Black Money – Domestic and International Efforts

Global funding watchdog hands 10-point plan to Pakistan


Mains Paper 2: IR | Important International institutions, agencies & fora, their structure, mandate

From UPSC perspective, the following things are important:

Prelims level: FATF

Mains level: International initiatives to combat terror financing and black money

FATF action on Pakistan

  1. The Financial Action Task Force (FATF) has unanimously agreed to put into effect its February decision to place Pakistan in the greylist for inaction against terror funding
  2. It has laid out a 10-point action plan for compliance with its guidelines
  3. Pakistan’s failure in implementing the elaborate action plan may result in it being included in the blacklist next year

Important highlights of the plan

  1. The country has been instructed to take measures demonstrating that UN-designated terrorists and banned terror outfits are deprived of their resources and their sources of funding are choked
  2. Pakistan will have to take steps to ensure that terror funding risks are properly identified, assessed and that supervision is applied on a risk-sensitive basis
  3. It will also be required to show that remedial measures are being taken to prevent financial institutions from indulging in money laundering and terror funding
  4. The country will have to take stringent action against illegal financial operations, identify cash couriers and enforce controls on illicit movement of currency


Financial Action Task Force (FATF)

  1. FATF is an inter-governmental body established in 1989 by the Ministers of its Member jurisdiction
  2. The FATF is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas
  3. 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
  4. The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction
  5. 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
  6. The FATF’s decision-making body, the FATF Plenary, meets three times per year
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