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What is FATF?

by | May 18, 2021 | Economics

History of FATF

The Financial Action Task Force [FATF] is a global intergovernmental organization that was established by the G-7 summit in Paris, France in 1989.

The G-7 members created this organization in response to money laundering, terror financing and to recognize the threat posed to the financial system and financial institutions.

The G-7 Heads of state or Government and therefore the President of the European Commission convened the task force from G-7 member states, the European Union Commission, and eight other countries.

Objective of FATF

The Objective of the FATF square measure to line standards and promote effective implementation of legal, regulative, and operational measures for combating concealing, terrorist funding, and completely different connecting threats to the integrity of the international financial setup.

Beginning with its members, the FATF monitors countries’ progress in implementing the FATF recommendation reviews concealing and terrorist funding techniques and counter-measures and promotes the adoption and implementation of the FATF recommendations globally.

FATF Recommendations

The Taskforce was given the responsibility of examining concealment techniques and trends, reviewing the action which had already been taken at a national or international level, and beginning the measures that also needed to be taken to combat concealment.

In April 1990, a year after formation the FATF issued a report containing a gaggle of 40 recommendations, which were intended to provide a comprehensive plan of action needed to fight against concealment.

FATF Members and Observers

The FATF currently comprises 37 member jurisdictions and a pair of regional organizations, representing most major financial centers in all parts of the world.

India became an associate observer at FATF in 2006. Since then it had been operating towards full-fledged membership. On June 25, 2010, the Republic of India was taken in as the 34th country member of FATF.

The latest country to join FATF as a member is Saudi Arabia in the fall of June 2019.

FATF Terror Financing

FATF role in combating terror finance became notable when the 9/11

terror attack in the USA. In 2001 its mandate expanded to incorporate coercion finance, finance of coercion involves providing cash or financial backing to terrorists. As of 2019, FATF has blacklisted Iran and North Korea over terror finance. 18 countries are within the grey list namely :

Albania, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen, and Zimbabwe.

What is FATF’s Blacklist and Grey list?

Blacklist :

Countries known as non-cooperative countries or territories [NCCT] are put on the blacklist. These countries support terror funding and concealment activities. The FATF revises the blacklist frequently, adding or deleting entries.

Gerylist :

Countries that are considered safe heaven for supporting terror funding and concealment are placed on the FATF grey list. This inclusion is a warning to the country that it’s going to enter the blacklist.

Consequences of being in the FATF Greylist

Considered in the grey list may face:

  • Economic sanctions from IMF, International Bank for Reconstruction and Development, ADB, etc.
  • Problems in getting loans from IMF, International Bank for Reconstruction and Development, ADB, and other countries.
  • Reduction in international trade.
  • International boycott

FATF FAQ

Who created the FATF?

The FATF is an intergovernmental organization created by the G7 members.

How many members are there in FATF?

As of 18 May 2021, The FATF currently comprises 37 member jurisdictions and a pair of regional organizations.

How many countries are in greylist?

As of 18 May 2021, there 18 counties on the greylist.

How many countries are on the blacklist?

As of 18 May 2021, there 2 countries on the blacklist which are Iran and North Korea.

The above information was taken from the following sources:

Business standard website

FATF website

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