How does the Financial Action Task Force (FATF) measure the effectiveness of a country's efforts to combat money laundering and terrorist financing?

The Basel Committee is primarily focused on banking supervision and does not evaluate countries' effectiveness in combating money laundering or terrorist financing. Instead, it develops guidelines for banking regulation and risk management, which are separate from the FATF's mission.

While internal audits may play a role in a country's compliance efforts, they are not the formal mechanism used by FATF to measure effectiveness. The FATF relies on mutual evaluations that involve peer reviews and comprehensive assessments rather than just internal audits.

Although the FATF Evaluation Committee is involved in overseeing the evaluation process, it does not directly measure effectiveness. The evaluations are conducted through mutual evaluations, which include input from various stakeholders and are not solely the responsibility of the Evaluation Committee.