FATF: (Financial Action Task Force)

Introduction:
When it was founded: The FATF is a Paris-based organization founded in 1989
Why it was founded: Objectives/Functions
●  setting out the measures that still needed to be taken to combat money laundering
● Combatting the financing of terrorism and the financing of proliferation of weapons of mass destruction
(AML/CFT), and supporting the implementation of these standards.
● Conducts typologies studies of money laundering and terrorist financing methods, trends and
techniques.
● Responds to new and emerging threats, such as proliferation financing.

Who founded it: the G-7 Heads of State or Government and President of the
European Commission
Where it’s located: Paris, France
History: 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.  Recognising the threat posed to the banking system and to financial institutions, the G-7
Heads of State or Government and President of the European Commission convened the Task
Force from the G-7 member States, the European Commission and eight other countries.
Money Laundering:
The Task Force was given the responsibility of examining money laundering techniques and trends, reviewing
the action which had already been taken at a national or international level, and setting out the measures
that still needed to be taken to combat money laundering.  In April 1990, less than one year after its creation,
the FATF issued a report containing a set of Forty Recommendations, which were intended to provide a
comprehensive plan of action needed to fight against money laundering. 

Terror Financing:
In 2001, the development of standards in the fight against terrorist financing was added to the mission of the
FATF.  In October 2001 the FATF issued the Eight Special Recommendations to deal with the issue of terrorist
financing. The continued evolution of money laundering techniques led the FATF to revise the FATF standards
comprehensively in June 2003.  In October 2004 the FATF published a Ninth Special Recommendations,
further strengthening the agreed international standards for combating money laundering and terrorist
financing - the 40+9 Recommendations.

In February 2012:

The FATF completed a thorough review of its standards and published the revised FATF
Recommendations. This revision is intended to strengthen global safeguards and further
protect the integrity of the financial system by providing governments with stronger tools to
take action against financial crime. They have been expanded to deal with new threats such as
the financing of proliferation of weapons of mass destruction, and to be clearer on
transparency and tougher on corruption.
Members:
During 1991 and 1992, the FATF expanded its membership from the original 16 to 28 members. In 2000 the
FATF expanded to 31 members, and has since expanded to its current 39 members.

The FATF currently comprises 37 member jurisdictions and 2 regional organizations, representing most major
financial centres in all parts of the globe

Argentina France Japan

Australia Germany Republic of Korea  
Austria Greece Luxembourg
Belgium Gulf Co-operation Council Malaysia
Brazil Hong Kong, China Mexico
Canada Iceland Netherlands, Kingdom
China India New Zealand
Denmark Ireland Norway
European Commission Israel Portugal
Finland Italy Saudi Arabia

Who is 39th member of FATF: Saudi Arabia- granted membership in 2019; was part as observer
since 2015.
Associate members:
As of 2020 had 9 associated FATF style regional members, that have similar objectives of setting up
systems to fight terrorism and money corruption

● Asia/Pacific Group on Money Laundering (APG) (See also: APG website)

● Caribbean Financial Action Task Force (CFATF) (See also:  CFATF website) 
● Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and
the Financing of Terrorism (MONEYVAL) (See also: Moneyval website)
● Eurasian Group (EAG) (See also: EAG website)
● Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) (See also: ESAAMLG website)
● Financial Action Task Force of Latin America (GAFILAT) (formerly known as Financial Action Task
Force on Money Laundering in South America (GAFISUD)) (See also:   GAFILAT website)
● Inter Governmental Action Group against Money Laundering in West Africa (GIABA) (See also: GIABA
website)
● Middle East and North Africa Financial Action Task Force (MENAFATF) (See also: MENAFATF website)
● Task Force on Money Laundering in Central Africa (GABAC) (See also: GABAC website)
FATF Observers:
Indonesia; 30 countries and international organizations are observer organizations. These include
the IMF, the UN with six expert groups and the World Bank

Indonesia joined the group of observers that take part in upholding law against money
laundering, terrorism and illegal funding. The international organizations recorded have, among
other objectives, a specific anti-money laundering aim or function.
Grey List members
When the FATF places a jurisdiction under increased monitoring, it means the country has committed to
resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased
monitoring. This list is often externally referred to as the “grey list”. The FATF welcomes their commitment
and will closely monitor their progress. Since the start of the COVID-19 pandemic, the FATF has provided
some flexibility to jurisdictions not facing immediate deadlines to report progress on a voluntary basis.

