The Financial Action Task Force (FATF) has made some changes to its list. Every year the FATF revises its existing lists. Let us learn about the recent changes authority has made. And the reason why is Pakistan retained in the grey list of FATF?
What is the FATF?
The FATF stands for Financial Action Task Force. It is an international governmental body. It was established during the Group 7 summit in 1989. The authority has its headquarters in Paris, and currently, 39 countries are members of the organization, including India. The Financial Action Task Force (FATF) studies and assesses the strength of a country’s anti-terror financing and anti-money laundering frameworks.
What is the aim of the FATF?
The Financial Action Task Force was set up to ensure peace and progress around the globe. The FATF aims to set standards and promote the implementation of legal, regulatory and operational measures for combating anti-terrorist financing and money laundering. It also deals with the finance-related threats to the integrity of the international financial system. After studying and analyzing the data of the countries, the FATF classifies alarming countries in two lists.
What is the difference between Grey List and Black List?
There are two types of lists under the FATP. The lists are named Grey List and Black list. Here’s the difference between them.
It is also known for its increased monitoring list. The Grey list includes the countries that are considered to support terrorist funding and money laundering. The countries in the grey list may enter in the black list if they don’t uplift themselves. Currently, Pakistan, Jorden, Turkey and Mali are on the FATF grey list.
It is also known as a high-risk jurisdiction list. The black list consists of the countries that are proven to support terror funding and money laundering. These countries are also known as Non-Cooperative countries or territories (NCCTS).
The FATF Plenary takes the FATF decisions. The committee meets a year thrice. It has the task to revise the Black list and Grey list regularly.
What are the changes made by the FATF in 2021?
The Financial Action Task Force has removed Mauritius and Botswana from its grey list. Further, it has new countries like Jordan, Mali, and Turkey. The FATF has announced to retain Pakistan in the grey list.
Why is Pakistan still retained in the FATF’s grey list?
In 2021, Pakistan still retained in the revised grey list of FATF for the following reasons:
- Pakistan failed to implement the global FATF standards.
- Pakistan lacks progress on the investigation and production of commanders or operators of UN-designated terror groups.
- Pakistan was not able to address the items on the original action plan. Though, Pakistan agreed to do the same in June 2018.
- In June 2019, FATF handed a parallel action plan to Pakistan. The Country has failed to deliver the same.
Background of Pakistan and the FATF
In 2018 the Financial Action Task Force (FATF) had placed Pakistan on the Grey List. In the same year, the FATF had issued the 27-point action plan to curb money laundering and terror financing.
Even before 2018, Pakistan was placed in the FATF’s grey list in 2008 and 2015, respectively.
The FATF Advice to Pakistan
The Financial Action Task Force has advised Pakistan relevant efforts and parallel plans to uplift its previous conditions. Now, in 2021, the organization has again issued particular guidelines for Pakistan. The FATF has advised Pakistan to continue to address its six crucial deficiencies. Those six significant deficiencies include enhancing international cooperation, amending money laundering, taking assistance from countries, and implementing the UNSCR 1373 designation.
What is the UNSCR 1373 designation?
The UNSCR 1373 is the list of measures set up for counter-terrorism activities.
A Way Forward
Currently, it is too essential for Pakistan to understand the need of the hour. The Financial Action Task Force (FATF) plays a vital role in deciding the company’s prospects. Suppose a country is mentioned in the FATF grey list. In that case, it affects its financial relations with international financial bodies such as the World Bank, International Monetary Fund (IMF), and Asia Development Bank. Greylisting makes it more complex and complicated for the countries to issue loans and funds from the mentioned sources. Also, socially, terrorism and money laundering is harmful to the world’s peace and progress. A peaceful world ultimately turns into a progressive world. The countries listed in the black and grey list should cooperate with the globe, follow parallel plans, and play their part in a healthy globalization process.