FATF is an international body created by G7 members in 1989 which gives recommendations to its member countries to combat money laundering, terror financing, corruption, funding for weapons of mass destruction, etc.
FATF has 39 members and is headquartered in Paris, France, It keeps on regularly reviewing illegal activities and continuously strengths its recommendations to address recent trends.
FATF Grey list and Black list
Black list( Call for action)- These countries support money laundering and terror financing activities and are also known as non-cooperative or territories(NCCTs)
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Grey list- These countries are considered to be safe havens for the individuals or companies involved in terror financing and money laundering activities. This list serves as a warning for the countries that might be included in the black list.
The countries that are included in this list may face economic sanctions from IMF, World Bank, ADB, etc. and might not get additional loans which will further impact their international trade.
Both these lists are regularly updated adding and removing the countries based on their activities.
Market trends – Recently FATF has put Pakistan and Turkey on their grey list accusing both countries of terror financing.
There are 40 recommendations by FATF, some of the recommendations are
- Financial institutes should do thorough checks of their clients’ details like KYC and AML check
- Every country should have a Financial Intelligence Unit(FIU) to work against money laundering and related crimes
FATF is committed to maintain economic stability and global peace by reducing the money laundering and terror financing related activities
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