Terrorism and Challenges Related To It

Pakistan to remain on FATF ‘Greylist’

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FATF

Mains level : Money laundering and terror financing

The Financial Action Task Force (FATF) has decided to retain Pakistan on the “greylist” till the next review of its performance.

Practice question for mains:

Q.What is FATF? Discuss its role in combating global financial crimes and terror financing.

What is the FATF?

  • FATF is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
  • The FATF Secretariat is housed at the OECD headquarters in Paris.
  • It holds three Plenary meetings in the course of each of its 12-month rotating presidencies.
  • As of 2019, FATF consisted of 37 member jurisdictions.
  • India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership. On June 25, 2010, India was taken in as the 34th country member of FATF.

What is the role of FATF?

  • The rise of the global economy and international trade has given rise to financial crimes such as money laundering.
  • The FATF makes recommendations for combating financial crime, reviews members’ policies and procedures, and seeks to increase acceptance of anti-money laundering regulations across the globe.
  • Because money launderers and others alter their techniques to avoid apprehension, the FATF updates its recommendations every few years.

What is the Black List and the Grey List?

  • Black List: The blacklist, now called the “Call for action” was the common shorthand description for the FATF list of “Non-Cooperative Countries or Territories” (NCCTs).
  • Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.

Consequences of being in the FATF grey list:

  • Economic sanctions from IMF, World Bank, ADB
  • Problem in getting loans from IMF, World Bank, ADB and other countries
  • Reduction in international trade
  • International boycott

Pakistan and FATF

  • Pakistan, which continues to remain on the “grey list” of FATF, had earlier been given the deadline till the June to ensure compliance with the 27-point action plan against terror funding networks.
  • It has been under the FATF’s scanner since June 2018, when it was put on the Grey List for terror financing and money laundering risks.
  • FATF and its partners such as the Asia Pacific Group (APG) are reviewing Pakistan’s processes, systems, and weaknesses on the basis of a standard matrix for anti-money laundering (AML) and combating the financing of terrorism (CFT) regime.
Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments