What is the issue ?
- The Financial Action Task Force (FATF), the global watchdog that combats terrorism financing, has put Pakistan back on 'grey list' for failing to do enough to stop terror financing.
Significance of this event :
- Significant achievement for Indian diplomacy as it required the watchdog to push back pressure from China to corner Pakistan.
- It will hurt Pakistan's economy to a certain extent and also have a negative impact on its international relations.
What is the Financial Action Task Force ?
- The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions.
- The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas
Objectives of Financial Action Task Force :
- To set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) Summit in Paris, initially to examine and develop measures to combat money laundering.
In October 2001, the FATF expanded its mandate to incorporate efforts to combat terrorist financing, in addition to money laundering.
Since its inception, the FATF has operated under a fixed life-span, requiring a specific decision by its Ministers to continue.
Working of FATF :
The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally.
In collaboration with other international stakeholders, the FATF works to identify national-level vulnerabilities with the aim of protecting the international financial system from misuse.
The FATF's decision making body, the FATF Plenary, meets three times per year.
- 37 member countries.
- India is a member country(jurisdiction).