INSIGHT: Why the US will not pull out of FATF – by organization’s former chief

By David Lewis, Managing Director at Kroll speaking at ‘Regulation Asia Fraud & Financial Crime Asia 2025’, Singapore on May 15

BY way of a brief introduction, as a UK official I led UK AML policy from 2009 to 2015 and I was Co-Chair of the Evaluation and Compliance Group, the body that oversees the evaluation of all countries against global standards.

I became FATF Executive Secretary in 2015 and Head of AML Advisory at Kroll in 2022 from where I advise political leaders, national authorities and regulated firms.

My remarks today are on what I see as the latest financial crime threat, or rather the latest threat to fighting it, and where we should turn to chart our way ahead, which may come as a surprise to you, if you’ve heard me speak before.

No doubt you’ll have heard today about the impact of geopolitics and disruption to the global international order.

This isn’t just about Trump. Most of the world went to the polls last year. The general trend was away from globalisation, against immigration, and was towards nationalism and protectionism.

We are facing the return of economic nationalism. We are seeing challenges to the legitimacy and operation of those international organisations that have ensured order and financial stability for the best part of the last century.

Nationalism impacts on financial crime

On top of that we’ve seen the weaponisation of finance and the limited effect of economic tools of coercion, such as sanctions and now tariffs to achieve their stated aims. And we are seeing markets demonstrate their power to reassert some kind of order. If you’re interested in hearing more about that then I urge you to tune in to a coming episode of the Disorder podcast by my colleague Jason Pack at RUSI.

Why does this matter when it comes to fighting financial crime? We all know that criminals, especially money launderers, operate not only without regard to borders but that they exploit borders, the limited reach of jurisdictions, and the differences between laws, regulations and the ability of countries and their willingness to enforce those laws. And yes, it’s very bad news that the US is pulling back from enforcement of financial crime.

We know, and constantly hear about the importance to fighting financial crime of international cooperation, of partnership and of information sharing – between agencies, between regulators and governments, between the public and private sector and between financial institutions.

This is why the threat to the international order established since the end of the second world war and the increase in nationalism, is a threat to international cooperation and therefore to fighting financial crime. And as most crime is financially motivated and the global AML/CFT system we have created is intended to take the profit out of crime, prevent the funding of terrorism and proliferation, this also threatens our ability to fight serious crime, terrorism and rogue states.

That’s all bad news.

Latest developments

So where do we turn? Donald Trump may have ordered a review of US membership and funding of international organisations from the UN to the IMF. However, when it comes to fighting financial crime, we have the Financial Action Task Force, the most influential international body most people have never heard of.

And I kind of hope that includes Donald, although it’s notable the biggest steps forward by FATF were taken during Trump’s first term and the US Presidency of the FATF, which perhaps ironically included the requirement for countries to regulate cryptos and for authorities and companies to assess and manage the risk of proliferation financing.

In some respects, we all love to hate the FATF. We all know, and as evidenced by FATF itself, action against money laundering remains largely ineffective, although we are making progress.

In many ways I’ve been the biggest critic of FATF, but that is because I care about it deeply. Its slow pace of change and its apparent disconnection from the real world has often frustrated me. I see the difference it makes and its potential to make a much bigger difference.

However, it may be some of the characteristics that have led to this, also strengthens the FATF in times of uncertainty and division such as we face now. It may be that while we struggle to navigate troubled waters, that the best compass we have is the FATF. I’ll tell you why. It’s about its focus on effectiveness, it’s technical rather than political basis, and the efficient and inclusive way in which it operates.

FATF standards

First and foremost, FATF recognises that passing laws and regulations and establishing financial intelligence units and supervisors, is not enough. You must enforce these and use these tools effectively to fight money laundering. FATF was the first global standard setter in any area to start assessing effectiveness, by which I mean impact.

So when we criticise the impact, or lack of impact of AML efforts, it is because we know from the evidence that FATF publishes that they are ineffective. FATF has fundamentally shifted to assessing effectiveness and not just ticking boxes.

This takes time to filter down but is happening and is irreversible. In its next round of evaluations FATF will also focus more on cryptos and the non-financial sector. Governments, regulators and firms will need to demonstrate they understand their risks and are taking effective action in response. Whereas in the past countries were listed for a failure to comply technically with the FATF, they are already being listed for failing to effectively fight money laundering.

Secondly, FATF is often accused of being politically influenced, whether we are talking about the listing of countries, the results of its country evaluations, or even its unwillingness to expel or list certain countries. Indeed, a satirical news rag in the UK, Private Eye, once published an article about how the UK had done surprisingly well in its latest FATF mutual evaluation report, especially considering all the dirty money washing through it.

Surprising that is, until you look at the official responsible for the FATF, one David Lewis, formerly of HM Treasury. It was funny, but it hurt a bit, because the reality was that as a UK national in my position at FATF, I was effectively excluded by my own staff from having any involvement in the process.

I had no idea what was going on, despite my wish to hold the UK to account for not listening to me more while I was at the Treasury. My team was right to do that of course, and despite the spin put on the results by the UK Chancellor, the results were still relatively bad. In fact, it led me to say to a journalist at the ICIJ – the group that broke the Panama Papers – that when it comes to fighting money laundering, everyone is doing badly, some not as badly as others.

