What is the Financial Action Task Force (FATF)?

The Financial Action Task Force is the world’s leading standard-setter on anti-money laundering (AML) and countering the financing of terrorism (CFT). Established in 1989 with the United States as a founding member, FATF develops global standards to combat illicit finance and evaluates how well countries implement them.

Unlike many international bodies, FATF has real financial influence. Major banks and financial institutions adjust their risk practices based on FATF findings, becoming unofficial market enforcers of FATF findings. This means that FATF decisions can directly affect investment flows, financial access, and global market confidence.

What is happening now with the United States?

The United States is currently undergoing a FATF “mutual evaluation,” a comprehensive peer review conducted roughly every six years. This process examines both the strength of U.S. laws and how effectively they are enforced in practice, offering a full picture of how well the country is equipped to combat illicit finance.

How does the FATF evaluation process work?

The evaluation typically takes more than a year and begins with the U.S. providing FATF with detailed information about its laws, enforcement actions, and institutional framework. FATF evaluators then analyze that information and conduct an on-site visit, meeting with government officials, law enforcement, and private-sector actors such as financial institutions.

Following these consultations, evaluators draft a report that undergoes multiple rounds of review before being finalized, approved by FATF member countries, and published. Importantly, the process assesses not only whether laws exist, but whether they are working in practice to stop illicit financial activity. Countries found to have serious deficiencies may face censures commonly referred to as “grey listing,” which increases standards for monitoring funds coming into and out of the country and can affect investor confidence and financial stability.

Why does this evaluation matter for the U.S.?

The stakes are both global and domestic. As the world’s largest economy and issuer of the global reserve currency, the United States plays a central role in the international financial system. Its performance influences global standards and expectations for combating illicit finance.

At the same time, strong AML safeguards are essential at home. They enable law enforcement to combat fraud, disrupt drug trafficking networks, and prevent foreign adversaries from exploiting the U.S. financial system. This evaluation is a test of economic integrity, national security, and global leadership.

What progress has the U.S. made since its last evaluation?

Since its last review in 2016, the United States has taken meaningful steps to strengthen its AML framework. This includes the passage of the Corporate Transparency Act, which requires companies to disclose their true, “beneficial” owners, as well as new rules addressing money laundering risks in residential real estate and private investment sectors.

These reforms represent significant progress in addressing long-standing vulnerabilities, particularly the misuse of anonymous shell companies. In follow-up reports, FATF upgraded U.S. standing in certain categories, including beneficial ownership transparency, based on these reforms.

Where are the biggest concerns or vulnerabilities today?

Despite that progress, recent developments have raised concerns about whether the U.S. is maintaining momentum or risks backsliding. Changes to the implementation of the Corporate Transparency Act have dramatically narrowed its scope, with the administration deciding to exempt 99.98% of entities that were mandated by Congress to report their true ownership information to the Treasury Department. At the same time, investment advisers remain largely outside of AML requirements, and the Treasury Department has delayed its timeline for effectuating planned rules for that sector.

There is also uncertainty surrounding real estate transparency rules following a recent court decision in Texas that halted enforcement of new reporting requirements for residential real estate, pending appeal. More broadly, experts point to a sharp decline in U.S. financial crime enforcement, an increase in related presidential pardons, and a more permissive compliance environment. Taken together, these factors weaken the effectiveness of existing AML safeguards.

What are “enablers,” and why are they a problem?

“Enablers” refer to professionals such as lawyers, accountants, and corporate service providers who may facilitate financial transactions that involve illicit funds, sometimes without fully understanding the underlying risks.

FATF has identified the United States as lagging behind other countries in regulating these actors. Without consistent requirements for due diligence and reporting, these gatekeepers can intentionally or unintentionally provide entry points for illicit money into the financial system, undermining broader AML efforts.

What happens if the U.S. performs poorly?

A weak evaluation could have meaningful consequences. It could damage the United States’ credibility as a global leader on financial transparency and open the door to increased scrutiny from international financial institutions.

In practical terms, that could translate into higher compliance costs and greater due diligence requirements for transactions involving the U.S. financial system. It could also create pressure for policymakers to strengthen enforcement and close regulatory gaps.

How does this affect everyday Americans?

Strong AML systems help prevent fraud and scams, disrupt drug trafficking networks, and support law enforcement’s ability to track illicit financial flows. When safeguards are weak, illicit money can move more easily through the economy, contributing to criminal activity and undermining financial stability in ways that ultimately affect communities across the country.

Are other countries doing better?

Some countries, including the United Kingdom, have taken more proactive steps in recent years to strengthen financial transparency, particularly through verifying data in beneficial ownership registries. Likewise, the United States is the only G20 country without AML protections for its residential and commercial real estate sectors.

These efforts highlight potential areas where the U.S. could improve, especially in ensuring that transparency measures are both comprehensive and effectively implemented.

What emerging illicit finance risks are gaining attention, both in the U.S. and internationally?

One area of growing concern is the role of commodities such as gold in illicit finance. Illegal gold mining has become a significant source of revenue for organized criminal organizations and terrorist groups. It is increasingly used to move funds across borders.

Despite widespread acknowledgment of this risk, many financial institutions still lack adequate procedures to address it, underscoring the need for more coordinated action between regulators and the private sector.

What should journalists and stakeholders watch going forward?

In the months ahead, attention will focus on the outcome of the FATF evaluation, expected later in 2026, as well as any policy or regulatory changes that may follow. Ongoing court decisions, congressional action, and shifts in enforcement priorities will also play a key role in shaping how the United States is assessed, and how it responds.