Topics Covered: Indian and its neighbourhood. Important International institutions, agencies and fora, their structure, mandate.
Pakistan govt to set new rules to meet FATF demands:
Pakistan, in order to exit from the grey list of the FATF, is set to introduce new rules relating to money laundering and terror financing cases.
- Changes being made include the transfer of investigations and prosecution of anti-money laundering (AML) cases from police, provincial anti-corruption establishments (ACEs) and other similar agencies to specialised agencies.
Based on these measures, the FATF would conclude if Pakistan has complied with three outstanding benchmarks, out of 27, that blocked its exit from the grey list in February this year.
Pakistan was put on the grey list by the Paris-based Financial Action Task Force (FATF) in June 2018 and the country has been struggling to come out of it.
- The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 on the initiative of the G7.
- It is a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in various areas.
- The FATF 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.
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.
What is a blacklist and grey list?
Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put in the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.
Grey List: Countries that are considered safe haven for supporting terror funding and money laundering are put in the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
Considered in the grey list may face:
- Economic sanctions from IMF, World Bank, ADB.
- Problem in getting loans from IMF, World Bank, ADB and other countries.
- Reduction in international trade.
- International boycott.
- G7 vs G8 vs G20.
- Black vs Grey list.
- Are FATF’s decisions binding on member countries?
- Who heads the FATF?
- Where is its secretariat?
What is the mandate and objectives of the Financial Action Task Force? Discuss.
Sources: the Hindu.