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Master Complete FATF UPSC ( FATF for UPSC exam) 2022

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If you searched the term FATF UPSC this article is for you.

The Financial Action Task Force (FATF) is an intergovernmental organisation founded in 1989 that sets global standards for combating money laundering and terrorist financing. The FATF is an independent body comprising representatives from 37 member countries, including the United States. The FATF’s objectives are to develop and promote policies and measures that will protect the global financial system from money laundering and terrorist financing.

The FATF is made up of 37 member countries and two regional organisations, the European Union and the Gulf Cooperation Council. The FATF’s primary goal is to develop and promote policies to prevent money laundering and terrorist financing.

March 2022 Review Meeting of FATF

  • Pakistan has been on the Financial Action Task Force’s (FATF) “greylist” or “increased monitoring list” for a long time now. And in the March 2022 review, it was still kept in the greylist.
  • The FATF has 17 countries on its “grey list.” Zimbabwe was excluded after a review found it compliant on all parameters.
  • Pakistan is kept in the greylist category despite meeting 32 of 34 action points. 
  • Since June 2018, Pakistan has made a high-level political commitment to work with the FATF and APG to strengthen its anti-money laundering/counter-terrorism financing (AML/CFT) regime and address strategic counter-terrorist threats’ financing-related deficiencies. Its continued political commitment has resulted in significant progress across a comprehensive CFT action plan.

What is FATF

  • Financial Action Task Force, is a Policy framing intergovernmental body established in 1989 on the initiative of G7 group. It focuses on framing policies to counter money laundering globally.
  • FATF keep track of the policy framework of its member states and make recommendations to them, to stop the menace of money laundering.
  • Headquarters– Paris, france at OECD headquarters.
  • Members= 39 members which includes 37 countries and 2 regional organisations.( As of 2021)
  • As of JULY 2021 there are two countries on FATF Blacklist: North Korea and Iran.

Source https://www.fatf-gafi.org/about/membersandobservers/

FATF members in 2021

S.NoMembers
1Argentina
2Australia
3Austria
4Belgium
5Brazil
6Canada
7China
8Denmark
9European Commission
10Finland
11France
12Germany
13Greece
14Gulf Cooperation Council
15Hong Kong
16Iceland
17India
18Ireland
19Israel
20Italy
21Japan
22Republic of Korea
23Luxembourg
24Malaysia
25Mexico
26Netherlands
27New Zealand
28Norway
29Portugal
30Russian Federation
31Saudi Arabia
32Singapore
33South Africa
34Spain
35Sweden
36Switzerland
37Turkey
38United Kingdom
39United States
FATF members in 2021

Download FATF Members list and Map | FATF UPSC

Presidency

  • The Financial Action Task Force (FATF) was founded in 1989 by the G7 to develop and promote policies to combat money laundering. In 2001, its mandate was expanded to include terrorist financing. The FATF Secretariat is housed at the OECD headquarters in Paris.
  • The presidency keeps on rotating among member states at an interval of one year
  • The objectives of the FATF are to set standards and policies for combating money laundering and terrorist financing, to promote cooperation between financial intelligence units (FIUs), and to provide technical assistance to its members.

The Organisation for Economic Cooperation and Development (OECD) is a global economic organisation that consists of 34 member countries. The OECD promotes economic growth and financial stability worldwide, as well as sustainable development. It does this by working with its members to develop policies in key areas such as taxation, trade, and investment. The OECD also provides research and analysis on economic issues, and works to improve the functioning of markets.

  • The Organisation for Economic Cooperation and Development (OECD) is an intergovernmental economic organisation established to promote economic progress and global trade.
  • The majority of OECD members are developed nations with high-income economies and a high human development index (HDI).
  • It was founded in the year 1961.
  • Its headquarters is located in Paris, France.

International Organisation

BIMSTECMekong Ganga Cooperation 
CDRI OPEC | OPEC+
COP 26RCEP 
FATFSCO
International Criminal CourtTaliban Terror History
IPCC report AR6 2021World Bank
International Court of Justice (ICJ)

How FATF works?

  • FATF main agenda is to counter the money laundering activities, terror financing activities and to stop proliferation of weapons of mass destruction. It achieves this aim by keeping track of the policies of its members states and making recommendations to them to align their policies with the regularly released guidelines by FATF.
  • FATF has released four sets of guidelines in the year 1990, 2001, 2003 and 2012 respectively.
  • FATF has created two lists the Grey list and the Black list, among which it places a country based on their Policy framework to counter money laundering activities.

FATF Greylist:

  • Officially known as Jurisdiction under Increased monitoring. Countries in this list formally commits to work with FATF to stop money laundering activities, but their policies reflect much higher risk of being involved in terror financing and money laundering activities.
  • Those countries whose policies make them safe heaven for money laundering activities and terror financing activities, are put in grey list. It act as a warning signal to them to align their policies with FATF guidelines otherwise they will be put into Blacklist.

FATF Blacklist:

  • Officially FATF calls it High Risk Jurisdiction subject to Call For Action.
  • Countries which are considered as lacking in their regulatory regimes to counter money laundering and terror financing activities are put into Black list.

Purpose of listing countries into Grey list or Blacklist.

