1.5 KiB
risk-weight mapping correctness. A $100K/yr Basel gate package for a G-SIB
risk-weight mapping correctness. A $100K/yr Basel gate package for a G-SIB is a trivial expense relative to the capital requirement penalty of getting the mapping wrong.
FATF (Financial Action Task Force) — AML/CFT Standards
International standard-setter for anti-money laundering and counter-terrorism financing. 40 Recommendations covering: risk assessment, customer due diligence (CDD), beneficial ownership transparency, suspicious transaction reporting, targeted financial sanctions, proliferation financing. National implementation varies by jurisdiction.
Who must comply: Financial institutions, DNFBPs (designated non-financial businesses and professions), virtual asset service providers (VASPs). In practice: every bank, money service business, crypto exchange, and high-value dealer globally.
Penalties: National enforcement varies. Systemic failures lead to FATF grey-list (monitoring) or black-list (counter-measures). Grey-listing increases transaction costs — Iran and North Korea are black-listed.
Why it matters: FATF's CDD requirements are the most widespread and rule-complex compliance obligation globally. The gate stack can encode tiered CDD rules, prove that every customer onboarding followed the correct verification path, and produce an auditable trail for every suspicion