FATF’s 11 Immediate Outcomes explained

There are two things that FATF looks at when it assesses a country’s anti-money laundering, counter-terrorist financing and counter-proliferation financing (AML/CFT/CPF) framework: technical compliance and effectiveness. 

• Technical compliance questions if the right laws and regulations exist
• Effectiveness investigates if the rules are actually working

The 11 Immediate Outcomes are in place to address the question of effectiveness. They help to define what an effective AML/CFT/CPF system looks like in practice and they form the backbone of every mutual evaluation that FATF conducts. 

How FATF measures effectiveness

FATF makes it clear that technical compliance is necessary but not sufficient. It also needs to see whether those measures actually produce the outcomes they’re designed to. A country can have fully compliant laws and still score poorly if those laws aren’t effective in practice.

To test effectiveness, FATF looks at all 11 Immediate Outcomes during each mutual evaluation, including:

• how well a country understands and acts on its ML/TF/PF risks;
• how effectively its supervisors oversee regulated businesses;
• whether preventive measures like customer due diligence (CDD) and suspicious activity reporting are genuinely working;
• and whether law enforcement is able to investigate, prosecute and confiscate the proceeds of crime. 

Each Outcome is rated on a four-point scale:

HE = high level of effectiveness
SE = substantial level of effectiveness
ME = moderate level of effectiveness
LE = low level of effectiveness

The 11 Immediate Outcomes

1: Risk, policy and coordination

Countries need to understand their money laundering, terrorist financing and proliferation financing risks and use this knowledge to focus their effort. This shapes most countries’ national risk assessments, which in turn impact what supervisors look for in regulated businesses. 

2: International cooperation

So much of modern crime crosses borders, so countries have to share information and help each other’s investigations. If your business deals with overseas clients or transactions, your due diligence on them is just one part of a much bigger chain.

3: Supervision

Assessing if Supervisors appropriately supervise, monitor and regulate financial institutions and DNFBPs for compliance with AML/CFT requirements commensurate with their risks.

Globally this is one of the weakest areas: average effectiveness is around 27%, according to Basel Institute data. The pressure from FATF to improve these numbers is why supervisors scrutiny of regulated businesses keeps increasing.

4: Preventive measures

Assessing if financial institutions and DNFBPs adequately apply AML/CFT preventative measures commensurate with their risks, and report suspicious transactions.

This is day-to-day compliance work for regulated businesses, looking at whether they’re checking who their customers are, watching for suspicious activity and filing reports when something looks suspicious.

5: Legal persons and arrangements

Criminals can hide behind shell companies or layered ownership structures – and commonly do. This Outcome is about making sure authorities can find out who really owns and controls a company, no matter how it’s set up.

6: Financial intelligence

When a business files a report on suspicious activity, FATF wants to see what happens to it. This Outcome is about how it gets used (if at all) and turned into real leads on criminal activities.

7: Money laundering investigations and prosecutions

A country needs to prove that its ML/TF/PF intelligence leads somewhere, so FATF will analyse whether law enforcement and prosecutors conduct meaningful investigations, and give proportionate charges and penalties.

8: Confiscation

Crime cannot be shown to be a lucrative option. Inspectors look at whether proceeds of crime actually get seized or whether the law only technically allows for it.

9: Terrorist financing investigations and disruptions

This is similar to Outcome 7 but specifically related to terrorism. The focus here is on stopping the money before it’s used and disrupting funding early, not just dealing with it after the fact.

10: Terrorist financing prosecutions and sanctions

FATF also wants to see that countries cut off terrorists’ access to money and the financial system entirely, including making sure they can’t exploit charities or non-profits to move funds.

11: Proliferation financing

Proliferation financing specifically relates to the proliferation of weapons of mass destruction. Countries and financial institutions need to show they act immediately on sanctions designed to stop funding for WMD development.

Why this matters for regulated professionals

FATF’s 11 Immediate Outcomes don’t directly dictate your business’ AML/CTF/CPF programme. Instead, they’re a test of whether a country’s whole system actually works effectively. Your firm’s day-to-day compliance is one of the links in that chain and is what will be checked for Immediate Outcomes 3 and 4.

This need to prove effectiveness is why supervisors are so focused on the preventative measures that regulated businesses have in place, such as customer due diligence, risk assessments, PCPs, transaction monitoring, filing their suspicions properly and training. Proving you have the correct paperwork is no longer sufficient; proving the outcome of your work is effective is now crucial. 

These activities are part of the evidence base that FATF uses to judge whether a country’s whole system is working. Getting these right is also what keeps your firm aligned with where AML expectations are heading and what supervisors will increasingly be looking for as scrutiny continues to grow.