Day 90 – Q 4.What is the Financial Action Task Force (FATF)? What are its objectives and mandate? Discuss.

4. What is the Financial Action Task Force (FATF)? What are its objectives and mandate?  Discuss.    

फाइनेंशियल एक्शन टास्क फोर्स (FATF) क्या है? इसके उद्देश्य और अधिदेश क्या हैं? चर्चा करें।

Introduction:

The Financial Action Task Force (FATF) is an intergovernmental organization that was established by the G7 nations in 1989 during a summit in Paris, France. The task force was created in response to the difficulties nations experienced in trying to cooperate and enforce an effective global Anti-Money-Laundering (AML) policy.

The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures and promotes the adoption and implementation of appropriate measures globally.  In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.

Body

Objective of FATF

• The objectives of the 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. 
• Starting with its own members, the FATF monitors countries’ progress in implementing the FATF Recommendations; reviews money laundering and terrorist financing techniques and counter-measures; and, promotes the adoption and implementation of the FATF Recommendations globally.

Mandate of FATF

• The FATF has a mandate to respectively combat money laundering, and after the 9/11 attacks in 2001, the funding of terrorism-related activities. 
• After 9/11 tragedy, the FATF vowed to combat international terrorism by issuing new recommendations aimed at cutting off financial avenues of funding to terrorists, and imploring (and succeeding in persuading) other nations to adopt the “Special Eight Recommendations” (now nine).

Conclusion

FATF maintains two different lists of countries: those that have deficiencies in their AML/CTF regimes, but they commit to an action plan to address these loopholes, and those that do not end up doing enough. The former is commonly known as grey list and latter as blacklist.

Once a country is blacklisted, FATF calls on other countries to apply enhanced due diligence and counter measures, increasing the cost of doing business with the country and in some cases severing it altogether. As of now there are only two countries in the blacklist — Iran and North Korea — and seven on the grey list, including Pakistan, Sri Lanka, Syria and Yemen.