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What are Grey List and Black List of the Financial Action Task Force?

Feb 25, 2019 12:50 IST
    FATF Logo

    The Financial Action Task Force (FATF) was established in July 1989 by a Group of Seven (G-7) countries in a Summit held in Paris. Initial motive of FATF was to examine and develop measures to combat money laundering.

    In October 2001, the FATF expanded its wings to incorporate efforts to combat terror financing, money laundering and human trafficking.

    Functions of the FATF are;

    1. The FATF is an independent inter-governmental body that develops and promotes policies to protect the global financial system against anti-money laundering standards and counter-terror funding.

    However, the FATF is not in a position to give any advice regarding the credentials or work of associations.

    2. Now the FATF has started dealing with the Virtual currency.

    3. The FATF is an international policy-making body. It does not have any role in law enforcement matters, investigations or prosecution.

    Name of World Bank funded Projects in India

    What are Black List and Grey List of the FATF?

    FATF has 2 types of lists;

    1.  Black List

    2. Grey List

    1. Black List: Only those countries are included in this list that FATF considers as unco-operative tax havens. These countries are known as Non-Cooperative Countries or Territories (NCCTs). In other words; countries which are not supporting terror funding and money laundering activities are listed in the Black list.

    The FATF blacklist or OECD blacklist has been issued by the Financial Action Task Force since 2000 and lists countries which it judges to be non-cooperative in the global fight against money laundering and terror funding.

    The FATF updates the blacklist regularly, adding or deleting entries.

    grey list 2018

    (This map shows the countries included in the Grey list)

    2. Grey List: Those countries which are considered as the safe heaven for supporting terror funding and money laundering; included in this list.

    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 black list to grey list by the FATF.

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

    1. Economic sanctions from international institutions (IMF, World Bank, ADB etc.) and countries

    2. Problem in getting loans from international institutions (IMF, World Bank, ADB etc.) and countries

    3. Overall Reduction in its international trade

    4. International boycott

    Pakistan was included in the grey list for the first time in 2012 and remained in it till 2015. On 29 June, 2018 FATF Grey listed Pakistan for the second time.  The process began in February 2018 when FATF approved the nomination of Pakistan for monitoring under its International Cooperation Review Group (ICRG) commonly known as 'grey list'.

    Pakistan was asked to prepare a plan to address international body's concerns and get its approval to get included in the black list again.

    So this was the crux of information on the black and grey list of the FATF. I hope that in the coming years the leadership of Pakistan will try hard to check terror activities from its soil and co-operate with India is ensuring peace and prosperity in the Asian continent. 

    What is the Meaning and Objectives of the Financial Action Task Force (FATF)?

    What is Money Laundering and how is it done?

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