Financial Action Task Force (on Money Laundering) (FATF):

The Financial Action Task Force (on Money Laundering) (FATF), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001, its mandate was expanded to include terrorism financing. Headquarters located in Paris

Objective

The main ocset 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. FATF is a "policy-making body" that works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. FATF monitors progress in implementing its Recommendations through "peer reviews" ("mutual evaluations") of member countries.

MEMBERSHIPS

As of 2019, FATF had 39 full members, comprising 37 member jurisdictions and two regional organisations.

TYPES OF LIST

1.Black List

Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.

2.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.

GREY LISTED COUNTRIES:

Albania
Barbados
Botswana
Cambodia
Ghana
Jamaica
Mauritius Myanmar (Burma)
Nicaragua
Pakistan
Panama
Syria
Uganda
Yemen
Zimbabwe

BLACK LISTED COUNTRIES

1.North Korea

2.Iran

Assessment:

Although Assessment criteria vary accordingly, FATF performs assessment on 40 points, These points are the subcategory of seven points, listed below.

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.

• Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT)

• Policies and Coordination (R01 – R02)

• Money Laundering and Confiscation (R03 – R04)

• Terrorist Financing and Financing of Proliferation (R05 – R08)

• Preventive Measures (R09 – R23)

• Transparency and Beneficial Ownership of Legal Persons and Arrangements (R24 – R25)

• Powers and Responsibilities of Competent Authorities and other Institutional Measures (R26 – R35)

• International Cooperation (R36 – R40)

FATF & Pakistan

Pakistan has been in the FATF grey list since June 2018 and has been asked to implement the FATF Action Plan fully by September 2019. It was in the same category from 2012 to 2015 too.

In february FATF clears pakistan on 24 points out of 27 points, remaining three points are as follows:

Below are the three points, that are going to be review in June 2021

(1) demonstrating that Terrorist Financing investigations and prosecutions target persons and entities acting on behalf or at the direction of the designated persons or entities
(2) demonstrating that Terrorist Financing prosecutions result in effective, proportionate and dissuasive sanctions
(3) demonstrating effective implementation of targeted financial sanctions against all 1267 and 1373 designated terrorists, specifically those acting for or on their behalf,” the FATF demanded.

Consequences of being in the FATF grey list & black list:

Considered in the grey list may face the following problems partially, while black list countries potentially face these problems. 1. Economic sanctions from IMF, World Bank, ADB
2. Problem in getting loans from IMF, World Bank, ADB and other countries
3. Reduction in international trade
4. International boycott