The Financial Action Task Force has given great relief to Pakistan in a three-day convention in Berlin, Germany. It decided to remove Pakistan from the ‘Grey List’. The FATF is expected to make an official announcement during the plenary session in October.
Pakistan has been on the FATF grey list continuously since June 2018.
Today Current Affairs
Financial Action Task Force (FATF):
Introduction:
It is an intergovernmental body that was established in 1989 during the G7 summit in 1989 in Paris.
Mandate : The Hindu analysis
In October 2001 after the 9/11 attacks, the FATF expanded its mandate to include efforts to combat terrorist financing.
In April 2012, it added to efforts to combat the financing of the proliferation of weapons of mass destruction.
The FATF has developed the FATF Recommendations or Standards, which ensure a coordinated global response to combating organized crime, corruption and terrorism.
More than 200 jurisdictions around the world have committed to FATF recommendations through a global network of nine regional bodies and FATF membership.
Formation of FATF : The Hindu analysis
The FATF currently consists of 37 member jurisdictions and two regional organizations (the European Commission and the Gulf Cooperation Council), representing the most major financial centers in all parts of the world.
India is a member of FATF since 2010.
India is also a member of its regional partners, the Asia Pacific Group (APG) and the Eurasian Group (EAG).
The headquarters : The Hindu analysis
Its secretariat is located at the Organization for Economic Cooperation and Development (OECD) headquarters in Paris.
FATF Lists:
Grey list : The Hindu analysis
Countries that are considered safe havens to support terror funding and money laundering have been put on the FATF gray list.
Being included in this list serves as a warning to the country concerned that it may be included in the black list.
Black List : The Hindu analysis
Countries identified as Non-Cooperative Countries or Territories (NCCTs) are included in the Black List. These countries support terrorist funding and money laundering activities.
The FATF regularly revises this list to include or remove countries.
Iran and the Democratic People’s Republic of Korea (DPRK) are currently on the High Risk Jurisdiction or Black List.
Sessions / Sessions : The Hindu analysis
FATF Plenary is the decision-making body of the FATF.
Its session is organized three times every year.
What is the grey list and the reasons for Pakistan’s inclusion in it?
About Grey List : The Hindu analysis
Grey listing means that the FATF has placed a country under surveillance to check its progress on measures against money laundering and the financing of terrorism.
The “Grey List” is also known as the “Enhanced Watch List”.
Countries included in the grey list : The Hindu analysis
As of March 2022, there are 23 countries on the FATF’s increased monitoring list, officially known as “Jurisdictions with Strategic Deficiencies”, including Pakistan, Syria, Turkey, Myanmar, the Philippines, South Sudan, Uganda and Yemen is included.
Remove from list : The Hindu analysis
To get out of the grey list, a country has to perform tasks recommended by the FATF, for example by confiscating the properties of individuals linked to terrorist groups.
If the FATF is satisfied with the progress, it removes the country from the list.
The FATF recently removed Zimbabwe and earlier Botswana and Mauritius from the grey list.
Zimbabwe has strengthened the effectiveness of its AML/CFT regime and addressed technical deficiencies to meet commitments in its Action Plan on strategic deficiencies identified by the FATF in October 2019.
AML/CFT stands for “Anti-Money Laundering/Combating the Financing of Terrorism”.
In the case of Pakistan, it was first included in the list in the year 2008 and then excluded, after that it was included in the list again from the year 2012 to 2015 and has remained in the list since the year 2018.
The FATF released a 27-point action plan in June 2018 after placing Pakistan on the ‘Grey List’. This action plan is related to curbing money laundering and terrorist financing. In the year 2019, a parallel action plan was submitted by the regional partner of FATF- Asia Pacific Group (APG).
Effect of listing on a country : The Hindu analysis
If a country is on the gray list, it indicates an increased risk to the global financial and banking system in dealings with that country.
Furthermore, given that major financial institutions such as the IMF and WB are affiliated with the FATF as observers, a grey-listed country faces complications in accessing international debt instruments.
An example from July 2019 is the US$6 billion IMF loan agreement that stressed the need for Pakistan to comply with FATF action.
Pakistan’s economy is in dire straits and continues to suffer from severely low foreign exchange reserves, despite loan aid from Saudi Arabia and China.
In this article we mention all information about the FATF grey list Today Current Affairs.
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