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Table of Contents
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.
FATF members in 2021
|14||Gulf Cooperation Council|
|22||Republic of Korea|
Download FATF Members list and Map | FATF UPSC
Presidency keeps on rotating among memeber states at the interval of one year .
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.
- 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.
- 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.
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
- Increased monitoring by the FATF.
- Economic sanction from institutions as World Bank, IMF etc.
Consequences of being in Black list
- 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.
India was a observer State in FATF since 2006, and became a member state in 2010.
- 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.
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 List||Countries 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 List||Countries known as Non-Cooperative Countries or Territories (NCCTs) are entered into the blacklist. These countries support terror funding and money laundering activities.|
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.
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