FATF, which is the acronym for the Financial Action Task Force, and also known by its French name, Groupe d’action financière (GAFI), is an inter-governmental policy-making organization founded in 1989 by the initiative of the G7. The FATF Secretariat, headquartered in Paris, is comprised of over 30 countries, and has a ministerial mandate to establish international standards for combating money laundering and terrorist financing.
The primary functions of the FATF are to monitor members’ progress in implementing necessary measures, review money laundering and terrorist financing techniques and counter-measures, and promote the adoption and implementation of appropriate measures globally. To date, over 180 jurisdictions have joined the FATF or a FATF‐style regional body, and committed at the ministerial level to implement FATF standards and evaluations. In performing its activities, the FATF collaborates with other international bodies involved in combating money laundering and terrorism financing, and has established mutual evaluations (see monitoring implementation of the FATF recommendations.)
The FATF does not have a tightly defined constitution or an unlimited life span, and thus periodically reviews its mission. The current mandate of the FATF (for 2004-2012) was subject to a mid-term review and was approved and revised at a ministerial meeting in April 2008 (see FATF standards.)
A global consulting group ordered a risk management investigation of a commodities trading firm and its principals. Media searches revealed that among the subject firm’s investors was Galleon Group founder Raj Rajaratnam, a hedge fund manager alleged by the U.S. Department of Justice to have received over $35 million in ill-gotten profits as a result of a sophisticated insider trading scheme. Media outlets also reported that Rajaratnam made a $5 million contribution to a Sri Lankan charity identified as under the control of the terrorist group, The Tamil Tigers; however, Rajaratnam’s name did not appear in the subject firm’s filings with the Securities and Exchange Commission or in Secretary of State records. In the wake of Rajaratnam’s 2009 arrest, a partner in the subject firm acquired stakes in a foreign bank. Among the investors in the bank was an individual who had also partnered with Rajaratnam in 2006 to form a hedge fund management company. By canvassing media stories from several years, SI’s analyst pieced together this complicated web, with Rajaratnam at its center. In addition to these dubious business connections, public record searches uncovered state and federal tax liens in excess of $15 million against two of the subject company’s executives. Additionally, the National Futures Association (NFA) indicated the company had withdrawn its membership, even though the firm’s Web site claimed membership in the NFA.
