What is the primary role of the Financial Action Task Force (FATF)?

What is the primary role of the Financial Action Task Force (FATF)?

• A. Enforces domestic banking regulations
• B. International policy making body
• C. Issues sanctions on individuals
• D. Conducts monetary policy

Answer: (B)

FATF is an international policy-making body that sets and promotes global standards for preventing money laundering and terrorist financing. It does this by publishing the FATF Recommendations, offering guidance, and coordinating peer reviews to see how well countries implement these measures. This role—developing and refining international standards and encouraging their adoption across nations—is what makes it the best answer. Enforcement of rules at the national level, such as regulating banks or applying sanctions on individuals, is carried out by individual countries and their regulators, not by FATF. Monetary policy is handled by central banks and financial authorities, not by FATF.

FATF is an international policy-making body that sets and promotes global standards for preventing money laundering and terrorist financing. It does this by publishing the FATF Recommendations, offering guidance, and coordinating peer reviews to see how well countries implement these measures. This role—developing and refining international standards and encouraging their adoption across nations—is what makes it the best answer. Enforcement of rules at the national level, such as regulating banks or applying sanctions on individuals, is carried out by individual countries and their regulators, not by FATF. Monetary policy is handled by central banks and financial authorities, not by FATF.