FATF (Financial Action Task Force) Video lecture

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FATF (Financial Action Task Force)


Overview:


FATF Established:1989.
FATF Members:39 Members.
FATF Headquarters:Paris, France.
FATF President:Dr. Marcus Pleyer (Germany).

What is FATF:


The FATF is an international intergovernmental organization that works to tackle money laundering and terrorist financing activities. The acronym FATF stands for Financial Action Task Force. The FATF members meet two times a year to review the situation and actions taken previously.


Establishment of the FATF:


The FATF was established in 1989 by the G7 summit held in Paris, France. At that time, the G7 heads of states and the president of the European Commission convened the task force from the G7 member states, the European Commission, and the eight other member states.


Members of the FATF:


Initially, FATF was formed with 16 members, and during 1991-1992, the FATF expanded its members from the original 16 to 28 members. In the year 2000, the FATF expanded to 31 members and has since expanded to its current 39 members. Currently, FATF comprises 37 member states, 2 regional organizations as the members, and 1 observer state. Two regional organizations are GCC (Gulf Cooperation Council), and the European Commission. Indonesia is the only observer state of the FATF.


The list of 37 Member states:


flag-iconAustraliaflag-iconArgentina
flag-iconBrazilflag-iconJapan
flag-iconCanadaflag-iconAustria
flag-iconChinaflag-iconMexico
flag-iconFranceflag-iconIndia
flag-iconDenmarkflag-iconFinland
flag-iconGreeceflag-iconHong Kong
flag-iconIcelandflag-iconIreland
flag-iconIsraelflag-iconNetherlands
flag-iconSaudi Arabia
>
flag-iconBelgiumflag-iconSouth Korea
flag-iconSouth Africaflag-iconTurkey
flag-iconThe United Kingdomflag-iconRussia
flag-iconThe United Statesflag-iconItaly
flag-iconGermany
flag-iconLuxembourgflag-iconMalaysia
flag-iconNew Zealandflag-iconNorway
flag-iconPortugalflag-iconSingapore
flag-iconSpainflag-iconSweden
flag-iconSwitzerland

Recommendations of the FATF:


Recommendations are intended to provide a comprehensive plan of action needed to fight against money laundering and terrorists financial activities.

April, 1999 – 40 Recommendations.

October, 2001 – 8 Special Recommendations.

October 2004 – Ninth Special Recommendation.

February 2012 – Reviewed Previous Recommendations.


Objectives of the FATF:


The main objectives of the FATF are Combating money laundering and terrorist financing. It makes it hard for the terrorist groups to sustain themselves without money and do any terrorist activities.


However, till now FATF has not able to completely stop the financial activity of the terrorist groups. The main reason the FATF not able to completely stop the terrorists' financial activities is due to the definition of the terrorist is not clear to the international bodies. For one country if one terrorist group is a terrorist group but for another country, the same group is not a terrorist group. The other country considers the same terrorist group as their supporters in any mission.


The FATF GreyList:


The FATF puts those countries on the greylist which violating the rules and is not transparent to the financial transactions after observing the financial activities within that country. By listing any country in the greylist means that country will remain under observation of the FATF until that country takes steps to stop such financial activities. To remain in the greylist also restrict other financial activities of that country or you can say the FATF imposes international financial sanctions on that country. The imposing of sanctions is to pressurise that country to take action towards tackling money laundering and terrorists financial activities.


The countries which are on the greylist Albania, Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Myanmar, Nicaragua, Panama, Pakistan, Syria, Uganda, Yemen, Zimbabwe.


Once the respective country takes action on the FATF recommendations and in the next FATF meeting the committee thinks that the actions taken by the respective country are satisfactory then they remove that country's name from the FATF greylist as well as lifts the sanctions imposed before. The same process also applies to blacklisted countries.


The FATF Blacklist:


The FATF puts those countries on the blacklist which are not taking satisfying actions after the FATF recommendations to tackle the money laundering and terrorists financial activities. Once any country listed on the FATF blacklist then FATF imposes more international financial sanctions to that country and organizations working with that country. It makes it that country very hard to do trade with other countries and organizations. Only two countries are on the FATF blacklist now and they are North Korea and Iran.


Headquarters of the FATF:


The headquarters of the FATF is situated in Paris, France.


India and FATF:


India is an active member of the FATF and helping the international community to tackle the giant terrorist financial activities so that people can live in a peaceful environment.