1. Recommendation 7 requires countries to implement targeted financial sanctions 10 to comply
with United Nations Security Council resolutions that require countries to freeze, without
delay, the funds or other assets of, and to ensure that no funds and other assets are made
available to, and for the benefit of, any person
11 or entity designated by the United Nations
Security Council under Chapter VII of the Charter of the United Nations, pursuant to Securit y
Council resolutions that relate to the prevention and disruption of the financing of
proliferation of weapons of mass destruction.
12
2. It should be stressed that none of the requirements in Recommendation 7 is intended to
replace other measures or oblig ations that may already be in place for dealing with funds or
other assets in the context of a criminal, civil or administrative investigation or proceeding, as
is required by international treaties or Security Council resolutions relating to weapons of
ma ss destruction non -proliferation.
13 The focus of Recommendation 7 is on preventive
measures that are necessary and unique in the context of stopping the flow of funds or other
assets to proliferators or proliferation; and the use of funds or other assets by proliferators or
proliferation, as required by the United Nations Security Council (the Security Council).

10 Recommendation 7 is focused on targeted financial sanctions. These include the specific restrictions set
out in Security Council resolution 2231 (2015) (see Annex B paragrap hs 6(c) and (d)). However, it should
be noted that the relevant United Nations Security Council Resolutions are much broader and prescribe
other types of sanctions (such as travel bans) and other types of financial provisions (such as activity –
based financ ial prohibitions, category -based sanctions and vigilance measures). With respect to targeted
financial sanctions related to the financing of proliferation of weapons of mass destruction and other types
of financial provisions , the FATF has issued non -bindi ng guidance, which jurisdictions are encouraged to
consider in their implementation of the relevant UNSCRs.
11 Natural or legal person.
12 Recommendation 7 is applicable to all current Security Council resolutions applying targeted financial
sanctions relating to the financing of proliferation of weapons of mass destruction , any future successor
resolutions, and any future Security Council resolutions which impose targeted financial sanctions in the
context of the financing of proliferation of weapons of mass destruction . At the time of issuance of this
Interpretive Note (June 2017), the Security Council resolutions applying targeted financial sanctions
relating to the financing of proliferation of weapons of mass destruction are: resolutions 1718 (2006 ),
1874 (2009), 2087 (2013), 2094 (2013 ), 2270 (2016), 2321 (2016) and 2356 (2017). Resolution
2231 (2015), endorsing the Joint Comprehensive Plan of Action, terminated all provisions of resolutions
relating to Iran and proliferation financing, including 1737 (2006), 1747 (2007), 1803 (2008) and
1929 (2010), but established specific restrictions including targeted financial sanctions. This lifts
sanctions as part of a step by step approach with reciprocal commitments endorsed by the Security
Council. Impl ementation day of the JCPOA was on 16 January 2016.
13 Based on requirements set, for instance, in the Nuclear Non-Proliferation Treaty , the Biological and Toxin
Weapons Convention, the Chemical Weapons Convention , and Security Council resolutions 1540 (2004)
and 2235 (2016). Those obligations exist separately and apart from the obligations set forth in
Recommendation 7 and its interpretive note.

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B. DESIGNATIONS
3. Designations are made by the Security Council in annexes to the relevant resolutions, or by
the Security Council Committees established pursuant to these resolutions. There is no
specific obligation upon United Nations Member States to submit proposals for designations
to the Security Council or the relevant Security Council Committee(s). However, in practice,
the Security Counci l or the relevant Committee(s) primarily depends upon requests for
designation by Member States. Security Council resolution 1718 (2006) provides that the
relevant Committee shall promulgate guidelines as may be necessary to facilitate the
implementation o f the measures imposed by this resolution and its successor resolutions.
Resolution 2231 (2015) provides that the Security Council shall make the necessary practical
arrangements to undertake directly tasks related to the implementation of the resolution.
4. Countries could consider establishing the authority and effective procedures or mechanisms
to propose persons and entities to the Security Council for designation in accordance with
relevant Security Council resolutions which impose targeted financial s anctions in the context
of the financing of proliferation of weapons of mass destruction. In this regard, countries
could consider the following elements:
(a) identifying a competent authority(ies), either executive or judicial, as having
responsibility fo r:
(i) proposing to the 1718 Sanctions Committee, for designation as appropriate,
persons or entities that meet the specific criteria for designation as set forth in
resolution 1718 (2006) and its successor resolutions
14, if that authority decides
to do so and believes that it has sufficient evidence to support the designation
criteria (see Section E for the specific designation criteria associated with
relevant Security Council resolutions); and
(ii) proposing to the Se curity Council, for designation as appropriate, persons or
entities that meet the criteria for designation as set forth in
resolution 2231 (2015) and any future successor resolutions, if that authority
decides to do so and believes that it has sufficient e vidence to support the
designation criteria (see Section E for the specific designation criteria associated
with relevant Security Council resolutions).
(b) having a mechanism(s) for identifying targets for designation, based on the
designation criteria set out in resolutions 1718 (2006), 2231 (2015), and their
successor and any future successor resolutions (see Section E for the specific
designation criteria of relevant Security Council resolutions). Such procedures should
ensure the determination, accord ing to applicable (supra-)national principles,
whether reasonable grounds or a reasonable basis exists to propose a designation.
14 Recommendation 7 is applicable to all current and future successor resolutions to resolution
1718 (2006). At the time of issuance of this Interpretive Note (June 2017), the successor resolutions to
resolution 1718 (2006) are: resolution 1874 (2009), resolution 2087 (2013), resolution 2094 (2013),
resolution 2270 (2016), resolution 2321 (2016) and resolution 2356 (2017).

