The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

With more than 200 countries and jurisdictions committed to implementing them.  The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism. They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes.  The FATF also works to stop funding for weapons of mass destruction.

Objectives

• The FATF’s goals are to establish standards and support the successful implementation of legal, regulatory, and operational measures to combat money laundering, terrorist financing, and other risks to the international financial system’s integrity.
• There are two lists maintained by the FATF:
• • The FATF maintains a grey list of countries that are deemed safe havens for terrorist financing and money laundering. This is a notice to the country that it may be added to the blacklist.
  • The blacklist includes countries classified as Non-Cooperative Countries or Territories (NCCTs). These countries aid in the financing of terrorism and the laundering of money. The FATF updates the blacklist on a regular basis, adding and removing items as needed.

Its role in preventing global financial crimes

• The FATF sets standards or recommendations for countries to achieve in order to plug the holes in its financial system and make it less vulnerable to illegal financial activities. According to the last update in 2012, FATF has 49 consolidated recommendations for countries to follow in order to set up an Anti-Money Laundering/Combating the Financing of Terrorism (AML/ CFT) regime.
• The FATF conducts regular peer-reviewed evaluations called Mutual Evaluations (ME) of countries, starting with member countries, to check their performance on standards prescribed by it. The reviews are carried out by FATF and FATF-Style Regional Bodies (FSRBs), which then release Mutual Evaluation Reports (MERs). For the countries that don’t perform well on certain standards, the FATF and FSRBs draw up time-bound action plans to fight financial crimes.
• The FATF reviews money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks, such as the regulation of virtual assets, which have spread as cryptocurrencies gain popularity.  The FATF monitors countries to ensure they implement the FATF Standards fully and effectively, and holds countries to account that do not comply.

The global financial crime watchdog Financial Action Task Force (FATF) in its latest plenary meeting, decided to retain Pakistan on its terror financing ‘grey list.

https://www.thehindu.com/news/international/the-lists-of-the-fatf-and-pakistans-position/article65200676.ece

How to structure

1) Give an intro about FATF

2)Mention its mandate and functioning

3) Examine its role in preventing global financial crimes and its effective

4) Suggest further measures

5) Conclude