Financial Action Task Force | IAS Target IAS Target

Financial Action Task Force

The Financial Action Task Force (on Money Laundering) (FATF) is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001 its mandate expanded to include terrorism financing. It scrutinizes progress in implementing the FATF Recommendations through "peer reviews" ("mutual evaluations") of the member countries.

Secretariat OECD headquarters in Paris
Members As of June 2019 there are 37 Member countries of FATF
Report Global Money laundering report

Objectives

  • The FATF monitors countries' progress in implementing the FATF Recommendations;
  • The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating terrorist financing, money laundering and other related threats to the integrity of the international financial system.
  • Promotes the adoption and implementation of the FATF Recommendations globally
  • Reviews money laundering and terrorist financing techniques and counter-measures

Functions:

  • The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures and promotes the adoption and implementation of appropriate measures globally.
  • In association with other international stakeholders, the FATF works to recognize national-level vulnerabilities with the aim of shielding the international financial system from misuse

Note:

The Financial Action Task Force (FATF) has decided to keep Pakistan on its grey list at the end of its week-long plenary meeting in Paris. India had lobbied hard to get the global financial body to blacklist Pakistan for non-compliance in curbing terror financing.

Blacklist and Grey list

FATF maintains two different lists of countries:

Grey List Those that have deficiencies in their AML/CTF regimes, but they commit to an action plan to address these loopholes known as Grey list.
Black List Those that have deficiencies in their AML/CTF regimes, and that do not end up doing enough to address these loopholes known as Black list

Once a country is blacklisted, FATF calls on other countries to apply enhanced due diligence and countermeasures, boosting the cost of doing business with the country and in some cases severing it altogether. As of now, there are only two countries on the blacklist Iran and North Korea and seven on the grey list, including Pakistan, Sri Lanka, Syria, and Yemen.