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11 Key FATF Outcomes: Dynamic Reforms Inspire Global Change

In February 2025, global financial security took center stage during the second FATF Plenary Meeting, held from 19 to 21 February in Paris, France. Under the leadership of President Elisa de Anda Madrazo from Mexico, delegates from over 200 jurisdictions and observers representing international organisations gathered to debate and decide on transformative measures to combat money laundering, terrorist financing, and proliferation financing. This comprehensive report delves into the detailed discussions, strategic initiatives, and forward-looking actions that emerged from the meeting, offering an in‐depth perspective on how global financial integrity is being reinforced.

The plenary session in Paris marked a significant turning point in the evolution of international financial regulation. Delegates engaged in robust, technical debates over a three‐day period, with a primary focus on ensuring that countries adopt and maintain effective measures to counter illicit financial flows. Emphasising a risk‐based approach and prioritising financial inclusion, the FATF Outcomes announced during the meeting signal a major step forward in safeguarding the global financial system.

One of the major highlights was the revision of the FATF Standards, aimed at promoting a risk-based framework that not only mitigates the risks associated with money laundering but also supports financial inclusion. The need to adapt to a rapidly evolving global landscape, where nearly 1.4 billion people remain unbanked, was a recurring theme. The reformed standards encourage financial institutions to apply simplified measures in lower-risk scenarios, thereby helping to extend financial services to more people without compromising on security. This nuanced approach is designed to balance robust regulatory oversight with the practical realities of modern financial inclusion.

Delegates also addressed a critical challenge: combating the exploitation of vulnerable populations through online platforms. A landmark report, slated for publication next month, was approved to tackle the financial flows linked to online child sexual exploitation. By focusing on financial intelligence and enhanced monitoring, the report aims to disrupt and prevent the “sextortion” of children. This initiative underscores the FATF’s commitment to protecting the most vulnerable and ensuring that technological advancements do not come at the cost of human dignity.

The plenary’s agenda extended to launching further public consultations on emerging issues such as payment transparency and complex proliferation financing schemes. These consultations are intended to incorporate a broad range of views—from financial institutions, regulatory bodies, and the private sector—to craft more refined and practical regulatory measures. By inviting feedback and actively engaging diverse stakeholders, the FATF Outcomes not only reinforce current standards but also pave the way for continuous improvement in global financial governance.

Strategic Initiatives and Global Cooperation

Building on a strong foundation of public consultations and expert analyses, the FATF’s strategic initiatives reflect a proactive approach to addressing systemic vulnerabilities. The adoption of revised standards is particularly significant when viewed through the lens of financial inclusion and the risk-based approach. Over 140 responses from a diverse group of experts, including non-profit organisations, banks, payment providers, insurers, academics, and lawyers, informed these changes. The collaborative effort has provided the FATF with a rich tapestry of insights that underline the need for flexible yet rigorous compliance measures.

An essential component of the discussions was the reclassification of several jurisdictions in line with their progress in adhering to the revised standards. The Philippines, for instance, was removed from the list of countries under increased monitoring following a successful on-site evaluation. This development was celebrated as a positive outcome, demonstrating that rigorous oversight, when combined with dedicated reform efforts, can lead to tangible improvements in a country’s ability to combat money laundering and related financial crimes.

In parallel, the FATF expanded its network by inviting new participants to its guest initiative. Kenya was one of the newest additions, joining the Cayman Islands and Senegal, which had been involved since October 2024. This inclusive step is part of a broader strategy to integrate regional perspectives and expertise into global financial regulation. The guest initiative represents an opportunity for countries that are not yet full members of the FATF to contribute their insights, further enriching the dialogue on compliance and enforcement measures.

The meeting also addressed the status of jurisdictions under increased monitoring. For countries that have been identified as having significant strategic deficiencies in their systems, the FATF has put in place strict action plans with defined timeframes for improvement. For example, the Lao People’s Democratic Republic and Nepal were added to this category, highlighting the ongoing commitment to remediate risks associated with money laundering and related crimes. These actions underscore the FATF’s zero-tolerance approach towards any lapses that could compromise global financial security.

Amid these regulatory adjustments, the FATF reaffirmed the suspension of the Russian Federation’s membership. This decision remains in effect and serves as a stern reminder to all jurisdictions about the importance of adhering to internationally accepted standards to prevent the circumvention of measures designed to protect the global financial ecosystem.

Challenges and Future Directions

The FATF Plenary Meeting was not just about celebrating achievements; it was also a candid examination of the challenges ahead. One of the most pressing issues discussed was the need to maintain balance between stringent financial controls and fostering an environment conducive to innovation. In today’s fast-paced digital world, regulators face the difficult task of ensuring compliance while not stifling technological progress or limiting access to financial services. The evolving landscape of online financial transactions and digital payments necessitates an agile regulatory framework that can adapt to new threats without hindering economic growth.

