Tag:GS2 || International Relations || International Organizations || Miscellaneous

Why in news?

• International terror financing watchdog FATF retained Pakistan on the Grey List and warned the country of action for its failure in combating money laundering and terror financing.

What FATF said on Pakistan :

• It is “highly probable” that Pakistan will be formally black listed by global terror funding and money laundering watchdog FATF if it does not swiftly act against terror funding by February 2020.
• The Paris-based FATF took the decision after its five-day plenary, which concluded in the French capital.

About FATF:

• What is it? The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 on the initiative of the G7. It is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas. The FATF Secretariat is housed at the OECD headquarters in Paris.
• Objectives: The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
• 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 collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

What is blacklist and grey list?

• FATF maintains two different lists of countries: those that have deficiencies in their AML/CTF regimes, but they commit to an action plan to address these loopholes, and those that do not end up doing enough. The former is commonly known as grey list and latter as blacklist.
• Once a country is blacklisted, FATF calls on other countries to apply enhanced due diligence and counter measures, increasing the cost of doing business with the country and in some cases severing it altogether. As of now there are only two countries in the blacklist — Iran and North Korea — and seven on the grey list, including Pakistan, Sri Lanka, Syria and Yemen.