Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) was established in 1989 by the Group of Seven (G-7) industrialized nations to combat money laundering and terrorist financing worldwide. This Paris-based intergovernmental body developed international standards for anti-money laundering (AML) and counter-terrorist financing, creating a framework that countries were expected to adopt. FATF gained significant power to influence global financial systems by maintaining lists of cooperative and non-cooperative jurisdictions.

During the 1990s, concerns grew internationally about money laundering from drug trafficking, corruption, and other criminal activities flowing through weak financial systems. Nigeria, under military rule and facing widespread corruption allegations, lacked robust financial oversight mechanisms that met emerging international standards. The country's banking sector operated with limited transparency requirements, making it vulnerable to illicit financial flows that attracted FATF's attention as the organization expanded its monitoring beyond its founding members.