What is in news : The Financial Action Task Force (FATF) retained Pakistan in the ‘greylist’

Why : Pakistan is  needed to further demonstrate that investigations and prosecutions were being pursued against the senior leadership of UN-designated terror groups, which include the Lashkar-e-Taiba (LeT), Jaish-e-Mohammed (JeM), al-Qaeda and the Taliban.

What it means :

A country put in the grey list may face-

• Economic sanctions from IMF, World Bank, ADB etc.
• The problem in getting loans from the IMF, World Bank, ADB and other countries.
• Reduction in international trade.
• International boycott.
• Reduction in bilateral and multilateral trade.

About FATF

The Financial Action Task Force (FATF)

• Inter-governmental body established in 1989 on the initiative of the G7.
• “Policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas.
• Secretariat is housed at the OECD headquarters in Paris.

Roles and functions:

• Initially it was established to examine and develop measures to combat money laundering.
• In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.
• In April 2012, it added efforts to counter the financing of proliferation of weapons of mass destruction.

Composition: The FATF currently comprises 37 member jurisdictions and 2 regional organisations, representing most major financial centres in all parts of the globe. It also has observers and associate members.

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.