The Financial Action Task Force

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Pakistan would stay on FATF grey list till 2021

About FATF

• FATF was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially 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.
• Since its inception, the FATF has operated under a fixed life-span, requiring a specific decision by its Ministers to continue.  
• The current mandate of the FATF (2012-2020) was adopted at a Ministerial meeting in April 2012.
• 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.  

Different kinds of listings under FATF

1. ” Non-Cooperative Countries or Territories” (NCCTs) / The FATF blacklist

• • The FATF blacklist or OECD blacklist has been issued by the FATF since 2000 and lists countries which it judges to be non-cooperative in the global fight against money laundering and terrorist financing, calling them “Non-Cooperative Countries or Territories” (NCCTs). In other words; countries which are not supporting terror funding and money laundering activities are listed in the Blacklist.

1. FATF Watch list or greylist

• • Those countries which are considered as the safe haven for supporting terror funding and money laundering; included in this list.
  • Greylist is a warning given to the country that it might come in Blacklist.
  • If a country is unable to curb mushrooming of terror funding and money laundering; it is shifted from blacklist to grey list by the FATF.

When a country comes in the Greylist, it faces many problems like;

1. Economic sanctions from international institutions (IMF, World Bank, ADB etc.) and countries
2. The problem in getting loans from international institutions (IMF, World Bank, ADB etc.) and countries
3. Overall Reduction in its international trade
4. International boycott