Re-thinking FATF: an experimentalist interpretation of the Financial Action Task Force

Abstract

Most explanations of the Financial Action Task Force argue that material coercion plays a key role in the consolidation and diffusion of the global anti-money laundering regime. This paper looks carefully at the decision-making within FATF and argues that, at its most impactful, FATF operates in line with the principles of “experimentalist governance.” Experimentalism emphasizes broad, participatory standard setting, contextualized implementation, intensive but diagnostic monitoring, and routinized updating in light of experience. The paper discusses the differences between the more common understandings of FATF before laying out the principles of experimentalist governance. It outlines the experimentalist form of FATF decision-making. It then provides evidence of experimentalist decision-making in three important aspects of FATF: the evolution of blacklisting; the role of monitoring; and the continuing implementation of the risk-based approach.