FATF(Financial Action Task Force)

Context:

The Financial Action Task Force (FATF) has released a new “Asset Recovery Guidance and Best Practices” framework. It strengthens global mechanisms for the recovery of assets derived from financial crimes such as money laundering and corruption.

UPSC Relevance:

International Organisation

UPSC PYQ:

Q. Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (2021)

About FATF:

• The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. 
• As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
• The FATF was established in 1989 and is based in Paris.

The 40-member body sets international standards to ensure national authorities can effectively go after illicit funds linked to drugs trafficking, the illicit arms trade, cyber fraud and other serious crimes. 

• The FATF’s decision-making body, the FATF Plenary, meets three times per year and holds countries to account if they do not comply with the Standards.
• If a country repeatedly fails to implement FATF Standards then it can be named a Jurisdiction under Increased Monitoring or a High Risk Jurisdiction. These are often externally referred to as “the grey and black lists”.

* FATF suspended membership of the Russian Federation on 24 February 2023.

Members:

 Grey and Black Lists of the FATF?

• Grey List: The Grey List includes countries that are considered safe haven for supporting terror funding and money laundering.
• Black List: The Black List includes Non-Cooperative Countries or Territories (NCCTs) that support terror funding and money laundering activities.
  • As of now, Iran, North Korea and Myanmar are the three black listed countries.