The Financial Action Task Force (FATF)


  •  The Financial Action Task Force (FATF) is an intergovernmental organisation founded in 1989 in Paris on the initiative of the G7 to develop policies to combat money laundering. 
  • 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.
  • Its Secretariat is located at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
  • In its first year, FATF issued a report containing forty recommendations to more effectively fight money laundering. These standards were revised in 2003 to reflect evolving patterns and techniques in money laundering.
  • The mandate of the organisation was expanded in 2001 to include terrorist financing following the September 11 terror attacks.


Members of FATF

  • At the time of its formation, FATF had 16 members, which by 2021 had grown to 39.
  • As of 2019 FATF had 39 full members, comprising 37 member jurisdictions and two regional organisations. The FATF also works in close co-operation with a number of international and regional bodies involved in combating money laundering and terrorism financing
  • India is one of the members.


Observer members of FATF

  • 30 countries and international organisations are observer organisations. These include the International Monetary Fund, the UN with six expert groups and the World Bank.
  • Indonesia joined the group of observers that take part in upholding law against money laundering, terrorism and illegal funding. 
  • The international organisations recorded have, among other objectives, a specific anti-money laundering aim or function.
  • African Development Bank
  • Anti-Money Laundering Liaison Committee of the Franc Zone (CLAB) 
  •  Asian Development Bank
  • Basel Committee on Banking Supervision (BCBS)
  • Camden Asset Recovery Inter-agency Network (CARIN)
  • Egmont Group of Financial Intelligence Units
  • European Bank for Reconstruction and Development (EBRD)
  • Group of International Finance Centre Supervisors
  • United Nations Office on Drugs and Crime (UNODC)
  • United Nations Counter-Terrorism Committee Executive Directorate (UNCTED)


FATF has two lists:

  • Since 2000, FATF has maintained the FATF blacklist (formally called the "Call for action") and the FATF greylist (formally called the "Other monitored jurisdictions").
  • 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.
  • 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.


 Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG)

  • It is a regional body comprising nine countries: India, Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and Belarus.
  • It is an associate member of the FATF.


Effects of FATF

  • The effect of the FATF Blacklist has been significant, and arguably has proven more important in international efforts against money laundering than has the FATF Recommendations. While, under international law, the FATF Blacklist carried with it no formal sanction, in reality, a jurisdiction placed on the FATF Blacklist often found itself under intense financial pressure.
  • The FATF began to become a big figure shortly after the 9/11 attacks to help combat the financing of terrorist organisations. FATF makes sure funds are not easily accessible by terror organisations that are causing these crimes against humanity. FATF has helped to fight against corruption by ‘grey-listing’ countries that do not meet Recommended Criteria and this helps to cripple economies and states that are aiding terrorist and corrupted organisations.[45] FATF continues to work with other monetary agencies to control terrorist finance activity and to bring an end to illegal financial organisations, terrorism and corruption.
  • FATF has made it difficult for non-governmental organisations (NGOs) in countries to access funds to aid in relief situations due to strict FATF criteria. FATF criteria have mainly impacted NGOs that are located in Middle Eastern and terror-ridden countries. Some argue that the FATF Recommendations do not specifically set out restrictions for NGOs which often results in them going against FATF Recommendation.



As of 2020 FATF had 9 associated FATF style regional members, that have similar objectives of setting up systems to fight terrorism and money corruption:

· Asia/Pacific Group on Money Laundering(APG)

· Caribbean Financial Action Task Force(CFATF)

· Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)

· Eurasian Group (EAG)

· Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures (Moneyval)(formerly PC-R-EV)

· Financial Action Task Force of Latin America (GAFILAT), formerly The Financial Action Task Force on Money Laundering in South America (GAFISUD)

· Inter-Governmental Action Group against Money Laundering in West Africa (GIABA)

· Middle East and North Africa Financial Action Task Force (MENAFATF)

· Task Force on Money Laundering in Central Africa (GABAC)

 



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