28th June 202

FINANCIAL ACTION TASK FORCE

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Why in the News??

The Financial Action Task Force (FATF) has decided to keep Pakistan on the “greylist” till the next review of its performance on its recommendations during the June Plenary session.

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Background: 

• During the plenary meet of October last year Pakistan got extension till february 2021, to fulfil its compliance due to the Covid-19 pandemic, Pakistan was given an extension.

• However, Pakistan did not comply with the directives.

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About:

• FATF did acknowledge Pakistan’s significant improvement in combating terrorism. However it was found that Pakistan is yet to fully comply with three of the 27-point action plans.

• These three points relate to effective steps in terms of financial sanctions and penalties against the terror funding infrastructure and the entities involved.

About Financial Action Task Force: 

• It is an inter-governmental body which was established in 1989 during the G-7 summit in Paris.

• The FATF assesses the strength of a particular country’s anti-money laundering and anti-terror financing frameworks.

Objectives: 

It aims at setting standards and promoting effective implementation of legal, regulatory and operational measures in order to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.

• Headquarters: 

  • The secretariat of FATF is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.

• Member Countries: 

  • At present FATF has 39 members which also includes two regional organisations namely the European Commission and Gulf Cooperation Council. 

  • India is a member of the FATF.

• Various lists under FATF:

  • Grey List: 

    • Countries which are considered as the safe haven for supporting terror funding and money laundering are kept under the grey list of FATF.

    • The entry in the grey list serves as a warning to the country that it may soon enter the blacklist.

  • Black List: 

    • The countries in blacklist are the Non-Cooperative Countries or Territories (NCCTs).

    • These countries are those which support terror funding and money laundering activities.

    • The FATF revises the blacklist regularly by either adding or deleting the entries.

• Sessions: The decision making body of the FATF is FATF Plenary. It generally meets thrice a year.