FATF

The Financial Action Task Force, or FATF, is an intergovernmental body that sets global standards to combat money laundering, terrorist financing and related financial crime. Its recommendations shape identity-verification and customer due-diligence rules worldwide.

FATF does not directly regulate banks, fintechs or identity-verification providers. Instead, its standards are implemented through national and regional laws, regulations and supervisory guidance.

For identity verification, FATF is most relevant to anti-money laundering and counter-terrorist financing programs. These programs require covered firms to understand who their customers are and to manage financial-crime risk.

Why FATF matters for IDV

FATF's Recommendations are the main international framework for anti-money laundering, counter-terrorist financing and counter-proliferation financing. Recommendation 10 covers customer due diligence, often called CDD, including identifying and verifying a customer's identity using reliable, independent source documents, data or information.

• Firms must identify customers and, where relevant, beneficial owners, meaning the people who ultimately own or control an entity.
• Verification methods can include government identity documents, authoritative databases and other reliable independent sources, subject to local law and risk.
• Higher-risk relationships may require enhanced due diligence, such as additional identity evidence, source-of-funds checks or ongoing monitoring.
• Firms should not rely on an IDV check alone. They must also screen and monitor for suspicious activity when required.

Standards, assessments and country risk

FATF evaluates how well jurisdictions implement its standards. It also identifies jurisdictions with serious strategic deficiencies in their anti-money laundering and counter-terrorist financing controls. These findings can affect how financial institutions assess country risk and when they apply enhanced due diligence.

The United States, EU member states and other jurisdictions translate FATF principles differently. IDV obligations therefore depend on the applicable local regime, such as US Bank Secrecy Act rules or EU anti-money laundering law, rather than FATF guidance alone.

Go deeper: FATF Grey List and Black List Explained and Crypto and the Travel Rule: KYC Reaches Decentralized Finance.