“Annually, between 2% and 5% of the world’s GDP, over 2 trillion dollars, is laundered through the financial systems worldwide” [OECD, 2023][FATF, 2024]. These funds not only fuel global crime but also undermine trust in international markets, creating reputational and sanction risks for companies entering new markets. In a landscape where regulators tighten control and banks demand transparency in corporate structures, entrepreneurs and top managers face the challenge: how to ensure sustainable business development without falling under sanctions and losing access to banking services?
In this article, I, Nikita Veremeev, founder of COREDO, offer not just an overview but a practical guide: here you will find answers to key questions, learn about real cases, and get tools that will allow you not only to comply with international AML and CTF standards but also to use them as a growth driver and competitive edge. If you want to understand how FATF recommendations affect company registration, licensing, and access to financing in different jurisdictions: read to the end. Here you’ll find COREDO’s experience and the best market practices.
What is FATF and its Recommendations
FATF (Financial Action Task Force, FATF) is an intergovernmental organization that sets global standards for anti-money laundering (AML) and combating the financing of terrorism (CTF). Its recommendations have become the “golden standard” for national regulators, banks, and international companies. Complying with FATF standards is not a formality but a necessary condition for legal access to global financial markets, successful company registration in Europe, Asia, and Africa, and obtaining financial licenses.
History of FATF and its Mission
FATF was established on the initiative of the G7 countries in 1989 to develop unified international standards of financial regulation and provide a coordinated response to the threat of laundering criminal proceeds. By 2001, FATF’s mandate was expanded to include counteracting the financing of terrorism and the proliferation of weapons of mass destruction. Today, the organization unites 39 countries and regional organizations, and its recommendations are mandatory for implementation in over 200 jurisdictions through national AML and CTF legislation [OECD, 2023][FATF, 2024].
The mission of FATF is to shape a global compliance system where every financial institution, corporate structure, and state must implement effective anti-money laundering mechanisms, ensure corporate transparency, and collaborate with international financial organizations like the World Bank and OECD.
FATF’s Tasks and Role
FATF develops and updates international AML standards, ensures their implementation through mutual evaluations, and forms black and grey lists of jurisdictions with insufficient control levels. The focus is on financial monitoring, preventing the financing of terrorism, corporate transparency, controlling shell companies, and implementing international sanction lists. For businesses, this means that only compliance with FATF recommendations opens access to international payments, banking products, and investments, reducing corporate sanctions and reputational risks.
FATF Recommendations: Structure and Requirements
The core of FATF standards is the 40 recommendations that cover all aspects of compliance: from risk assessment and Due Diligence to internal control procedures, disclosure of Ultimate Beneficial Owner (UBO), and AML process automation. In practice, these requirements become the foundation for national and regional regulatory requirements in the EU, Asia, and Africa.
What is a Risk-Based Approach?
One of FATF’s key innovations is the implementation of the risk-based approach (RBA). This means that each company is required to assess AML/CFT risks, build internal control procedures, and develop individual AML policies considering business specifics, geography, client base, and transaction flows. COREDO’s practice has shown that a well-implemented RBA reduces compliance costs, minimizes the likelihood of errors, and allows successful FATF mutual evaluation when starting a business in Europe or Asia.
KYC and Beneficiary Disclosure
FATF’s fundamental requirements include KYC (know your customer), Customer Due Diligence (CDD), and beneficiary disclosure (UBO). International beneficiary verifications, digital client identification, corporate transparency are mandatory elements for registering companies in Europe, Asia, and Africa, as well as for obtaining financial services licenses, including crypto, payment, and bank licenses. Solutions developed at COREDO allow automating data collection and verification, integrating them with electronic transaction monitoring systems and international sanction lists.
Implementing FATF Standards in Business
Implementing FATF standards is not a one-time task, but a continuous process: automating AML processes, integrating compliance procedures into ERP systems, regular audits, and staff training. COREDO’s experience confirms that companies investing in the automation and digitalization of financial monitoring not only accelerate registration and licensing but also gain a strategic advantage when entering new markets.
FATF Grey and Black Lists for Business
Being placed on FATF’s black or grey list is not only a reputational blow but also real limitations for business: account freezing, challenges in company registration, increased costs for due diligence and compliance, and bans on cross-border payments.
How Black and Grey Lists are Formed
FATF forms black and grey lists based on mutual evaluations conducted jointly with national Financial Intelligence Units (FIU) and regional regulators of the EU and Asia. If a country fails to meet the 40 FATF recommendations, does not implement effective internal control procedures, and fails to ensure corporate transparency, it risks being classified as a high-risk jurisdiction.
Company Registration and Banking Services
In practice, appearing on FATF’s black or grey list means for businesses: delays in company registration in Europe and Asia, difficulties opening bank accounts, restrictions on cross-border payments and fintech operations, increased automation AML requirements, and integration with international sanction lists. COREDO’s team has implemented several projects to relocate corporate structures from high-risk jurisdictions, ensuring their compliance with international AML standards and access to banking services.
How to Avoid Being Listed by FATF
Effective implementation of AML policies, regular staff training, implementing whistleblowing systems, and automating internal compliance are key tools for minimizing corporate sanction risks. COREDO’s solutions enable the development of compliance systems that adhere to not only national but also international FATF requirements, reducing the likelihood of appearing on the black or grey list.
Implementing FATF Standards in the EU, Asia, and Africa
Implementing FATF standards in different regions comes with its features related to EU regulatory requirements, specifics of company registration in Europe, Asia, and Africa, as well as national AML legislation.
