The FATF and Evolution of Counterterrorism Asset Freeze Laws in the Nordic Countries: We Fought the Soft Law and the Soft Law Won

Abstract

The Financial Action Task Force (FATF) is an inter-govermental body devoted to developing international standards for combatting money laundering as well as terrorist and proliferation financing. It is particularly known for its profoundly influential “40 Recommendations” and the grueling mutual evaluations to which member governments periodically subject each other. Despite the non-binding “soft law” nature of its Recommendations, the FATF has had an immense impact on the development of domestic laws in jurisdictions around the world. Some have sought to explain the FATF’s powers through its ability to penalize non-compliant jurisdictions through a “blacklisting” mechanism, while others have emphasized the softer, persuasive powers a co-operative expert organization can have on its members. This chapter explores the historical development of a particularly contentious FATF Recommendation on counterterrorism asset freezes and its implementation in the Nordic countries to provide a detailed example of how the FATF influences individual states—and how individual states, in turn, may influence the FATF.