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Fatf

Financial Action Task Force is a confederation of many states founded on the initiative of the G7. It is also recognized by its French term, Groupe d'action financière. FATF is physically situated in the OECD (Organization for Economic Co-operation and Development) headquarters in Paris. The FATF has 39 members. 37 members are global states and the other two are regional organizations. 

History 

Created in 1989 FATF is a task force that is concerned with studying money laundering and economic law enforcement. It was formed in the G7 summit in Paris. During its formation, it had 16 member countries which increased to 36 by 2016. The first report launched by FATF contained forty recommendations on how to combat money laundering. This was revised in 2003. FATF extended its directive in 2001 following the 9/11 attack. It began including within its mandate combating and identifying terrorist financing. 

Black List and Grey List 

Since 2001 FATF has maintained two lists, Blacklists, and Greylist. These include terror-associated countries. Black Lists include the name of countries that are non-cooperative in battling terrorist activities. These names are revised and deleted to match contemporary realities. 

Grey List contains the list of all the countries that are a haven for supporting terror funding and laundering. They are notorious for contributing to terror funding. 

Roles of the FATF 

  • Apply appropriate international conventions
  • Cooperate internationally to combat terror financing 
  • Institute a financial intelligence unit
  • Criminalize money laundering to ensure legal financial flows 
  • Review and understand terror financing and financial laundering 
  • Implement record maintenance, identity verification for or financial institutions

Effects of FATF

  • The FATF blacklist has been effective in international politics. 
  • FATF is the only substantial check on financial institutions. 
  • FATF has made it difficult for non-governmental organizations (NGOs) in countries to access funds