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(c) having appropriate legal authority, and procedures or mechanisms, to collect or solicit
as much information as possible fro m all relevant sources to identify persons and
entities that, based on reasonable grounds, or a reasonable basis to suspect or believe,
meet the criteria for designation in the relevant Security Council resolutions.
(d) when deciding whether or not to prop ose a designation, taking into account the
criteria in Section E of this interpretive note. For proposals of designations, the
competent authority of each country will apply the legal standard of its own legal
system, taking into consideration human rights, respect for the rule of law, and in
recognition of the rights of innocent third parties.
(e) when proposing names to the 1718 Sanctions Committee, pursuant to resolution
1718 (2006) and its successor resolutions, or to the Security Council, pursuant to
r esolution 2231 (2015) and any future successor resolutions, providing as much detail
as possible on:
(i) the proposed name, in particular, sufficient identifying information to allow for
the accurate and positive identification of persons and entities; and
(ii) specific information supporting a determination that the person or entity meets
the relevant criteria for designation (see Section E for the specific designation
criteria of relevant Security Council resolutions).
(f) having procedures to be able, w here necessary, to operate ex parte against a person or
entity who has been identified and whose proposal for designation is being
considered.
C. FREEZING AND PROH IBITING DEALING IN F UNDS OR OTHER ASSETS
OF DESIGNATED PERSON S AND ENTITIES
5. There is an obligation for countries to implement targeted financial sanctions without delay
against persons and entities designated:
(a) in the case of resolution 1718 (2006) and its successor resolutions, by the Security
Council in annexes to the relevant resolutio ns, or by the 1718 Sanctions Committee of
the Security Council
15; and
(b) in the case of resolution 2231 (2015) and any future successor resolutions by the
Security Council,

when acting under the authority of Chapter VII of the Charter of the United Nations.
15 As noted in resolution 2270 (2016) (OP32) this also applies to entities of the Government of the
Democratic People’s Republic of Korea or the Worker’s Party of Korea that countries determine are
associated with the DPRK’s nuclear or ballistic missile programmes or other activities prohibited by
resolution 1718 (2006) and successor resolutions.

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6. Countries should establish the necessary legal authority and identify competent domestic
authorities responsible for implementing and enforcing targeted financial sanc tions, in
accordance with the following standards and procedures:
(a) Countries
16 should require all natural and legal persons within the country to freeze,
without delay and without prior notice, the funds or other assets of designated
persons and entities . This obligation should extend to: all funds or other assets that
are owned or controlled by the designated person or entity, and not just those that can
be tied to a particular act, plot or threat of proliferation; those funds or other assets
that are wh olly or jointly owned or controlled, directly or indirectly, by designated
persons or entities; and the funds or other assets derived or generated from funds or
other assets owned or controlled directly or indirectly by designated persons or
entities, as w ell as funds or other assets of persons and entities acting on behalf of, or
at the direction of designated persons or entities.
(b) Countries should ensure that any funds or other assets are prevented from being made
available by their nationals or by any persons or entities within their territories, to or
for the benefit of designated persons or entities unless licensed, authorised or
otherwise notified in accordance with the relevant Security Council resolutions (see
Section E below).
(c) Countries shoul d have mechanisms for communicating designations to financial
institutions and DNFBPs immediately upon taking such action, and providing clear
guidance, particularly to financial institutions and other persons or entities, including
DNFBPs, that may be hol ding targeted funds or other assets, on their obligations in
taking action under freezing mechanisms.
(d) Countries should require financial institutions and DNFBPs
17 to report to competent
authorities any assets frozen or actions taken in compliance with t he prohibition
requirements of the relevant Security Council resolutions, including attempted
transactions, and ensure that such information is effectively utilised by competent
authorities.
(e) Countries should adopt effective measures which protect the rights of bona fide third
parties acting in good faith when implementing the obligations under
Recommendation 7.
(f) Countries should adopt appropriate measures for monitoring, and ensuring
compliance by, financial institutions and DNFBPs with the relevant laws or
16 In the case of the European Union (EU), which is considered a supra -national jurisdiction under
Recommendation 7 by the FATF, the assets of designated p ersons and entities are frozen under EU
Common Foreign and Security Policy (CFSP) Council decisions and Council regulations (as amended). EU
member states may have to take additional measures to implement the freeze, and al l natural and legal
persons withi n the EU have to respect the freeze and not make funds available to designated persons and
entities.
17 Security Council resolutions apply to all natural and legal persons within the country.

