The international watchdog against money laundering and financing of terrorism, the Financial Action Task Force (FATF), has put Pakistan on a list of “jurisdictions with strategic deficiencies”, also known as the grey list.
Details: The other countries on the list, in alphabetical order, are Ethiopia, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen.
Consequences of being in the FATF grey list
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
The “black list” refers to countries for who there has been a “call to action” or strict banking and international finance sanctions, a list which at present includes Iran and North Korea.
- The Financial Action Task Force (FATF) is an inter-governmental decision-making body. It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering. It is a “policy-making body” which works to generate the political will to bring about national legislative and regulatory reforms in money laundering.
- It has also started dealing with virtual currencies.
- The FATF Secretariat is located in Paris.
What is the objective of FATF?
FATF sets standards and promotes effective implementation of:
- legal, regulatory and operational measures for combating money laundering.
- The FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
How many members are there in FATF?
- As of 2019, FATF consists of thirty-seven member jurisdictions.
Is India a member of the Financial Action Task Force?
- India became an Observer at FATF in 2006. Since then, it had been working towards full-fledged membership. On June 25, 2010 India was taken in as the 34th country member of FATF.