Money laundering law essentially originates with the USA and works like this: if you move money around, you have to stop criminals using your services and repor

Money laundering law essentially originates with the USA and works like this: if you move money around, you have to stop criminals using your services and report anything suspicious to the authorities. Failure is transitive. If Bank A provides services to Bank B and Bank B opens an account for someone who later turns out to have been a drug dealer, then the management of Bank A can be criminally prosecuted. Still, that doesn't sound so bad, does it? Only one tiny problem. The penalty for failing to stop criminals is that you, yourself, Mr CEO of the bank, become a criminal too and conscious participation in crime is not required. That you tried hard to fight crime is no excuse. Failure to stop crime IS crime, end of story. Obviously it didn't start out this way. The original laws were interpreted as is normal, with a mens rea requirement, i.e. you had to actually intend to break the law. That was removed in the general freakout following Sept 11th in the PATRIOT Act, although I'm sure it'd have been removed at some point anyway because really, you can't stop terrorism through the banking system. Terrorist attacks are invariably very cheap, far too cheap to spot from the desk of a banker. Nonetheless, this pernicious result persisted. Anti money laundering doesn't work that well if it's restricted to one country. Criminals can just insert their illegitimate money in some other country and wire to the first. So AML has to be a global system if it's to have any chance of being effective. Thus the "FATF" was set up and became one of the many obscure international organisations that that make up so-called international law, who are beholden to nobody, and whose powers are effectively written into the regulations of every country. FATF got this power because the USA threatened to ban any country that didn't comply from using the dollar. Once you agree to obey the FATF's "recommendations" a country is itself required to blacklist any country that doesn't, so, eventually more or less every country has fallen into line. So the best way to answer your question is: 1. FATF is an international organisation that sets the global AML rules. 2. Nothing gives them any democratic legitimacy. There is nothing you can do if you disagree with their decisions, not even voting for new politicians, not unless you want to start a financial/banking war with the entire world simultaneously. 3. Why: because the system propagates itself. That's what it's designed to do.