What is Financial Action Task Force (FATF)?

March 31, 2024

The FATF has found that many countries are yet to fully implement its requirements aimed at preventing misuse of virtual assets and virtual asset service providers (VASPs).

About Financial Action Task Force (FATF):

It is an inter-governmental policy-making and standard-setting body dedicated to combating money laundering and terrorist financing.
Objective: To establish international standards and to develop and promote policies, both at national and international levels, to combat money laundering and the financing of terrorism.
Origin:
- It was established in 1989 during the G7 Summit in Paris to develop policies against money laundering.
- In 2001, its mandate was expanded to include terrorism financing.
Headquarters: Paris, France.
Its members include 39 countries, including the United States, India, China, Saudi Arabia, Britain, Germany, France and the EU as such.
India became a member of FATF in 2010.
What are FATF 'grey list' and 'blacklist'? FATF has 2 types of lists:
- Black List: Countries known as Non-Cooperative Countries or Territories (NCCTs) are put on the blacklist. These countries support terror funding and money laundering activities. The FATF revises the blacklist regularly, adding or deleting entries.
- Grey List: Countries that are considered a safe haven for supporting terror funding and money laundering are put on the FATF grey list. This inclusion serves as a warning to the country that it may enter the blacklist.
Three countries North Korea, Iran and Myanmar are currently in FATF’s blacklist.
Consequences of being on the FATF blacklist:
- No financial aid is given to them by the International Monetary Fund (IMF), the World Bank, the Asian Development Bank (ADB) and the European Union (EU).
- They also face a number of international economic and financial restrictions and sanctions.