Key Aspects of Implementing Business in the EU
In EU countries, strict implementation of FATF’s 40 recommendations is in effect: high due diligence level, comprehensive corporate AML reporting, regulation of PEP (politically exposed persons), and mandatory UBO disclosure. For companies entering the European market, the COREDO team builds multi-layered internal control procedures and automated transaction monitoring systems, allowing successful audits and ensuring corporate transparency.
Implementing FATF Standards in Asia and Africa
In Asia and Africa, the level of FATF standards implementation varies: some countries focus on risk-based approaches and regulatory sandboxes for fintech companies; others emphasize basic AML procedures. When registering companies in Asia or Africa, COREDO considers national peculiarities, integrating international financial information exchange agreements and local due diligence requirements. Implementing automated solutions speeds up processes and minimizes the risk of appearing on FATF’s grey list.
SEO Cases for International Companies
COREDO’s practice confirms that the optimal solution for international holdings is building a global compliance system with centralized AML process management, automating KYC and CDD, integration with international sanction lists, and digital client identification. Such an approach not only ensures compliance with FATF requirements but also effectively manages corporate structures in various jurisdictions.
This foundation not only enhances operational transparency but also minimizes potential regulatory risks associated with non-compliance with international standards.
Business Risks of Violating FATF Recommendations
Ignoring FATF standards means not only legal and financial sanctions but direct threats to the investment climate, corporate reputation, and access to international financing.
Financial, Legal, and Reputational Risks
Sanctions for non-compliance with FATF include account freezes, restriction on international payments, exclusion from global payment systems, and inclusion in international sanction lists. For companies, this means losing access to investments, increased compliance costs, and the urgent need to revise corporate strategy. COREDO’s practice shows that timely implementation of FATF standards minimizes corporate sanction and reputational risks, preserving business resilience even under the tightening global anti-corruption initiatives.
How to Prepare for a FATF Audit
The key element of preparation is building a corporate AML reporting system, regular personnel training, conducting internal audits, and stress-testing compliance processes. COREDO’s solutions not only help pass FATF compliance audits but also build a long-term risk management strategy by integrating training, whistleblowing, and automation into control.
Automation and Digitalization of AML/CTF
Modern technologies are changing approaches to compliance: AML process automation, digital client identification, AML integration into ERP systems, and the use of electronic transaction monitoring systems are becoming the standard for international companies.
AML Innovations for International Companies
The implementation of digital signatures, automation of due diligence, integration with international sanction lists, and building global compliance systems allow companies to accelerate registration, licensing, and financial monitoring processes. COREDO’s experience indicates that AML process automation reduces operational costs, minimizes the human factor, and increases risk management efficiency.
AML for Fintech and Digital Currencies
FATF places special emphasis on regulating digital currencies and fintech companies, implementing regulatory sandboxes, and conducting international beneficiary checks. For companies dealing with crypto assets, the COREDO team develops solutions that consider the specifics of digital identification, transaction monitoring automation, and adherence to new FATF requirements.
Practical Tips for Entrepreneurs
Practical tips for entrepreneurs help adapt business to modern regulatory requirements and mitigate risks. Implementing FATF recommendations requires attention to detail: from client verification to data storage and internal control, these measures are critical in practice for companies of any size.
Implementing FATF Recommendations in Business
- Conduct a comprehensive AML/CFT risk assessment, considering business specifics and geography.
- Develop and implement internal control procedures, including automating KYC, CDD, and transaction monitoring.
- Ensure regular staff training and integrate a whistleblowing system to identify suspicious operations.
- Integrate compliance procedures into corporate structures and ERP systems.
- Conduct regular internal and external audits of compliance with FATF standards.
Choosing a Jurisdiction Considering FATF
When choosing a jurisdiction for registration, it is essential to consider not only tax and corporate advantages but also the extent of FATF standards implementation, presence on black or grey lists, due diligence, and corporate transparency requirements. COREDO’s experience shows that optimal jurisdictions have full implementation of all 40 FATF recommendations, developed digital identification infrastructure, and a transparent system for regulator interaction.
Comparing FATF Requirements in the EU, Asia, and Africa
| Region | Main FATF Requirements | Implementation Features | Business Risks | Access to Banking Services |
|---|---|---|---|---|
| EU | Full implementation of 40 recommendations, strict KYC, CDD, UBO | High level of control, regular audits | High fines, reputational risks | Accessible with full compliance |
| Asia | Varies by country, emphasis on risk-based approach | Implementation depends on jurisdiction, often simplified procedures | Potential registration delays, banking challenges | Requires transparency confirmation |
| Africa | Partial implementation, focus on basic AML | Limited resources, local features | Risks of being on grey/black list | Limited access, high due diligence requirements |
Conclusions and Recommendations on the Topic
FATF recommendations are not just regulatory requirements but strategic tools for sustainable international business development. Their implementation ensures corporate responsibility, minimizes legal, financial, and reputational risks, and opens access to banking services and investments. For entrepreneurs and leaders, it is essential to:
- Build a compliance system based on a risk-based approach, KYC, CDD, and AML process automation.
- Regularly conduct internal audits and staff training.
- Choose jurisdictions with full FATF standards implementation.
- Use digital technologies for transaction monitoring and client identification.
- Prepare for FATF mutual evaluations by integrating international AML standards into corporate strategy.
COREDO’s practice confirms that only a systematic approach to implementing FATF standards allows not just compliance with regulatory requirements but also turning compliance into a competitive advantage in the global market.