June 2021:

the following countries had their progress reviewed by the FATF since June 2021: Albania, Barbados,
Botswana, Cambodia, Cayman Islands, Jamaica, Malta, Mauritius, Morocco, Myanmar, Nicaragua, Pakistan,
Panama, Philippines, Senegal, Uganda, and Zimbabwe

October 2021:

Turkey, Mali and Jordon became new entrants: Botswana and Mauritius no longer remained part of grey list.

Currently: Albania
Barbados
Burkina Faso
Cambodia
Cayman Islands
Haiti
Jamaica
Jordan
Mali
Malta
Morocco
Myanmar
Nicaragua
Pakistan
Panama  
Philippines
Senegal
South Sudan
Syria
Turkey
Uganda
Yemen
Zimbabwe

Black List members

For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply
enhanced due diligence, and, in the most serious cases, countries are called upon to apply counter-measures
to protect the international financial system from the money laundering, terrorist financing, and proliferation
financing (ML/TF/PF) risks emanating from the country. This list is often externally referred to as the “black
list”

Iran and North Korea

FATF’s standards

More broadly, the FATF standards deal with four areas of concern:

(i) criminalizing ML, FT, and related crimes;

(ii) strengthening the methods of tracing, freezing, and confiscating the proceeds of illegal activity;
(iii) implementing regulatory tools to prevent the use of the financial system for the purpose of ML,
FT, and other related crimes (including preventive measures to be taken by financial institutions
and other businesses and professions, measures to ensure transparency in the ownership of
legal persons, and the establishment of competent authorities with appropriate functions); and
(iv) improving powers, mechanisms, and arrangements to cooperate with other countries

FATF recommendations

The current FATF standards consist of 40 consolidated recommendations that include

administrative and regulatory measures to prevent proceeds of crime from entering into the
legitimate financial system as well as substantial recommendations regarding criminal law and
procedure.
The new FATF Recommendations, approved in 2012, are grouped into the following seven
categories: (1) anti-money laundering and combating the financing of terrorism (AML/CFT)
policies and coordination, (2) ML and confiscation, (3) terrorist financing and proliferation, (4)
preventive measures, (5) transparency and beneficial ownership of legal persons and
arrangements, (6) powers and responsibilities of competent authorities and other institutional
measures, and (7) international cooperation.
Politics behind FATF:
If someone looks at the criteria percentage given to various countries, it gets stranger. For
example, the percentage of partially compliant and non-compliant status given to Pakistan is
20pc, and it has been placed on the grey list, while Lithuania and South Korea also scored 20pc,
but found a place on the ‘white list’. The stronghold of the core countries in FATF creates
inequality among those on the periphery.
Ironically, the CIA supplied weapons and ammunition to the Afghan Mujahideen against the
Soviets, and the United States declared them freedom-fighters. Later, the same group which
transformed into the Taliban was declared terrorists because of shifting American interests in
the region.

Rationally speaking, if the FATF is really serious about dirty money being used in terror
financing, it should ask the US why the CIA funded and weaponised the Mujahideen. When
Pakistan presented a dossier against India in the United Nations, accusing it of stoking terrorism
in Pakistan, India was not held accountable. The Brussels-based European Union Disinfo Lab
exposed 750 fake websites of the Indian government, operating for 15 years to discredit and
malign Pakistan. No action was taken.

Besides, the proliferation of weapons of mass destruction is one of the main FATF agenda
items. According to the South Asia Strategic Stability Institute (SASSI), 18 incidents of nuclear
material theft were reported in India from 1944 to 2021, involving over 200kg of nuclear
material. But FATF neither asked any question over the uranium theft in India, nor did it hold it
accountable. All these examples reinforce the perception that FATF is merely a political tool
used selectively against countries following national policies that hamper the political and
strategic objectives of the global elite.