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enforceable means governing the obligations under Recommendation 7. Failure to
comply with such laws, or enforceable means should be subject to civil, administrative
or criminal sanctions.
D. DE-LISTING, UNFRE EZING AND PROVIDING ACCESS TO FROZEN FUNDS OR OTHER ASSETS
7. Countries should develop and implement publicly known procedures to submit de -listing
requests to the Security Council in the case of designated persons and entities, that, in the
view of the country, do not or no longer meet the cr iteria for designation. Once the Security
Council or the relevant Sanctions Committee has de -listed the person or entity, the obligation
to freeze no longer exists. In the case of resolution 1718 (2006) and its successor resolutions,
such procedures and cr iteria should be in accordance with any applicable guidelines or
procedures adopted by the Security Council pursuant to resolution 1730 (2006) and any
successor resolutions, including those of the Focal Point mechanism established under that
resolution. Countries should enable listed persons and entities to petition a request for
delisting at the Focal Point for de -listing established pursuant to resolution 1730 (2006), or
should inform designated persons or entities to petition the Focal Point directly.
8. For persons or entities with the same or similar name as designated persons or entities, who
are inadvertently affected by a freezing mechanism (i.e., a false positive), countries should
develop and implement publicly known procedures to unfreeze the fun ds or other assets of
such persons or entities in a timely manner, upon verification that the person or entity
involved is not a designated person or entity.
9. Where countries have determined that the exemption conditions set out in
resolution 1718(2006) and resolution 2231 (2015) are met, countries should authorise access
to funds or other assets in accordance with the procedures set out therein.
10. Countries should permit the addition to the accounts frozen pursuant to
resolution 1718 (2006) or resolut ion 2231 (2015) of interests or other earnings due on those
accounts or payments due under contracts, agreements or obligations that arose prior to the
date on which those accounts became subject to the provisions of this resolution, provided
that any such interest, other earnings and payments continue to be subject to these provisions
and are frozen.
11. Freezing action taken pursuant to resolution 1737 (2006) and continued by
resolution 2231 (2015), or taken pursuant to resolution 2231 (2015), shall not p revent a
designated person or entity from making any payment due under a contract entered into prior
to the listing of such person or entity, provided that:
(a) the relevant countries have determined that the contract is not related to any of the
prohibite d items, materials, equipment, goods, technologies, assistance, training,
financial assistance, investment, brokering or services referred to in
resolution 2231 (2015) and any future successor resolutions;
(b) the relevant countries have determined that th e payment is not directly or indirectly
received by a person or entity subject to the measures in paragraph 6 of Annex B to
resolution 2231 (2015); and

THE FATF RECOMMENDATIONS
INTERNATIONAL STANDARDS ON COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM & PROLIFERATION
50  2012- 2019
(c) the relevant countries have submitted prior notification to the Security Council of the
intention to make or receive such payments or to authorise, where appropriate, the
unfreezing of funds, other financial assets or economic resources for this purpose, ten
working days prior to such authorisation.
18
12. Countries should have mechanisms for communicating de -listings and unfreezings to the
financial sector and the DNFBPs immediately upon taking such action, and providing adequate
guidance, particularly to financial institutions and other persons or entities, including
DNFBPs, that may be holding targeted funds or other assets, on their obligations to respect a
de -listing or unfreezing action.
E. UNITED NATIONS DE SIGNATION CRITERIA
13. The criteria for designation as specified in the relevant United Nations Security Council
resolutions are:
(a)
On DPRK – Resolutions 1718 (2006), 2087 (2013), 2094 (2013) and 2270 (2016) :
(i) any person or entity engaged in the Democratic People’s Republic of Korea
(DPRK)’s nuclear- related, other WMD -related and ballistic missile -related
programmes;
(ii) any person or ent ity providing support for DPRK’s nuclear -related, other WMD –
related and ballistic missile -related programmes, including through illicit
means;
(iii) any person or entity acting on behalf of or at the direction of any person or
entity designated under subs ection 13(a)(i) or subsection 13(a)(ii)
19;
(iv) any legal person or entity owned or controlled, directly or indirectly, by any
person or entity designated under subsection 13(a)(i) or subsection 13(a)(ii)
20;
(v) any person or entity that has assisted in th e evasion of sanctions or in violating
the provisions of resolutions 1718 (2006) and 1874 (2009);
(vi) any person or entity that has contributed to DPRK’s prohibited programmes, activities prohibited by the DP RK -related resolutions, or to the evasion of
provisions; or
18 In cases where the designated person or entity is a financial institution, jurisdictions should consider the
FATF guidance issued as an annex to The Implementation of Financial Provisions of United Nations
Security Council Resolutions to Counter the Prolif eration of Weapons of Mass Destruction, adopted in June
2013.
19 The funds or assets of these persons or entities are frozen regardless of whether they are specifically
identified by the Committee. Further, resolution 2270 (2016) OP23 expanded the scope of targeted
financial sanctions obligations under resolution 1718 (2006), by applying these to the Ocean Maritime
Management Company vessels specified in Annex III of resolution 2270 (2016).
20 Ibid.

