About Financial Action Task Force (FATF)

• It is an intergovernmental organization that designs and promotes policies and standards to combat financial crime.
• Recommendations of the FATF target
  • Money laundering
  • Terrorist financing
  • Other threats to the global financial system
• The FATF was created in 1989 by the G7 countries, and is headquartered in Paris.
• There are 37 members, including India and two regional organisations – European Commission and the Gulf Cooperation Council.

Grey list FATF

• Member countries that have deficiencies in their anti-money laundering and counter terrorist financing (AML/CTF) regimes but they commit to an action plan to address these loopholes.
• Currently, there are more than 20 countries on the grey list, including Pakistan.

Black list FATF

• Member countries that have deficiencies in their anti-money laundering and counter terrorist financing (AML/CTF) regimes and do not end up doing enough.
• As of now there are only two countries in the blacklist — Iran and North Korea.
• While greylist includes countries which are considered as safe havens for supporting terror funding and money laundering, blacklisting will mean severe strictures on the countries banks and credit rating, as well as access to loans and foreign investments.
• Pakistan has been under the FATF’s scanner since 2018, when it was put on the greylist for terror financing and money laundering risks.

Why in News?

• The Financial Action Task Force has once again retained Pakistan on the increased monitoring list, also known as the “grey list” and called the country to work on complex money laundering investigations and prosecutions. This decision was made after the conclusion of the four-day FATF Plenary from March 1-4.
• Pakistan has been on the FATF’s grey list for deficiencies in its counter-terror financing and anti-money laundering regimes since June 2018. This greylisting has adversely impacted its imports, exports, remittances, and limited access to international lending.

Reference:

1. https://newsonair.gov.in/News?title=Financial-Action-Task-Force-keeps-Pakistan-in-Grey-List%3b-Asks-Islamabad-to-do-more-to-probe-and-prosecute-terrorists&id=436626