Published on: October 22, 2022
FATF ‘grey list’
FATF ‘grey list’
Why in news?
Four years after it was placed on the ‘grey list’ and penalised with severe financial strictures by the Financial Action Task Force (FATF), Pakistan won a major reprieve, as the international watchdog on terror financing and money laundering agree to remove Pakistan’s namefrom the list of countries under ‘increased monitoring’
- FATF stated Pakistan was taken off the “grey list” in the wake of Islamabad’s “high-level political commitment” in dealing with the menace of money laundering and carrying out reforms in its existing monitoring mechanism,
What are the major reason for removal ?
- It has strengthened the effectiveness of its AML/CFT (anti-money laundering and counter-terrorist financing) regime and addressed technical deficiencies to meet the commitments of its action plans regarding strategic deficiencies that the FATF identified, the latter of which was completed in advance of the deadlines, encompassing 34 action items in total
What is FATF?
- It is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering.
- The objectives of FATF are 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.
- It monitors progress in implementing its Recommendations through “peer reviews” (“mutual evaluations”) of member countries.
- The FATF currently comprises 37 member jurisdictions and 2 regional organisations( Gulf cooperation and European union) , representing most major financial centres in all parts of the globe
What are the lists of FATF?
- It has maintained the FATF blacklist (formally called the “Call for action“) and the FATF grey list(formally called the “Other monitored jurisdictions“).
- The lists has led financial institutions to shift resources and services away from the listed. This in turn has motivated domestic economic and political actors in the listed countries to pressure their governments to introduce regulations that are compliant with the FATF.
- Currently Iran and North Korea are in the black list.