02 Nov FATF’s grey list
FATF’s grey list
Details on the topic “FATF’s grey list”
Pakistan’s removal from the FATF’s grey list signifies.
Prelims: Current events of national and international importance, international bodies. about FATF
Mains: GS paper II: Important International institutions and function, agencies and fora- their structure, mandate
Significance of Prelims; FATF, grey list and black list, FATF Recommendations
Significance of Mains: objectives of FATF, enlisting of the grey list and black list, the geopolitics of Pakistan, India’s reaction.
Context:
- The Financial Action Task Force (FATF) has recently announced that they will remove Pakistan from its “Grey List.
- This announcement of FATF was unexpected and it also raises concerns for India.
What is FATF?
- The FATF stands for Financial Action Task Force was established in 1989,
- It is an intergovernmental body formed in Paris during the G7
- Its Secretariat is situated at the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris.
- The purpose of FATF are as follows:
The objectives of the FATF are to
(a) set standards and promote effective implementation of legal, regulatory, and operational measures
(b) To combat money laundering
(c) check the finances provided to the Terrorist groups, and
(d) Other threads related to the integrity of the international financial system.
At present the FATF is made up of 37 members jurisdiction and 2 regional organizations, representing nearly all of the major financial centers across the world
This is the reason why FATF is a “policy-making body”, which functions to generate the necessary political will to bring about the national legislative and regulatory reforms in these regions
Two Listing by FATF:
Grey List:
- The countries which are taken into consideration as safe havens for sustaining terror funding and money laundering are listed in the grey list.
- When a country is added to the Grey list it is considered a warning to the country that I may enter into the black list in future.
Black List:
- The countries which are involved in terror funding and money laundering activities were enlisted to the blacklist.
- These countries are termed as Non- Cooperative.
- The FATF revises the blacklist regularly adding or deleting entries.
Objectives of FATF
- It pulls outs a list of guidelines termed the “FATF Recommendations or FATF standards”
- This FATF recommendation consists of a range of regulatory and enforcement actions that countries are supposed to implement
- More than 200 countries and jurisdictions are devoted to implementing the recommendations of FTAF.
- The consensus between the FATF and its associate or regional member like the Asia Pacific Group on Money Laundering (APG) takes the decision against a country.
Implementation of the recommendations of FATF
It monitors the implementations through the periodic evaluation
- Anti-money laundering (AML)
- Combating the financing of terrorism (CFT)
- Proliferation financing system (PF system ).
Enlisting the countries into the Grey and Black list
- When the FATF founds the countries have strategic deficiencies in AML/CFT/PF regimes are put under a scheme of increasing monitoring which is also called a ‘Grey listing’
- Once the countries were put on the grey list are supposed to take the needed steps to address their deficiencies on the basis of the “Action plans ” pulled out and checked by FATF
- This Grey list functions like a warning to countries
- Countries that have major strategic deficiencies in their AML/CFT/PF regimes are enlisted to “High-Risk Jurisdiction” also known as “Black list ” put through a Call for Action.
- The black list has serious economic consequences by increasing heck on the transaction made to the labeled country
- At present, there are 23 countries enlisted on the FATF’s “Grey list” excluding Pakistan, and 3 countries names North Korea, Iran and Myanmar enlisted on the “Black list”
How grey list helped to counter terrorism in Pakistan?
- Till now Pakistan has been put 3 times on the grey list and taken off it. In June 2018, it was put on the list for 3rd time.
- In June 2010, when it was removed from the list after it supposedly “demonstrated progress” in improving its AML/AFT regime.
- The FATF members have stated that the adherence to FATF standards by a country should be judged on the basis of the “effectiveness” of action taken against individuals and entities of concern, rather than pro-forma-based “technical compliance”.
- FATF‘s approach was taken against Pakistan which escalated a further threat of being blacklisted. These efforts made Pakistan prosecute, convict, fine, and jail, the wanted terrorists.
Pic: FATF’s grey list
Geopolitical favors to Pakistan
- The good relations of Pakistan with FATF members like China, Malaysia, Turkey and Saudi Arabia helped Pakistan in moving from the grey list to the black list.
- The decision of Moving Pakistan from the grey list to the black list could have been opposed by them.
How should India react?
- In spite of the fact, that there has been a reduction in terrorist activities across the Line of Control (LOC) in Jammu and Kashmir. But frequent observation of drones carrying weapons payloads and infiltration along the LAC indicates the future danger for India
- Hence, India must be prepared and should continue with accessible opportunities to counter the terrorist attacks
Sources
Further reading
- What are LOC and LAC?
- India and Pakistan diplomatic relations.
- G7
- Members of FATF
Current Affairs for UPSC
The topic described above is related to the subject of Social Justice and International relations. You can read all the latest information on the subject of International Relations and Social Justice from Plutus IAS’s daily current affairs site. Get all the latest Current Affairs for UPSC from Plutus IAS. Nowadays it is very important for any UPSC aspirant to reading Current Affairs for UPSC examination. So everybody should accustom to reading Current Affairs for UPSC examination.
Plutus ias current affairs 2nd November 2022
No Comments