What is FATF Black List and Grey List?

Dear Readers,

We hope that you are keeping up with Contemporary events of national & international importance. Recently in news, we have heard the term FATF. According to the news of 21st February 2020, FATF preserved status quo & Pakistan will remain in the FATF Grey list till June 2020.

So, you might be wondering What is FATF? What does it do? What are the provisions of black list & grey list? Well, read this article to get all your doubts cleared.

What is FATF?

The Financial Action Task Force (FATF) is an inter-governmental body established in the 1989. The headquarters of FATF is located at Paris, France. The main functions of FATF are as follows:

• The main agenda of FATF is to enforce legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the rectitude of the international financial system.
• The FATF develops & implements international standard policies with respect to global illicit financial flows & proliferation of weapons of mass destruction.
• In 2014, FATF adopted key definitions and potential AML/CFT risks of virtual currencies.
• The FATF currently comprises 37 members (including India) and 1 Observer (Indonesia).
• The FATF’s decision making body, the FATF Plenary, meets thrice per year.

What is Black List & Grey List of FATF?

FATF has two types of list:

• Black List
• Grey List

Black List:

The countries which support terror funding and money laundering activities are placed in this list. The countries placed in the black list are also known as Non-Cooperative Countries or Territories (NCCTs). The FATF updates the blacklist regularly, adding or deleting entries.

Grey List:

Those countries which are not considered as the safe heaven for supporting terror funding and money laundering; included in this list. The inclusion in this list is not as severe as black listed.

Now Grey list is a warning given to the country that it might come in Black list (Just like a yellow card in a football match). If a country is unable to curb mushrooming of terror funding and money laundering; it is shifted from grey list to black list by the FATF.

When a country comes in the Grey list, it faces many problems like:

• Economic sanctions from international institutions (IMF, World Bank, ADB etc.)
• Problem in getting loans from international institutions (IMF, World Bank, ADB etc.) and countries
• Overall Reduction in its international trade
• International boycott

Register here to get study materials and regular updates!!

Prepare With,

• UPSC EPFO Complete Batch Enforcement Officer| Bilingual | Live Classes
• UPSC EPFO Enforcement Officer 2020 Online Test Series