The purpose of the FATF is to develop and promote policies which will prevent money laundering and terrorist financing. The FATF creates a list of countries which it believes are not doing enough to combat money laundering and terrorist financing. This list is known as the Grey List. Countries which are on the Grey List are given time to improve their policies. If a country does not improve its policies, then it is placed on the Blacklist.

Various sanction and boycott are imposed on countries as per their status of either in Grey list or Blacklist.

Consequences of being in Grey list

One of the most important functions of the FATF is to create a blacklist of countries that do not meet its anti-money laundering standards. Countries that are blacklisted can face serious consequences, such as being shut out of the global financial system. In February 2018, Pakistan was added to the FATF’s grey list after failing to take adequate steps to combat money laundering and terrorist financing. Being on the grey list means that Pakistan could be blacklisted if it does not make significant progress in reforming its financial institutions.

  • Increased monitoring by the FATF.
  • Economic sanction from institutions as World Bank, IMF etc.

Consequences of being in Black list

The consequences of being listed on the FATF Black List are significant. Countries that are listed are subjected to increased scrutiny from financial institutions and other member countries. The FATF also publishes a public list of all the countries that are non-cooperative with its efforts to combat money laundering and terrorist financing.

  • Country is negatively highlighted on the World stage.
  • Prohibitive measures by FATF members .
  • Economic sanction are imposed on the country by international organisations as World Bank, IMF, ADB etc.
  • International trade to the country reduces.
fatf upsc
fatf upsc

FATF India

In October 2001, following the September 11 terrorist attacks on the United States, FATF expanded its mandate to include combating terrorist financing. India was a observer State in FATF since 2006, and became a member state in 2010.
As a part of its efforts to combat money laundering and terrorist financing, FATF sets global standards for combating those crimes. Member states are required to implement these standards within their own jurisdictions. FATF also conducts peer reviews of member states to assess their compliance with these standards. India has made significant progress in implementing FATF’s recommendations, and has been assessed as being largely compliant with them.

India was a observer State in FATF since 2006, and became a member state in 2010.

FATF Pakistan

Pakistan was first added to the Greylist in February 2008 and removed in 2015. However, it was placed on the greylist again in 2018, and the FATF has given it until October 2019 to address its deficiencies. In June 2019, the FATF issued a public statement saying that Pakistan had made “limited progress” and that it “remains concerned about the lack of effective implementation of UNSCRs 1267 and 1373 (1999) by Pakistan.” 

UN Security Council resolutions 1267 and 1373 require all UN member states to freeze the assets of individuals and organisations associated with Al Qaeda and the Taliban.

  • Pakistan was put on Grey list in 2018, and since then it has been on Grey list as of 2021 now.
  • Asia Pacific group and FATF have been monitoring Pakistan on the standards of Anti Money Laundering (AML) regime and Combating the Financing of Terrorism (CFT) regime since 2018.
2008Pakistan classified as high risk and non-cooperative in adopting AML/CFT legislation. Placed on grey list
2009Pakistan taken off grey list
2012Pakistan classified as high risk and non-cooperative in adopting AML/CFT legislation. Placed on grey list
2013Pakistan remains on the grey list until next evaluation
2014Pakistan remains on the grey list until next evaluation
2015Pakistan taken off grey list after FATF identified progress in improving its AML/CFT regime
2018Pakistan was grey-listed for failure to address significant deficiencies in its AML/CFT regime
2019Pakistan remains on the grey list until next evaluation
FATF and Pakistan- FATF UPSC

In conclusion, the Financial Action Task Force is a global organisation that creates and promotes policies to prevent money laundering and terrorist financing. The organisation has been successful in its efforts, but there is always more work to be done. In order to further combat money laundering and terrorist financing, the Financial Action Task Force needs the support of its members.

Recent News about FATF UPSC

OCTOBER 2021

  • The FATF announced the Grey-listing of Jordan, Mali and Turkey.
  • The Financial Action Task Force (FATF) also retained Pakistan in the Grey-list yet again, observing that Pakistan needed to further demonstrate that investigations and prosecutions were being taken against the leaders of UN-designated terror groups, that includes the Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), Al-Qaeda and the Taliban.

JULY 2021

Financial Action Task Force (FATF) has added four more countries to the list of ‘jurisdiction under increased monitoring’ for strategic deficiencies. Haiti, Malta, Philippines and South Sudan .

Grey ListCountries which are acknowledged as safe haven for supporting terror funding and money laundering are put in the FATF grey list (or ‘Jurisdictions under increased monitoring’). It serves as a warning to the country that it may enter the blacklist.
Black ListCountries known as Non-Cooperative Countries or Territories (NCCTs) are entered into the blacklist. These countries support terror funding and money laundering activities.
FATF UPSC

The FATF updates the blacklist regularly by adding or removing nations. As of year 2021, there are only two countries on the FATF’s black list – North Korea and Iran.

Mar 8, 2022

  • Pakistan has been on the Financial Action Task Force’s (FATF) “greylist” or “increased monitoring list” for a long time now. And in the March 2022 review, it was still kept in the greylist.
  • The FATF has 17 countries on its “grey list.” Zimbabwe was excluded after a review found it compliant on all parameters.

This is gist for FATF UPSC article. HOPE it justified your search for FATF UPSC, want to learn more about FATF, have a look at Official FATF page.

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