International Standards: FATF, Egmont, Wolfsberg & Basel

Financial crime is global, but there is no single world regulator, no global police force that can reach across every border at will. Instead there's a layered architecture: international standard-setters that write the rules, membership bodies that coordinate and share intelligence, and national regulators and laws that put it all into force on the ground. The CFCS makes International Standards its own content area because a specialist must know who does what, which body sets the global benchmark, which one links investigators across borders, which one shapes day-to-day bank practice, and which gives the rules legal teeth.

Get the map straight and a lot of confusing scenarios resolve, because the exam often hands you a clue, FIUs, correspondent banking, mutual evaluation, grey list, that points straight at one body. Confuse the bodies and otherwise easy points slip quietly away. Let's now meet the key players.

At the center sits the Financial Action Task Force, FATF, the global standard-setter for anti-money-laundering and counter-terrorist-financing. Its 40 Recommendations are the benchmark that national laws around the world implement, you've cited them throughout this course, from the risk-based approach to confiscation. FATF doesn't regulate banks directly and can't fine anyone; it sets standards and then assesses countries through mutual evaluations, peer reviews that grade how well a country's laws and enforcement meet the Recommendations, looking at both technical compliance and real-world effectiveness.

The real pressure comes from FATF's public lists: jurisdictions with serious deficiencies land on the grey list, increased monitoring, or the black list, the call-for-action countries, which raises their cost of doing business, scares off correspondent banks, and pushes them to reform. A common exam distractor is treating FATF as a regulator that itself prosecutes, it doesn't.

Where FATF sets standards, the Egmont Group connects the people who use financial intelligence. It's a network of national financial intelligence units, the FIUs, agencies like FinCEN that receive and analyze suspicious activity reports, and it gives them a secure channel, the Egmont Secure Web, to exchange information across borders. When a laundering scheme touches five countries, Egmont is how those five FIUs compare notes lawfully and quickly, without waiting on slower formal treaty channels.

Think of FATF as writing the rulebook and Egmont as wiring up the investigators, complementary, not competing, and note that Egmont sets no standards and grades no countries. For the exam, if a question is about secure cross-border intelligence sharing between FIUs, Egmont is the answer; if it's about country standards, mutual evaluations, and lists, that's FATF, and keeping those two straight earns easy points.

Two more bodies round out the picture. The Wolfsberg Group is an association of major global banks that publishes influential good-practice guidance, especially on correspondent banking, where one bank holds accounts for another and inherits its customer's risk at one remove. Its Correspondent Banking Due Diligence Questionnaire, the CBDDQ, has become a near-standard way for banks to vet each other, replacing dozens of bespoke questionnaires with one common form.

The Basel Committee on Banking Supervision, the global forum of banking supervisors, issues guidance such as the sound management of money-laundering and terrorist-financing risks, embedding financial-crime expectations into prudential supervision alongside capital and liquidity. So one body is industry-led and voluntary, the other supervisor-led, and both shape how banks actually behave, even though neither writes binding law itself, a distinction the exam likes to probe.

Underpinning much of this are the United Nations conventions, the Vienna Convention on drug trafficking, which first obliged states to criminalize drug-money laundering, the Palermo Convention on transnational organized crime, and the Merida Convention against corruption, which create the binding treaty obligations that FATF's softer standards operationalize. And at the bottom, national regulators, FinCEN in the United States, the FCA in the United Kingdom, and their peers, enforce the rules locally with real penalties, fines, license revocations, and prosecutions. The whole system flows downward: conventions and standards at the top, law and enforcement at the ground.

So, recap: FATF sets the standard, runs mutual evaluations, and grades countries; Egmont links FIUs; Wolfsberg shapes bank practice, especially correspondent banking; Basel embeds expectations into supervision; and UN conventions plus national regulators give it legal force. Next, we build a compliance program. Test yourself first.