In an address entitled, ‘When Compliance isn’t Enough: The Global Shift to Effectiveness,’ Alfred Zammit, Vice-Chair, MONEYVAL discussed the institution’s mission and assessment framework and its role in helping member countries in their compliance with FATF (Financial Action Task Force) standards for countering money laundering and terrorism financing.
As the expert noted, the assessment uses two main components: Technical Compliance: Rating countries' adherence to FATF's 40 recommendations (rated as non-compliant, partially compliant, largely compliant, or compliant) and the Effectiveness Assessment: Evaluating outcomes against 11 "immediate outcomes" which are rated as low, moderate, substantial, or high effectiveness.
Zammit also talked about the critical gap between compliance and effectiveness.
The speaker highlighted a significant disparity: while 70% of countries achieve largely compliant or compliant ratings on technical compliance, only 24% achieve substantial or high effectiveness on immediate outcomes. This reveals that good legal frameworks often don't translate into practical, tangible results in fighting financial crime.
On recent methodology changes, Zammit pointed out the FATF framework was updated to refocus Immediate Outcome 3 entirely on the financial sector and Immediate Outcome 4 on the non-financial sector, emphasizing supervisors' risk understanding and private sector compliance with AML/CFT controls.
Highlighting a shift toward effectiveness, the speaker emphasized that compliance must move beyond a "tick-box approach" to focus on actual outcomes -whether measures effectively prevent and combat financial crime. This requires flexible, risk-based frameworks, proper coordination between authorities, and meaningful private sector engagement.
Identifying challenges, Zammit said that key issues include fragmented responsibilities, inconsistent implementation, frameworks that look robust on paper but lack real-world impact, and the need for adaptability in response to emerging risks like FinTech and virtual assets.
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