Current Affair 1:

News:

India has achieved an outstanding outcome in the Mutual Evaluation conducted during 2023-24 by Financial Action Task Force (FATF). The report places India in the ‘regular follow-up’ category, a distinction shared by only four other G20 countries. This marks a significant milestone in the nation’s efforts to combat money laundering (ML) and terrorist financing (TF).

About FATF:

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.

As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.

History of the FATF

In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989. 

Every year, FATF holds three meetings of its central decision-making body, the plenary, where all the 37 member jurisdictions and two regional organisations (EU and GCC, Gulf Cooperation Council and the European Commission) approve the outcomes through consensus.

India became a member of FATF in 2010.

 

In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.  In April 2012, it added efforts to counter the financing of proliferation of weapons of mass destruction.

Starting with its own members, the FATF monitors countries' progress in implementing the FATF Recommendations; reviews money laundering and terrorist financing techniques and counter-measures; and, promotes the adoption and implementation of the FATF Recommendations globally.

The FATF's decision making body, the FATF Plenary, meets three times per year.

What are FATF’s ‘black’ and ‘grey’ lists?

The FATF holds countries to account that do not comply with the FATF Standards. If a country repeatedly fails to implement FATF Standards then it can be named a Jurisdiction under Increased Monitoring or a High-Risk Jurisdiction. These are often externally referred to as “the grey and black lists”.

These terms do not exist in official FATF terminology but are colloquial phrases used to describe two lists of countries maintained by the body.

The ‘black list’ is the term used for FATF’s list of “High-Risk Jurisdictions subject to a Call for Action”. Currently, North Korea, Iran and Myanmar are on the ‘black list. These countries are deemed to have “significant strategic deficiencies” in their financial regimes that make them risky to be part of the larger international financial system, with countermeasures applied against them.

The second public list is of countries with “strategic deficiencies” in their regime to counter money laundering and terror financing. Once listed as ‘jurisdiction under increased monitoring’ by FATF, they must complete an action plan within a specific period. This one is colloquially referred to as the ‘grey list.’

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