Enhancing integrity in the implementation of FATF recommendations: robust governance frameworks to combat financial crime in an age of intergovernmental rulemaking

In this chapter, we discuss the main governance challenges posed by the Financial Action Task Force (FATF) recommendations for addressing money laundering and terrorist financing. The key task for states is to find a balance between meeting international demands and upholding strong domestic laws. The chapter focuses on the potential role for an integrity branch of government in upholding robust processes and procedures, in light of the increasing power of intergovernmental organisations such as the FATF. The chapter engages with arguments in support of an integrity branch of government in Australia and expands these arguments on the basis that such a branch may enhance the integrity and legitimacy of laws that adopt and adapt the FATF recommendations. It is argued that the FATF example is illustrative of a broader trend towards intergovernmental rulemaking, which holds significant potential to streamline legal approaches to global challenges such as financial crime. However, this intergovernmental model and the focus on consistency and conformity across jurisdictions should not be allowed to erode domestic sovereignty and the legitimacy of domestic legal processes in the development and implementation of law and policy frameworks. As such, the chapter weighs the merits and limitations of establishing an integrity branch in response to increasing intergovernmental power. It draws on the FATF example to demonstrate how an integrity branch may have impacted the law-making process in Australia, in the context of implementing the FATF recommendations and legislating to combat financial crime. The chapter furnishes an initial framework for invigorating existing institutions to champion integrity, reinforce legitimacy, and preserve the foundational tenets of good governance.