The Financial Action Task Force (FATF) is an intergovernmental organization to develop policies to combat money laundering. It was established in 1989 on the initiative of the G7.In 2001 its authority expanded and terrorism financing was included. The FATF Secretariat is housed at the OECD headquarters in Paris.
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. 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.FATF issued its first Recommendations in 1990 which were revised in 1996, 2001, 2003 and most recently in 2012.
Asia-Pacific Group on Money Laundering (APG) is one of the regional affiliates of the Financial Action Task Force. The Asia-Pacific Group on Money Laundering works to ensure that all the countries adopt and implement the anti-money laundering and counter-terrorist financing standards that are set out in the FATF’s 40 Recommendations and Eight Special Recommendations.
India is a member of both the APG and the FATF consultations and is represented by a team of officials from the Ministries of Finance, External Affairs and Home Affairs.
There are currently 38 members of the FATF; 36 jurisdictions and 2 regional organizations i.e. the European Commission and the Gulf Cooperation Council. There are also 31 international and regional organizations which are Associate Members or Observers of the FATF and participate in its work.
FATF Observers are Saudi Arabia and Indonesia. The FATF President is a senior official appointed by the FATF board from among its members for a term of one year. The term of the President commence on 1 July and ends on 30 June of the following year.Mr. Marshall Billingslea of the United States is the current President of the FATF since 1 July 2018.
FATF blacklist Pakistan for terror funding – Pakistan has been put in an “enhanced blacklist” by Financial Action Task Force for terror funding. Pakistan was non-compliant in 32 of the 40 Compliance Parameters on Money Laundering and Terror Financing and Pakistan was low in 10 of the 11 Effectiveness Parameters. FATF issued a warning to Pakistan to control terror financing by October or get ready for the consequences.
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.
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.