FATF

Financial Action Task Force (FATF)

• Global money laundering and terrorist financing
watchdog.

• Established by the 1989 G-7 Summit held in Paris.

• An inter-governmental body- sets international
standards to prevent illegal activities and the harm they cause.

• Works to generate the necessary political will- for
national legislative and regulatory reforms.

• Commitment by more than 200 countries and jurisdictions- to implement FATFRecommendations/FATF Standards.

• Also works to stop funding for weapons of mass destruction.
• Monitors countries to ensure they implement the
Standards effectively.

• Membership: 37 member jurisdictions and 2 regional organisations- including India. Jurisdictions under increased monitoring .

• Work with FATF to counter money laundering, terrorist financing, and proliferation financing.

• Committed to resolve the identified strategic deficiencies within agreed timeframes.

• Referred to as the “grey list”.

• Those failing to address these issues after a specific time- listed under ‘black list’.

 Greylisted countries- Pakistan, Mauritius, Myanmar, Syria etc.
 Blacklisted countries- North Korea and Iran.
Implications of being greylisted/black listed:
 Squeeze the country’s economy- harder to meet its foreign financing needs.
 Future borrowings from international organisations (IMF)- would be difficult.
 Downgrade the country’s debt ratings- difficult to tap into the international bond
markets
 Discourage foreign investors and companies to
do business in the country.