This episode of Banking Insights! explore the key differences between the 2013 and 2022 FATF Methodologies. The 2022 update shifts from a compliance-focused approach to one that emphasizes effectiveness, risk-based assessments, and real-world outcomes. It also refines compliance ratings and allows for more flexible evaluations. These changes aim to enhance global AML/CFT efforts.

The Financial Action Task Force (FATF) amended its assessment methodology in 2022 to provide a comprehensive framework detailing the process of mutual evaluations, which are aimed at determining how well countries adhere to FATF standards, with an emphasis on both legal and institutional frameworks, as well as the outcomes of these systems in practice. The methodology is divided into sections covering technical compliance assessment, effectiveness assessment, and various annexes providing templates and guidance for evaluators, reflecting updates and revisions made to the FATF standards as of August 2024

The paper titled "Monetary policy in the news: communication pass-through and inflation expectations," authored by Fiorella De Fiore, Alexis Maurin, Andrej Mijakovic, and Damiano Sandri, investigates the role of media in conveying information about the Federal Reserve's monetary policy to the public. Utilizing large language models (LLMs) for textual analysis, the authors find a strong correspondence between FOMC communication and media coverage, particularly during significant monetary policy shifts. They note that this communication pass-through weakened during the zero lower bound (ZLB) period but improved with the introduction of post-FOMC press conferences, which significantly influence media narratives. The study also reveals that media coverage affects households' inflation expectations, especially in high inflation contexts, highlighting the media's critical function in transmitting central bank communication to the public