The Financial Action Task Force

WHY IN NEWS?

The International Co-operation Review Group (ICRG) of the Financial Action Task Force (FATF) has recommended that Pakistan be retained on the “Grey List”, given the country’s failure to completely implement the 27-point action plan to check terror financing.

ABOUT FINANCIAL ACTION TASK FORCE

• Formation: The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 during the G7 Summit in Paris.
• Objectives: To set 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.
• Secretariat: Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
• Member Countries: The FATF currently has 39 members including two regional organisations — the European Commission and Gulf Cooperation Council. India is a member of the FATF.
• Lists under FATF:
• 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.
• 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.
• The recommendation by the ICRG is a precursor to the final decision at the FATF plenary session, and is usually not overturned.
• The FATF Plenary is the decision making body of the FATF. It meets three times per year. The latest meeting will conclude on 21st February, 2020 in which final decision with respect to Pakistan will be taken.

Prelims Question

Q. Consider the following statements regarding The Financial Action Task Force (FATF):
1.The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 during the G7 Summit in Paris.
2.India is not a member of the FATF.
Which of the statements given above is/are correct?
a)1 only
b)2 only
c)Both 1 and 2
d)Neither 1 nor 2

Answer to the Prelims Question