FATF's Proposed Disclosure Standards Might Raise Compliance Costs for Banks and Credit Card Companies

Introduction

The Financial Action Task Force (FATF) is a global organization that sets standards for combating money laundering and terrorist financing. In October 2022, the FATF proposed new disclosure standards that would require banks and credit card companies to collect and share more information about their customers.

These standards are designed to help law enforcement identify and investigate financial crime. However, they could also raise compliance costs for banks and credit card companies.

What are the Proposed Standards?

The proposed standards would require banks and credit card companies to collect and share the following information about their customers:

• Name
• Address
• Date of birth
• Social Security number
li>Account number
• Transaction history

This information would be shared with law enforcement agencies upon request.

How would the Standards Affect Banks and Credit Card Companies?

The proposed standards would impose significant compliance costs on banks and credit card companies. These companies would need to invest in new systems and procedures to collect and share the required information.

The standards could also lead to increased regulatory scrutiny. Banks and credit card companies would need to carefully monitor their customers' transactions to ensure that they are not involved in financial crime.

What are the Potential Benefits of the Standards?

The proposed standards could have a number of benefits, including:

• Helping law enforcement to identify and investigate financial crime
• Reducing the risk of financial crime
• Protecting the financial system

What are the Potential Drawbacks of the Standards?

The proposed standards also have a number of potential drawbacks, including:

• Increased compliance costs for banks and credit card companies
• Increased regulatory scrutiny
• Privacy concerns

Conclusion

The FATF's proposed disclosure standards are a complex issue with both potential benefits and drawbacks. Banks and credit card companies should carefully consider the costs and benefits of the standards before making a decision about whether to support them.

Given the potential costs and benefits, it is likely that the FATF's proposed disclosure standards will be the subject of much debate in the coming months.