Mutual evaluation
Also called FATF mutual evaluation, mutual evaluation report (MER)
A mutual evaluation is a peer review in which the FATF or a regional body assesses a country's anti-money laundering and counter-terrorist financing system. Assessors rate how far laws meet the FATF Recommendations and how well the system works in practice. The results can lead to follow-up monitoring or grey listing.
How it works
Assessors from other member countries review the country's laws, regulators, law enforcement and private sector over many months, including an on-site visit with interviews. They give two sets of ratings: technical compliance with each of the 40 Recommendations, from compliant to non-compliant, and effectiveness against a set of immediate outcomes, from high to low. The draft report is discussed and adopted at a plenary, then published as a mutual evaluation report.
Countries with weak results enter enhanced follow-up and must report progress, and serious gaps can lead to review by the International Co-operation Review Group and grey listing. The fifth round, approved in 2022 and started in 2024, runs on a shorter cycle with more focus on risk, context and effectiveness. Banks read these reports when rating country risk, and a poor rating feeds into customer risk scoring and enhanced due diligence.
The rules
Sets the criteria for technical compliance ratings on the 40 Recommendations and the effectiveness ratings on the immediate outcomes used in fifth round evaluations.
FATF members and FATF-style regional bodies conducting assessmentsSet the process for evaluations, follow-up and referral to the International Co-operation Review Group, on a shorter cycle than the fourth round.
FATF member countriesCommon questions
Who carries out mutual evaluations?
The FATF assesses its members, and FATF-style regional bodies assess theirs, using the same methodology. The IMF and World Bank also carry out some assessments. Assessors are experts from other countries plus secretariat staff.
What is the difference between technical compliance and effectiveness?
Technical compliance asks whether the laws and powers required by the Recommendations exist. Effectiveness asks whether the system actually delivers results, such as investigations, confiscations and good supervision.
Why do mutual evaluations matter to banks?
They feed country risk ratings, correspondent banking decisions and grey listing. A weak result can raise costs and due diligence demands for firms and customers linked to that country.