A key area of concern is the need for greater transparency in payment systems. By addressing issues around payment transparency, the FATF Outcomes aim to streamline information flows and bolster the integrity of cross-border transactions. The proposed revisions to Recommendation 16, which focuses on improving the standardisation of originator and beneficiary data, are expected to reduce duplication and enhance the efficiency of compliance procedures. The idea is to create a system where financial transactions are not only secure but also transparent, making it easier to detect irregularities that might signal illicit activities.

The FATF Outcomes also shed light on the phenomenon of “de-risking,” where financial institutions, driven by an overabundance of caution, may inadvertently exclude legitimate customers from accessing essential financial services. Such practices can lead to unintended consequences, including the curtailment of non-profit organisations and the disruption of normal economic activities. The revised standards advocate for a calibrated, risk-based approach that ensures security while preserving the financial rights of individuals and businesses. This delicate balancing act is crucial to preventing the negative social and economic impacts that can arise from overly stringent regulations.

Another significant challenge discussed was the rising complexity of proliferation financing and sanctions evasions. As global trade and financial transactions become more sophisticated, so too do the methods employed by those seeking to exploit regulatory loopholes. The FATF Outcomes call for enhanced collaboration with both the public and private sectors to share insights and best practices on identifying, assessing, and mitigating these risks. The planned public consultations on these topics will provide policymakers with a valuable opportunity to gather a wide array of perspectives, which in turn will inform the development of more robust countermeasures.

The conference further highlighted the importance of horizontal reviews of designated non-financial businesses and professions (DNFBPs) such as lawyers, accountants, and real estate agents. These gatekeepers play a critical role in the financial system, and their compliance with FATF Recommendations is essential to maintaining the overall integrity of the regulatory framework. The FATF Outcomes encourage jurisdictions to continue addressing any deficiencies in this area, ensuring that all stakeholders contribute effectively to the collective effort to combat money laundering and related crimes.

Looking to the future, the FATF has already set the stage for continued progress by announcing the upcoming appointment of a new Vice President. Mr Giles Thomson from the United Kingdom, who will assume the role on 1 July 2025, is expected to build on the momentum generated by his predecessors. His extensive experience in financial sanctions and economic crime will be instrumental in guiding the FATF through the next phase of its reform agenda. With a leadership structure that is responsive to emerging challenges, the FATF Outcomes signal a promising trajectory for the global fight against financial crime.

Conclusion

The FATF Plenary Meeting held in Paris in February 2025 delivered transformative FATF Outcomes that promise to reshape the global financial landscape. Through the adoption of revised standards and the initiation of strategic public consultations, the meeting underscored the importance of a balanced, risk-based approach that safeguards financial integrity while promoting inclusion. The collaborative spirit demonstrated by delegates—from the successful removal of the Philippines from increased monitoring to the integration of guest jurisdictions like Kenya—reflects a collective commitment to addressing both traditional and emerging financial crimes. The emphasis on transparency, coupled with targeted initiatives to combat online child sexual exploitation and proliferation financing, highlights the FATF’s proactive role in tackling some of the most complex challenges of our time.

As global financial markets continue to evolve, the need for agile and comprehensive regulatory frameworks has never been greater. The decisions taken during this landmark meeting are set to influence policy directions and regulatory practices worldwide, reaffirming the FATF’s position as a critical guardian of international financial stability. With forward-looking leadership and a clear strategy to incorporate diverse perspectives, the FATF Outcomes from the February 2025 Plenary represent a significant leap forward in the ongoing battle against money laundering, terrorism financing, and other illicit financial activities.

The road ahead will undoubtedly present challenges, but the progress made during this session provides a strong foundation for continued collaboration and innovation. The balance between enforcing strict regulatory measures and promoting financial inclusion will be key to ensuring that the global financial system remains both secure and accessible. The FATF’s commitment to continuous improvement, as evidenced by the scheduled public consultations and the upcoming guidance on best practices, is a testament to its enduring mission of protecting the international financial ecosystem.

As countries navigate the complexities of modern financial operations, the importance of a coordinated, global response to financial crime cannot be overstated. The FATF Outcomes are more than just regulatory adjustments—they are a call to action for all nations to embrace a risk-based, inclusive approach that leverages technological advances while upholding the highest standards of transparency and accountability. With these decisive steps, the FATF is setting a precedent for how international cooperation and informed policymaking can drive meaningful change in an increasingly interconnected world.