Financial Action Task Force: On Pakistan’s Being ‘ Grey’ under FATF - Seeker's Thoughts

Recent Posts

Seeker's Thoughts

For Clearing the Blur Spot.

Follow by Email

Saturday, 24 March 2018

Financial Action Task Force: On Pakistan’s Being ‘ Grey’ under FATF

Download free Android App
What is FATF or financial Action Task Force?
The Financial Action Task Force, also known by its French name, Groupe d'action financière, is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. 

There are two things which are curbed by the FATF-
      Money Laundering – Originally FATF was formed to curb practices of Money Laundering. 
      Terror Financing-   When United States was attacked by terrorists in 2001, the terror financing was also included in FATF List. 
Work Done By FATF—The basic work of FATF is to monitor the activities which are included in Money Laundering, terror financing and curbing that. However FATF does not put sanction on the countries. There are two categories of recommendation given by FATF---
      40 recommendations for money laundering – since 1992
      9 recommendation for special – terror financing Since 2001
     It declares non co operative countries (NCCTs), commonly called as FATF blacklist

Obligation on Member Countries of FATF—Originally there were 16 countries when FATF was formed, however now the number has reached till 39. There are certain obligations on the members of FATF and those obligations are as follow-- 
-Implement relevant international conventions
-Criminalize money laundering and enable authorities to confiscate the proceeds of money laundering
-Implement customer due diligence (e.g., identity verification), record keeping and suspicious transaction reporting requirements for financial institutions and designated non-financial businesses and professions
- Establish a financial intelligence unit to receive and disseminate suspicious transaction reports, and
- Cooperate internationally in investigating and prosecuting money laundering
SO far ---It has worked well in recent years that puts a huge financial burden on countries which did not cooperate with  rules However FATF carries no formal sanction .
Pakistan included in Grey List in June 2018 – 
There are charges against Pakistan for not doing enough for combating terrorism and this was recommended by – ICRG (International Cooperation Review Group) In 2018.  It would impact on Pakistan as countries need funds to develop infrastructure. The FATF grey list does not puts sanctions however there would be a low ranking of Pakistan in International Market which will impact investments and FDI etc.