According to the Tax Justice Network, approximately $427 billion is lost annually to corporate tax abuse and private offshore tax evasion, including the shifting of taxable profits into offshore jurisdictions. For additional background on the use and misuse of offshore tax structures and strategies, see our guide, Offshore Tax Matters Explained.
Formed in 1989 by the G7, FATF was originally directed to examine money laundering practices, evaluate existing prevention measures, and recommend international standards to address these issues. On the 30th anniversary of the organization in 2019, member countries agreed to an open-ended mandate for the organization to “lead decisive, coordinated and effective global action to counter the threats of the abuse of the financial system by criminals and terrorists, and strengthen its capacity to respond to these threats.”
The FATF is based in Paris and counts 40 members, as well as more than 200 jurisdictions and countries that have agreed to adopt and carry out FATF Standards, which include key areas such as:
International cooperation
Development of anti-money laundering policies
Development of preventive measures
Investigation and prosecution of money laundering
Measures to combat terrorist financing
Transparency and beneficial ownership of legal persons and arrangements
Responsibilities of competent authorities and other institutional measures
The FATF is one of several international organizations working to combat money laundering, tax crime, financial fraud, and human trafficking. INTERPOL is a law enforcement organization that cooperates with FATF on efforts to combat illicit financial activity, terrorism financing, and more. In 2022, the first FATF/INTERPOL Roundtable Engagement (FIRE) laid out a pathway for communication and cooperation between the organizations, public authorities and private entities.
While INTERPOL conducts international law enforcement operations, FATF primarily develops global standards and evaluates how effectively countries implement measures to prevent money laundering and terrorist financing. One of its most visible responsibilities is identifying jurisdictions with strategic deficiencies in their anti-money laundering and counter-terrorist financing systems.
FATF maintains lists of jurisdictions under increased monitoring, often referred to as the “grey list,” and high-risk jurisdictions subject to a call for action, commonly called the “black list.” These designations can lead to greater scrutiny of financial transactions and business relationships involving the affected jurisdictions.
Where there is money, there are bad actors ready to take advantage. FATF and dedicated partners work to strengthen financial safeguards and international cooperation against financial fraud, cybercrime, and dark money financing. Through its standards, evaluations, and monitoring efforts, FATF plays an important role in helping countries identify vulnerabilities and strengthen their defenses against financial crime.
If you have concerns about the structure or strategy of your offshore tax investments, or potential allegations involving money laundering, speaking with an experienced tax attorney may help you better understand your options and obligations.
The criminal tax attorneys at Robert J. Fedor, Esq., L.L.C. assist clients with strategy and options before potential compliance issues escalate into criminal investigations. Our firm represents individuals and businesses across the U.S. and internationally from offices in Cleveland and Chicago. Set up a consultation or reach out to us today at 440-250-9709.