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(vii) any entity of the Government of the DPRK or the Worker’s Party of Korea, or
person or entity acting on their behalf or at their direction, or by any entity
owned or controlled by them, that countries determine are associated with the
DPRK’s nuclear or ballistic missile programmes or other activities prohibited by
resolution 1718 (2006) and successor resolutions.
(b)
On Iran – Resolution 2231 (2015) :
(i) any person or entity having engaged in, directly associated with or provided
support for Iran’s proliferation sensitive nuclear activities contrary to Iran’s
commitments in the Joint Comprehensive Plan of Action (JCPOA) or the
development of nuclear weapon delivery systems, including through the
involvement in procurement of prohibited items, goods, equipment, materials
and technology specified in Annex B to resolution 2231 (2015);
(ii) any person or entity assisting designated persons or entities in evadi ng or acting
inconsistently with the JCPOA or resolution 2231 (2015); and
(iii) any person or entity acting on behalf or at a direction of any person or entity in
subsection 13(b)(i), subsection 13(b)(ii) and/or subsection 13(b)(iii), or by any
entities ow ned or controlled by them.

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INTERNATIONAL STANDARDS ON COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM & PROLIFERATION
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INTERPRETIVE NOTE TO RECOMMENDATION 8
(NON- PROFIT ORGANISA TIONS)
A. INTRODUCTION
1. Given the variety of legal forms that non -profit organisations (NPOs) can have, depending on
the country, the FATF has adopted a functional de finition of NPO. This definition is based on
those activities and characteristics of an organisation which put it at risk of terrorist financing
abuse, rather than on the simple fact that it is operating on a non -profit basis. For the
purposes of this Reco mmendation, NPO refers to a legal person or arrangement or
organisation that primarily engages in raising or disbursing funds for purposes such as
charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out
of other types of “good works”. Without prejudice to Recommendation 1, this
Recommendation only applies to those NPOs which fall within the FATF definition of an NPO.
It does not apply to the entire universe of NPOs.
2. NPOs play a vital role in the world economy and in many national economies and social
systems. Their efforts complement the activity of the governmental and business sectors in
providing essential services, comfort and hope to those in need around the world. The FATF
recognises the vital importance of NPOs in providing these important charitable services, as
well as the difficulty of providing assistance to those in need, often in high risk areas and
conflict zones, and applauds the efforts of NPOs to meet such needs. The FATF also recognises
the int ent and efforts to date of NPOs to promote transparency within their operations and to
prevent terrorist financing abuse, including through the development of programmes aimed
at discouraging radicalisation and violent extremism. The ongoing international campaign
against terrorist financing has identified cases in which terrorists and terrorist organisations
exploit some NPOs in the sector to raise and move funds, provide logistical support, encourage
terrorist recruitment, or otherwise support terrorist o rganisations and operations. As well,
there have been cases where terrorists create sham charities or engage in fraudulent
fundraising for these purposes. This misuse not only facilitates terrorist activity, but also
undermines donor confidence and jeopard ises the very integrity of NPOs. Therefore,
protecting NPOs from terrorist financing abuse is both a critical component of the global fight
against terrorism and a necessary step to preserve the integrity of NPOs and the donor
community. Measures to protect NPOs from potential terrorist financing abuse should be
targeted and in line with the risk -based approach. It is also important for such measures to be
implemented in a manner which respects countries’ obligations under the Charter of the
United Nations and international human rights law.
3. Some NPOs may be vulnerable to terrorist financing abuse by terrorists for a variety of
reasons. NPOs enjoy the public trust, have access to considerable sources of funds, and are
often cash -intensive. Furthermore, so me NPOs have a global presence that provides a
framework for nati

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