Basel Committee welcomes FATF recommendations

The Basel Committee on Banking Supervision today welcomed the Financial Action Task Force's (FATF) revised recommendations to combat money laundering. The Committee is pleased to note the extent to which its publication Customer Due Diligence for Banks, released in October 2001, has been reflected in the FATF's recommendations concerning customer due diligence. In all substantive respects, the spirit of the Committee's paper has been incorporated within the FATF approach.

Whereas its own paper is specifically addressed to banks, the Committee recognises that the FATF's recommendations apply to all financial and non-financial institutions. Moreover, the Basel Committee is concerned with prudential supervision, as well as combating money laundering and terrorist financing, which is the focus of the FATF. These distinctions are considered by the Committee to account for any differences that exist between the FATF's recommendations and its own paper.

The Basel Committee considers that there is nothing within the FATF's revised recommendations that calls for changes in its Customer Due Diligence for Banks paper. This will remain the Basel Committee's guidance on the essential elements of know-your-customer standards and banks' management of the reputational, operational, legal and concentration risk that can arise from a failure to conduct adequate due customer diligence.

Customer Due Diligence for Banks was endorsed by banking supervisors from about 120 countries at the International Conference of Banking Supervisors in Cape Town in September 2002. Its principles will be incorporated into the Committee's Core Principles for Effective Banking Supervision in due course.