Financial Integrity & Illicit Finance Control

High demand for metallic currency outstripped the supply of precious metals during the Tang dynasty, and a shortage of coins pushed people towards paper drafts. Familiarity with credit notes meant paper instruments were rapidly accepted, laying the groundwork for later state-issued money.

A booming Sichuan economy created a shortage of copper money, prompting traders to issue private notes covered by a reserve. The text identifies this as the first legal tender, an early instance of a monetary standard operating beyond a single issuer's coinage.

Under the Yuan, paper money became the sole legal tender, completing the transition away from metallic currency. This established fiat money as a state-backed monetary standard.

Issuing of notes was centralised in the Ministry of Finance during the Ming dynasty. This institutionalised control over money creation within a state administrative body rather than leaving it to private traders.

The four states agreed common gold and silver coin standards to make their currencies mutually interchangeable, an early experiment in international monetary standardisation that collapsed within decades but prefigured later efforts at global financial coordination.

Prompted by the Second World War, delegates from 44 nations met in Bretton Woods to determine the rules of post-war international trade and monetary policy. The conference laid out the frameworks for the International Monetary Fund and World Bank, giving countries a measurable common basis for exchange rates and fair currency valuation rather than leaving it to individual national banks.

The law required banks to report large cash transactions and keep records useful to criminal investigations, becoming the template that anti-money laundering reporting regimes in dozens of other countries were later built on.

Sceptical of the US dollar's role as the world's reserve currency, France reclaimed most of the gold it had exported to the US for safekeeping. Other nations followed in a rush to exchange dollars for gold, undermining the Bretton Woods system after roughly two decades.

The United States ended the dollar's peg to gold, and other nations followed suit. This transformed international finance by making the world's reserve currency fiat money, backed by government decree rather than a physical commodity, and allowed fiat currencies to circulate internationally for the first time.

Central bank governors created the committee after the collapse of Germany's Herstatt Bank exposed the dangers of uncoordinated cross-border banking, beginning decades of work toward common international supervisory standards.

Basel I set the first internationally recognised minimum capital standard for banks, requiring a set ratio of capital to risk-weighted assets and giving supervisors worldwide a shared benchmark for bank soundness.

The convention required signatory states to criminalise money laundering tied to drug trafficking, the first binding international treaty obligation of its kind and a direct precursor to the Financial Action Task Force.

Leaders established the task force at their Paris summit to develop coordinated international policy against money laundering, creating the body that still sets the global benchmark against which national compliance regimes are measured.

The task force published its first standard on combating money laundering, giving governments and banks worldwide a common reference framework that became the basis for national anti-money laundering law.

The Correspondent Banking Relationship office now coordinates a US$77 million project across eight Pacific countries, part of an effort launched in 2024 to keep cross-border banking channels open as global banks continued to withdraw from the region.

The June 2026 plenary placed the two jurisdictions under increased monitoring for anti-money laundering and terrorist-financing gaps, while removing Algeria and Namibia after they completed agreed action plans, leaving 22 jurisdictions under enhanced scrutiny worldwide.

Federal banking agencies issued revised capital requirements expected to be broadly capital-neutral for large banks, with implementation now expected to begin in 2027 and phase in over three years, years behind the original global timetable agreed after the 2008 crisis.

Kuwait was re-listed alongside Papua New Guinea after a mutual evaluation found critical shortcomings, including a weak understanding of terrorist-financing risk and too few investigations into complex money-laundering cases.

Brussels pushed adoption of the market risk framework back a further year beyond its already delayed 2026 target, while London deferred implementation to January 2027, prolonging a divergence in global capital standards first agreed a decade earlier.

The steepest reductions hit developing economies in Africa, the Pacific Islands and the Caribbean, as global banks concentrated compliance spending on fewer, larger counterparties and exited jurisdictions seen as high-risk or low-volume for anti-money laundering purposes.

The continued retreat of global banks from correspondent relationships has raised the cost and difficulty of cross-border payments and trade finance, prompting a push toward open payment systems as an alternative channel for compliant cross-border transactions.

The two countries were removed alongside Burkina Faso and Mozambique after demonstrating sufficient progress on their action plans, easing the enhanced due diligence and reputational costs that grey-listing imposes on cross-border banking and investment.

A Basel Committee review found only 8 of its 20 members had completed the full framework, with India notably absent from any implementation despite running one of the world's largest banking systems, underscoring wide divergence in global standards adherence.

Both countries were placed under increased monitoring for anti-money laundering deficiencies, while the Philippines was removed from the list in the same plenary after completing its action plan on financial crime controls.

New bank capital, leverage and liquidity requirements were agreed in response to the 2008 crisis, setting a global minimum standard that individual countries then had to transpose into domestic law, a process many had still not completed over a decade later.

The new body succeeded the earlier Financial Stability Forum to coordinate the design and monitor the implementation of international financial standards across member jurisdictions after the global financial crisis exposed gaps in oversight.

Following the September 11 attacks, the task force added terrorist financing to its remit and countries worldwide rapidly tightened correspondent banking and customer due diligence rules, reshaping global compliance practice almost overnight.