FATF consensus

The reality is that FATF is infuriatingly technical. It is infuriatingly technical to the point that it is virtually blind to politics and day to day events. It is not just the technical nature of the FATF that ensures it is not blown around like a balloon in a storm. It is also its reliance on consensus.

A consensus that has been cleverly designed to maximise discussion, robust evidence-based argument between countries, and the ability to decide based on a ‘feeling in the room’ rather than an absolute or even a qualified majority. The only definition of consensus at FATF is that it does not require unanimity.

That might seem strange. But it works surprisingly well. And it means that because there isn’t a fixed number of countries required to block or put through a decision, it is harder for countries to do deals behind closed doors and for politics to influence the decisions of FATF.

It maximises transparency, at least among its members, if not publicly.

Of course none of this is seen from outside the FATF, which is also why I chose to talk about it today.

But I suspect some of you won’t believe me and will want to believe that FATF is political and is subject to political winds.

So let’s look at a few examples which may help to illustrate why it isn’t and, therefore why the FATF and global standards can and should be our compass for fighting financial crime.

What about grey listing? Isn’t that political?

Evaluation process

Did you know that FATF has only decided to list three countries, ever. Those were Iran, DPRK and Pakistan.

The FATF did not decide, it was not required to decide to list the 80 odd other countries that have appeared on the so-called grey list. That is because in the vast majority of cases, countries are listed automatically as a result of their mutual evaluation report. If their ratings meet a complex set of rules agreed by the FATF, then they go into the process that leads to listing, which happens normally 18 months following the evaluation.

The only decision FATF is required to make immediately ahead of listing, is whether the country has made sufficient progress since its evaluation to NOT be listed. And given the need for consensus to change a decision that has in effect been made already automatically 18 months earlier, the decision not to list a country is almost always blocked by a handful of countries with strong views.

When you consider that FATF is made up of countries as diverse as the G7 and the BRICS, it is not surprising that there is generally a handful of countries with such views. The result is that listing happens in the vast majority of cases on a purely technical basis, according to the results of its mutual evaluation report.

But, you’ll say, isn’t the mutual evaluation process, somewhat politicised? Actually, it isn’t. It is really difficult for politics to influence the outcome of evaluations, or at least significantly.

The process and rules for conducting evaluations are published in full and are incredibly detailed.

Assessors are required to act independently of the countries and agencies from which they are drawn and they are subject to strict rules of confidentiality that prevent them from discussing the evaluation with their national authorities or political leadership.

The process itself takes about 18 months. The assessment of the country, desk-based and onsite, is a matter for the assessment team only, and the secretariat ensures that the team follows the published rules and processes to the letter.

Once the report is drafted it is shared not only with the assessed country for comment, but also with every other country in the world, and 20 international organisations including the UN, IMF, World Bank, Interpol, Egmont Group of FIUs and many more.

This happens more than once and all comments are made available for all members of the FATF Global Network to see.

The FATF Plenary is the only decision-making body of the FATF. While it includes representatives of the 9 FATF-Style Regional Bodies and international organisations, all of whom are fully involved in the discussion of every report, the final decision is technically down to the 40 FATF member countries.

It is therefore only at the final stage, at the last minute, that representatives of countries and international organisations, those outside the assessment team, have the possibility to influence and change the report.

However, with only three hours permitted to discuss each report, and with more than 40 FATF recommendations and 11 immediate outcomes involved, in practice only 3 or 4 of the most substantial ratings or issues are discussed by the plenary and that often only leads to 1 or 2 out of 51 ratings being changed.

That is rarely enough to ensure a country avoids or is subsequently listed. So, long story short, it is quite difficult to politically influence the results of FATF evaluations.

US approach to FATF

Finally and back about Trump’s executive order on US membership of international organisations? Will he pull US funding or the US itself from the FATF?

In short, FATF has no funding, or no significant funding. Most countries spend less on FATF than an average family in a developed country spends on a house and car.

While this is somewhat shameful, given the importance of the mission of the FATF on which all are agreed, it means that in addition to decisions being made by members, most of the work is also done by officials of member countries, which means they buy into it.

It also means that FATF should not be a target for Trump.

So there are no savings to be made by cutting FATF funding and it’s unlikely the US will withdraw from FATF. It’s been incredibly useful to the US for decades – both in terms of supporting its national security and in supporting the integrity and therefore the stability of the international financial system and the power and influence of the US dollar.

Without this, the US would not have been able to lead on the weaponisation of finance, and achieve leverage, however limited, through sanctions, therefore also avoiding putting boots on the ground and going to war.

So, all said, and in conclusion, in this era of uncertainty and of challenges to international cooperation, I believe we can and should trust FATF to show us the way when it comes to fighting financial crime. Whether you are currently undergoing your FATF evaluation, as Singapore is, or you’re a national authority or regulated company anywhere, if you fully and effectively implement the FATF Standards, you can do so knowing they’ve been agreed by the US, China and indeed most of the rest of the world.

• The text is from the address delivered by David Lewis at Regulation Asia’s Fraud & Financial Crime Asia 2025